Comments on working group

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

6. Please provide any additional comments.

The Alliance for Retail Energy Markets (AReM)[1] is an organization of electric service providers (ESPs), which are all load-serving entities (LSEs) serving customers in the competitive retail market in California.  AReM’s members participate in the Resource Adequacy (RA) market run by the California Independent System Operator (CAISO) and California Public Utilities Commission (CPUC), and therefore have an active interest in this Working Group.

AReM members are concerned by the recent Capacity Procurement Mechanism (CPM) event for the August 2023 RA compliance period. Despite being compliant with the CPUC requirements for adequate RA to serve their load, AReM members were assessed cost responsibility for the CAISO CPM. AReM members understand this is due to inconsistent treatment between the CPUC and CAISO, specifically in how CAISO does not account for demand response (DR) credits allocated to AReM members by the CPUC. AReM members are also concerned that local regulatory authorities (LRA) other than the CPUC may also have inconsistent or even insufficient RA standards, increasing the risk of CPM events and leading to cost shifts between non-CPUC jurisdictional LSEs and CPUC-jurisdictional LSEs.

AReM would like these issues addressed in the scope of this working group. Based on the CAISO discussion paper dated September 25, 2023, it should be addressed as part of Problem Statement 3: LRA Resource Adequacy and Cost Allocation. AReM looks forward to a resolution of these issues to avoid future cost shifts.

[1] AReM is a California non-profit mutual benefit corporation formed by electric service providers that are active in the California’s direct access market.  This filing represents the position of AReM, but not necessarily that of a particular member or any affiliates of its members with respect to the issues addressed herein.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

Introduction

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) RA Modeling and Program Design Discussion Paper and Working Group. The CAISO’s Resource Adequacy (RA) program is ripe for reevaluation considering the changing resource mix, increased variability in supply and demand conditions, and evolving RA frameworks in California and West-wide. The apparent RA supply deficiency and resulting exorbitant RA prices also warrant consideration when evaluating enhancements to the RA program to ensure they help reduce or avoid exacerbating challenging RA market conditions.[1] With these considerations in mind, CalCCA makes the following recommendations in response to the first working group:

• The CAISO should conduct the RA Modeling and Program Design initiative (Initiative) in one branch rather than two concurrent branches given the interconnectedness of the issues likely to be taken up around RA modeling and the RA program.
• The CAISO should prioritize issues around slice-of-day (SOD) implementation, including (1) determining if the California Public Utilities Commission’s (CPUC) SOD program will meet the requirements of the CAISO evaluation, (2) clarifying the resource values and requirements load serving entities (LSEs) will show and CAISO will validate, and (3) determining how it will conduct backstop once CPUC jurisdictional LSEs are subject to SOD and non-CPUC jurisdictional LSEs are not.
• CalCCA generally supports the CAISO’s efforts to develop a portfolio evaluation to test system-wide RA sufficiency in the CAISO balancing authority area (BAA). Several important considerations will need to be made, however, to develop a process that fits in well with the existing RA structure and provides the CAISO with the resources needed to meet reliability planning targets in all hours.
• The CAISO should expand the scope of Problem Statement 1 to include the sufficiency of the RA fleet west-wide, not just the RA fleet in the CAISO BAA.
• The CAISO should regularly publish public reporting of aggregated year-ahead and month-ahead RA showing information so that stakeholders can better understand RA market trends.
• The CAISO should work with the CPUC to ensure credited resources’ RA capacity is recognized, either through changes to the CPUC rules to have credit resources shown on supply plans or through a CAISO tariff change to support credited resources when allocating capacity procurement mechanism (CPM) costs.
• The CAISO should review its must-offer obligation (MOO) and bid insertion rules to ensure they are comprehensive, maximize the availability of the RA fleet, and properly reflect the capabilities of technologies providing RA.
• Given the shortcomings associated with resource adequacy availability incentive mechanism (RAAIM), the CAISO should evaluate other mechanisms to incent resource availability.
• The CAISO should work with the CPUC, which has scoped unforced capacity (UCAP) into its new RA proceeding, to evaluate how to incorporate UCAP into the CAISO and CPUC’s RA programs. Part of this evaluation should include whether special considerations need to be made to make UCAP compatible with SOD.
• CalCCA supports the CAISO reviewing the substitution rules for planned outages.
• Within the RA portfolio analysis described in Problem Statement 1, the CAISO should do an hourly assessment to check whether the entire shown RA fleet is sufficient to meet RA needs in all hours. The CAISO should also consider how to allocate costs when backstop is performed on hourly RA needs to ensure all programs are allocated costs consistently.
• The sub-issue of extended day-ahead market (EDAM) resource sufficiency evaluation (RSE) cost causation should be included primarily within the EDAM ISO BAA Participation Rules initiative rather than within the Initiative.

Working Group Process

During the Working Group, the CAISO asked stakeholders if the CAISO should conduct the working group meetings in one branch or two branches, one for modeling and one for the program. CalCCA recommends the CAISO conduct the Initiative in one branch rather than two concurrent branches given the interconnectedness of the issues likely to be taken up around RA modeling and the RA program.

Where CAISO and stakeholders would benefit from an accelerated timeline, however, is for the most time-sensitive issue, SOD implementation. The CAISO should (1) determine if the CPUC’s SOD program will meet the requirements of the CAISO evaluation, and (2) clarify the resource values and requirements LSEs will show and CAISO will validate. This confirmation and clarification should happen quickly. What will very likely require more stakeholder discussion, however, is how the CAISO will conduct backstop once CPUC jurisdictional LSEs are subject to SOD and non-CPUC jurisdictional LSEs are not. Ensuring all local regulatory authorities (LRA) bring their share of RA capacity necessary to meet reliability needs in all hours will be an important consideration for this initiative, especially considering the CAISO’s responsibility to administer the different RA programs adopted by each LRA.

[1]  An in-depth analysis of the RA supply stack and prices can be found in CalCCA’s RA Whitepaper posted here: https://cal-cca.org/resource-adequacy/.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

Problem Statement 1: Overall System Reliability Information

The CAISO indicates there is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO BAA. CalCCA agrees with this need and offers the following observations and recommendations:

• CalCCA generally supports the CAISO’s efforts to develop a portfolio evaluation to test system-wide RA sufficiency in the CAISO BAA. Several important considerations will need to be made, however, to develop a process that fits in well with the existing RA structure and provides the CAISO with the resources needed to meet reliability planning targets in all hours. These considerations include:
  • The structure of the portfolio evaluation (e.g., deterministic, stochastic);
  • When and how often to perform the portfolio evaluation (e.g., prior to RA showings, after RA showings, annually, monthly, etc.);
  • How far out the assessment will study (e.g., the next RA compliance period, multiple compliance periods, etc.);
  • What assumptions need to be made; and   
  • What steps the CAISO would take when an insufficiency is identified?

Importantly, a portfolio evaluation must be transparent and provide the right signals for LSEs to minimize the potential for CAISO backstop procurement. This working group should explore ways to provide as much information to market participants as far in advance as possible to anticipate potential deficiencies in time to act to avoid such deficiencies. For example, rather than wait until the CAISO has visibility for 100 percent of the shown RA resources needed to meet the year-ahead or month-ahead requirement, the CAISO could run a forward annual assessment that makes assumptions about system resources and loads known at the time of the study to inform LSE procurement. The CAISO could then rerun the study with the shown RA fleet to confirm sufficiency based on procurement and showings that occurred.

• The CAISO should expand the scope of this problem statement to include the sufficiency of the RA fleet west-wide, not just in the CAISO BAA. The CAISO depends on imports to meet RA requirements. The Western Resource Adequacy Program (WRAP) will soon have its own binding requirements its participants must meet with internal or external supply. The CAISO and RA market participants would benefit from an understanding of where RA supply is dedicated both internally and externally. As a starting point, the CAISO could coordinate with the WRAP to determine what data can be shared regarding the availability of California RA supply, the availability of RA supply in the broader west, and where such supply is dedicated.

• The CAISO should regularly publish public reporting of aggregated year-ahead and month-ahead RA showing information so that stakeholders can better understand RA market trends like (a) trends in the categories of resources (e.g., imports, storage) used for compliance and (b) the extent of California RA-eligible resources being used for non-RA purposes (e.g., exports, substitution, etc.). CalCCA greatly appreciated the CAISO publishing the Historical Year-Ahead RA Aggregate Data,[1] and found it extremely valuable in informing the use of RA imports since the California Public Utilities Commission’s (CPUC) import RA rule changes were adopted. The CAISO should continue to regularly post this data for year-ahead and month-ahead RA showings.

• On the working group call, the CAISO indicated that its desired visibility into non-RA supply includes resources contracted for another use and therefore unavailable to provide incremental reliability, like resources providing substitution, and “credited” resources that are not shown on supply plans, like certain demand response resources. CalCCA supports efforts to gain more visibility into credited resources, particularly because the CAISO cannot consider credited resources when allocating CPM costs, a problem that revealed itself after the CAISO’s August 2023 CPM. The CAISO should work with the CPUC to ensure credited resources’ RA capacity is recognized, either through changes to the CPUC rules to have credit resources shown on supply plans or through a CAISO tariff change to support credited resources when allocating CPM costs.

Problem Statement 2: Requirements for RA Capacity and Program Tools

The CAISO’s current requirements and tools have not been updated recently. CalCCA agrees that now is a good time to revisit them to ensure they (1) incent RA supply to be available when and where needed, (2) result in efficient procurement and investment decisions, and (3) function effectively for the CAISO and market participants.

The CAISO should consider the following recommendations for the five sub-issues the CAISO identified within this problem statement:

1. The current requirements for RA capacity: The CAISO should review its MOO and bid insertion rules to ensure they are comprehensive, maximize the availability of the RA fleet, and properly reflect the capabilities of technologies providing RA.
2. The Resource Adequacy Availability Incentive Mechanism (RAAIM): RAAIM is designed to incent RA resources to maximize their availability, minimize outages, and provide substitute capacity when outages occur. It is a self-funded mechanism that charges resources that are not available during the availability assessment hours (AAH) and pays resources that are available during the AAHs. Past CAISO analysis shows that RAAIM is ineffective at incenting substitute capacity to replace RA capacity on outage.[2] Several reasons could contribute to RAAIM’s ineffectiveness including but not limited to sellers incorporating the risk of RAAIM charges into capacity pricing, scheduling coordinators’ payments and charges balancing each other out, or too many resources or outage types receiving RAAIM exemptions. Additionally, RA prices are reflecting the current RA market scarcity. The CPUC’s 2023-2024 RA market price benchmark is $14.37 per kilowatt (kW) -month and the potential RAAIM payment is $3.79 per kW-month (or 60 percent of the $6.31 per kW-month CPM soft offer cap). It is, therefore, logical to assume sellers would rather sell substitute capacity as RA than use it to avoid RAAIM charges. Given these shortcomings, the CAISO should evaluate other mechanisms to incent resource availability, such as the UCAP counting methodology described below.
3. Lack of tools to incentivize performance: Given the shortcomings of RAAIM identified above, the CAISO should evaluate alternative methods for incentivizing resource availability, such as UCAP counting rules. UCAP counting rules incorporate historical forced outage rates into the RA value of resources, rather than incorporating average forced outage impacts into the planning reserve margin, like California does today. Including forced outages in the counting rules creates incentives for generators to conduct planned maintenance to prevent unplanned, forced outages. It also informs the market of generators' historical availability so that entities can procure resources that are most reliable. The CAISO should work with the CPUC, which has scoped UCAP into its new RA proceeding, to evaluate how to incorporate UCAP into the CAISO and CPUC’s RA programs. Part of this evaluation should include whether special considerations need to be made to make UCAP compatible with SOD. Whether or not a UCAP methodology needs to be specifically tailored to SOD can be informed by evaluating how forced outage trends vary by hour.
4. Rules for substitution and planned outages: CalCCA supports the CAISO reviewing the substitution rules for planned outages. Today, the CAISO requires all planned outages to come with substitute capacity. This can result in holding excess RA capacity from the market to cover potential upcoming planned outages and resources including a risk premium to cover any potential costs of substitute capacity. A future planned outage process that allows RA resources to reliably take planned outages without having to provide substitution in all cases could reduce the practice of holding back RA capacity and reduce RA costs.

• The need for a comprehensive review of the CPUC’s Slice-of-Day reform and the translatability and transactability of WRAP: CalCCA supports this sub-issue. As described in prompt #1 above, the CAISO should prioritize issues around SOD implementation, including:
  • Determining if the CPUC’s SOD program will meet the requirements of the CAISO evaluation;
  • Clarifying the resource values and requirements LSEs will show and CAISO will validate, and;
  • Determining how it will conduct backstop once CPUC jurisdictional LSEs are subject to SOD and non-CPUC jurisdictional LSEs are not.

CalCCA also supports the CAISO exploring how to ensure the CAISO RA program is compatible with WRAP. First steps to accomplishing this should include (1) an assessment of the structure and rules of both programs to understand similarities and differences, and (2) a determination of what data can be shared between program administrators and publicly regarding the availability of California RA supply, the availability of RA supply in the WRAP and broader west, and where such supply is dedicated.

Problem Statement 3: LRA RA Responsibility and Cost Allocation

The CAISO indicates that stakeholders have expressed a need for a transparent and common framework for evaluating reserve margins and counting rules and understanding of an LRA RA program’s contribution to overall system reliability. CalCCA agrees with this need and offers the following recommendations on this problem statement:

• As the CAISO points out, LRAs have their own definitions, methods of measurement, and planning standards for their RA programs. Assuming the CAISO and non-CPUC LRAs do not shift to a SOD RA program like the CPUC has, the CAISO needs some other way to determine whether each of the different RA programs results in an RA fleet that is available when and where needed to meet reliability needs in all hours, not just the single hour the CAISO currently checks for compliance. Within the RA portfolio analysis described in Problem Statement #1, the CAISO should do an hourly assessment to check whether the entire shown RA fleet is sufficient to meet RA needs in all hours. The CAISO should also consider how to allocate costs when backstop is performed on hourly RA needs to ensure all LSEs are allocated costs consistently. For example, if the CAISO identifies a deficiency in a subset of hours caused by a subset of LSEs, those LSEs should be allocated the costs of any backstop procurement resolving the deficiency. In sum, if the CAISO makes no changes in response to SOD, the CAISO risks missing reliability issues in the 23 hours the CAISO will not assess for RA compliance. The CAISO should avoid this risk by performing an hourly assessment of the RA fleet’s ability to meet hourly RA needs and allocate backstop costs in a manner that reflects each LSE’s contribution to the hourly need.

The sub-issue of EDAM RSE Cost Causation should be included primarily within the EDAM ISO BAA Participation Rules initiative rather than within the Initiative. The causes of EDAM RSE failures are not solely attributable to LSE RA deficiencies, so it makes more sense to include this topic in an initiative with a broader focus than solely RA. Additionally, opportunities to cure EDAM RSE failures will likely differ from those used to cure RA deficiencies given the differences in the timeframe for identifying and curing RA deficiencies in the year-ahead and month-ahead and the timeframe for identifying and curing EDAM RSE failures in the days prior to the trade date.

[1] http://www.caiso.com/Documents/HistoricalYearAheadResourceAdequacyAggregateData.xlsx.

[2] CAISO RA Enhancements Fifth Revised Straw Proposal (July 7, 2020), at Appendix 8.3.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

CalCCA supports the six principles proposed by CAISO for the RA program: Reliable, Efficient/Cost-Effective, Implementable, Durable, Adaptable, and Transparent. Proposed policy solutions should be developed with the goal of maximizing adherence to these principles. The CAISO and stakeholders will likely find, however, that most solutions will meet some of the guiding principles but not others (e.g., a proposed policy solution could be implementable but not durable, another could be reliable and adaptable but not cost-effective and efficient, etc.). The challenge during the policy development phase will be how to balance all of these guiding principles that may be at times contradictory to one another.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

CalCCA supports the draft RA goals and offers the following comments:

RA Goal 1: The CAISO’s established modeling and visibility enable an overall reliable system

Reliability is the central tenet of the RA program. CalCCA supports the CAISO establishing modeling that ensures that the RA program results in an RA fleet that meets planning targets and a CAISO system that is reliable in all hours. The CAISO’s modeling process, assumptions, and results should be transparent so that LSEs can plan in a manner that meets reliability targets and minimizes the need for CAISO backstop.

RA Goal 2: Procurement and trading is efficient, cost-effective, fungible, and affordable

CalCCA’s RA stack analysis shows that the RA supply stack is insufficient for all LSEs to comply with their RA requirements regardless of their best efforts and willingness to pay exorbitant prices.[1] As basic economics would predict, these conditions are ripe to produce exorbitant prices, making reliably serving California’s electricity customers more expensive. Between September 2019 and September 2021, the weighted average price for September RA increased by over 100 percent from $4.08/kW-month to $8.62/kW-month,[2] and continued to rise as the CPUC’s 2023-2024 RA market price benchmark is $14.37 per kW-month.[3] The lack of sufficient capacity available to meet RA needs is clearly driving up costs for California electricity customers. The only durable solution is to bring new resources online, yet new resources continue to face supply chain, interconnection, and permitting challenges. Until those challenges are met holistically, RA supply will remain tight, and prices paid by consumers will remain high. For these reasons, CalCCA supports this goal and recommends the CAISO design policies with this near-term reality in mind and refrain from pursuing proposals that will increase costs without providing any incremental reliability benefit. Policies that make the RA program as transparent and transactable as possible will aid in promoting near-term affordability.

RA Goal 3: The RA program is implementable, adaptable, and compatible with different programs

CalCCA supports this goal and recommends the CAISO add “durable” to this list. A durable RA program that will meet the CAISO’s reliability objectives for many years to come is key to providing market participants with the regulatory certainty needed to make longer-term planning decisions.

When evaluating the RA program’s compatibility with different programs, this evaluation should include California’s multiple LRA programs, the WRAP, and state’s strategic reliability reserves which will provide contingency resources beyond what is planned for RA purposes.

[1] An in-depth analysis of the RA supply stack and prices can be found in CalCCA’s RA Whitepaper posted here: https://cal-cca.org/wp-content/uploads/2023/09/CalCCA-Stack-Analysis-2023-2026-updated-9_15_23.pdf.

[2] CPUC 2021 Resource Adequacy Report, at 29: https://www.cpuc.ca.gov/-/media/cpucwebsite/divisions/energy-division/documents/resource-adequacy-homepage/2021_ra_report_040523.pdf.

[3] Calculation of the Market Price Benchmarks for the Power Charge Indifference Adjustment Forecast and True Up (Oct. 2, 2023).

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

CalCCA has no additional comments at this time.

6. Please provide any additional comments.

CalCCA has no additional comments at this time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

The Working Group process is well developed. In addition, the Working Group should be presented with CAISO analysis backed by data or specific details on the current RA program’s shortcomings identified as the sub-issues as available.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

Problem Statement 1: Overall system Reliability information

1. RA Portfolio evaluation:

CDWR comments: CAISO should define what RA portfolio means and illustrate with numerical examples (could be a spreadsheet) for a desired RA portfolio information with time frames. A clarification from CAISO would be helpful on why monthly RA showing evaluation and 7-day RA trend tracked by CAISO would not provide the necessary information.

2. Non-RA visibility:

CDWR comments: Is it possible for ISO to keep track, using Masterfile, of non-RA resources or partial RA capacity resources' availability on an hourly basis based on the submitted and approved outages (forced / planned)? Can ISO reach out to the scheduling coordinator (SC) for the resource and verify its assessment of hourly availability on a regular basis at a set frequency? This sort of short-term information may provide additional resources for grid reliability on an hourly basis.

3. Updating the CAISO’s Default Planning Reserve Margin (PRM):

CDWR comments: Default PRM may need to be updated based on an appropriate study.

Problem Statement 2: Requirements for RA Capacity and Program Tools

1. Requirements for RA Capacity

CDWR comments: 1) CAISO states that it does not evaluate the RA fleet for energy sufficiency which could pose a reliability risk to the CAISO BAA. Does it plan to run a study for energy sufficiency to determine if the portfolio is sufficient to meet the requirements? 2) Does CAISO plan to run a comprehensive study on flexible RA to determine if the existing flex RA products provide reliability benefits or need changes? If the current flexible RA is to continue, ISO should: 1) review allocation methodology to reflect causation, 2) reduce the prorated flexible RA obligation for an LSE if the solar and wind resources included in the flexible capacity needs study in an LSE’s portfolio do not realize COD until the applicable compliance month. This will align with the principle of program being efficient and cost effective without impacting the reliability.

2. Incentivizing Availability

CDWR comments: Is the update needed on penalty price for incentive or the RAAIM mechanism itself? Data analysis supporting the concern would be helpful.

3. Incentivizing Performance

CDWR comments: RA performance should be defined. Is it an LSE’s performance or a supplier performance?

4. Outages: Allowing use of import resources for internal resource substitution, if implementable, may address some of the concerns on substitution capacity availability. If there is any relaxation of current rules that could increase substitution capacity, that possibility should be explored.
5. CPUC’s Slice-of-Day (SOD)

CDWR comments: CAISO systemwide analysis for SOD in the current RA program could demonstrate the current status on hourly sufficiency.

Problem Statement 3: LRA Resource Adequacy Responsibility & Cost Allocation

1. Definitions and requirements

CDWR comments: RA is provided using net qualifying capacity (NQC) values and effective flexible capacity (EFC) values. Is the issue related to the resource counting rules?

The following data analyses would be helpful:

1. CAISO data analysis whether the RA resources made available to CAISO systemwide in the DAM can meet 24 SOD RA requirements for each of the 12 months in sample years. (Last 5 years).

2. CAISO data analysis whether the RA plus non-RA resources made available to CAISO systemwide in the DAM can meet 24 SOD RA requirements for each of the 12 months in sample years. (Last 5 years).

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

Stated principles are convincing. However, whether the “efficient / cost-effective” principle represents cost causation, is not clear. Cost causation should be one of the principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

No comments at this time

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

CDWR may present in future if needed depending on the analysis produced on the problem statements and sub-issues identified in the discussion paper.

6. Please provide any additional comments.

No further comments at this time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

The text of DMM's full set of comments is pasted into this response to question #1. A fully formatted version of the same comments is included as a pdf attachment below the final question.

Comments on Resource Adequacy Enhancements

October 5, 2023 Working Group

Department of Market Monitoring

October 20, 2023

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Resource Adequacy Enhancements October 5, 2023 Working Group.[1] DMM supports the problem statements, principles, and goals outlined in the ISO’s working group discussion paper, and agrees there is room for improvement. Resource adequacy (RA) rules should ensure that sufficient capacity with the characteristics needed to maintain system and local reliability is procured by load serving entities (LSEs), and is also made available operationally in the ISO markets.  

DMM believes that RA enhancements should be based on improving the economic incentives for individual participants to procure sufficient capacity and make this capacity available operationally to the ISO markets. Some of the areas in which incentives can be improved include, but are not limited to: (1) incentivizing resource availability, (2) cost allocation in the capacity procurement mechanism (CPM), (3) the use of a forced outage in place of a planned outage, and (4) resource valuation as reflected in the ISO’s net qualifying capacity (NQC) list.

Resource availability and performance

Resource availability incentives at the ISO currently fall under the resource adequacy availability incentive mechanism (RAAIM). Currently, the maximum possible monthly penalties and availability incentives are set at half of the CPM price, which is the ISO’s backstop procurement mechanism. As capacity becomes more limited and prices increase, the difference between capacity payments and RAAIM penalties also increase, and DMM is concerned that the penalties have become insignificant compared to RA payments. DMM recommends revisiting the level of the RAAIM penalty, and has previously recommended the penalty be set significantly higher, especially under stressed system conditions. [2]

RAAIM is an availability incentive, as defined by bidding requirements, and DMM believes the incentive should be adapted to a performance incentive.[3] The current incentive can lead suppliers to sell RA that is unavailable or that is likely to incur forced outages for critical periods of system or local needs. The adaptation of RAAIM to a performance-based policy could result in potentially very high penalties that claw back a large portion of capacity payments when resources do not deliver on critical days. This type of mechanism could also better incentivize suppliers to sell highly available, and dependable, capacity up front.

Capacity procurement mechanism cost allocation

The capacity procurement mechanism is a backstop policy for the ISO to procure capacity in conditions of a shortfall. Capacity procurement obligations are allocated out to all local regulatory authorities (LRAs), and in cases of a deficiency, the ISO has the ability to procure on behalf of any deficient entity. However, since 2020, almost all (99%) of the resources procured using the CPM were for system-level capacity, and as a result these costs were allocated on a pro rata basis to all ISO entities, and not to the entity that was short first. [4] Allocating the cost for backstop or substitute capacity procurement in this way does not create incentives for individual load serving entities (LSEs) to procure their full capacity requirements. DMM recommends the ISO reassess the cost allocation of the CPM to deficient entities to further incentivize LSEs to procure their requisite capacity requirement.

Planned to forced outages

Forced outages are defined as outages that are taken seven or fewer days from the start of the outage. When approving forced outages, CAISO operators may not currently be able discern whether the outage is required for immediate plant health, or whether the outage could be delayed. These outages requested within seven days of the start of the outage can lead to local or system instabilities and affect overall reliability. Therefore, if the outage is a discretionary maintenance outage, it is important the resource scheduling coordinator clearly identify it as such. DMM recommends the ISO enhance outage reporting requirements to more clearly require the resource scheduling coordinator to identify if a forced outage is necessary to avoid imminent damage to the plant, or if the forced outage is for discretionary plant maintenance that could be postponed for system reliability. In addition to this recommendation, increased penalties for outages, discussed above, should further increase the incentive of resources to perform when needed for reliability.

Resource capacity values

As presented in the working group discussion paper, the generation mix of the grid is changing, and DMM believes as a result, so should methods for determining resource capacity values. DMM recommends two considerations for the working group: (1) incorporate resource availability and/or performance into the net qualifying capacity of resources, and (2) incremental alignment to the California Public Utility Commission’s (CPUC) slice-of-day format. The details of our recommendations are below, and DMM would be willing to present on either or both of these topics.

DMM believes it is important that the net qualifying capacity for a resource incorporates the availability or performance of a resource, similar to an unforced capacity framework (UCAP). DMM has long reported on the performance of RA resources, and as an example, in 2022, resources with must-offer obligations had an average capacity derate to 91% of their nameplate capacity during Energy Emergency Alert (EEA+) hours.[5] UCAP policies have recently been proposed by the CPUC, [6] and DMM recommends considering UCAP in the RA workshops.

Overall, DMM is concerned about the NQC that is provided to all resources, such as resources generally considered firm. Batteries and natural gas resources receive RA capacity that is their full nameplate capacity, even if they consistently fail to perform at their full nameplate capacity during critical net peak hours. Moreover, DMM is concerned about the NQC of use-limited resources, which are increasingly becoming the majority of resource adequacy capacity.

For example, Figure 1 shows a comparison of the 24-hour slice of day (SoD) accounting framework to the 2024 Tech Factors in the ISO’s NQC list. It includes four months which represent the four seasons, and includes both wind and solar. [7] The SoD framework is over 24-hours, so the x-axis has 24-hours for each of the two resource types for each of the four months. The y-axis is the capacity value’s percent of the total nameplate capacity that would be attributed to the resource under different capacity valuation methods. The horizontal black line is the NQC used by the ISO. The blue line is the exceedance, or 24-hour NQC, methodology used by the CPUC, and it is generated from the last six years of production data. [8] The blue line will be used in the CPUC’s SoD accounting framework, and DMM seeks to highlight the current differences between the two accounting methodologies. The red-shaded area represents the availability assessment hours (AAHs), where the RAAIM is applied, and these hours correlate with the typically difficult reliability hours during peak and net-peak load.

Use-limited resources are expected to do much of the charging for battery resources. DMM is willing to present on the historical behavior of batteries. DMM published an initial report on battery resources, [9] but this analysis can be extended to look at their behavior in the SoD context. DMM understands there are a number of LRAs, and adopting the SoD concept will conflict with non-CPUC RA frameworks. However, DMM supports an incremental approach by the ISO, and suggests the ISO describe a timeline for implementing a comprehensive accounting framework, given the system-wide transition to use-limited resources.

Figure 1 - Resource accounting between the CPUC and CAISO NQC list

[1] Resource Adequacy Enhancements – Discussion Paper, CAISO, October 5, 2023: DiscussionPaper-ResourceAdequacyWorkingGroup-Oct5-2023.pdf (caiso.com)

[2] Comments by Department of Market Monitoring on Resource Adequacy Enhancements Issue Paper, CAISO DMM, November 30, 2018: DMMComments-ResourceAdequacyEnhancements-IssuePaper.pdf (caiso.com)

[3] 2022 Annual Report on Market Issues and Performance, CAISO DMM, July 11, 2023, p. 249: 2022-Annual-Report-on-Market-Issues-and-Performance-Jul-11-2023.pdf (caiso.com)

[4] DMM Comments on CPM Enhancements Track 2 - Final Proposal, CAISO DMM, August 31, 2023: DMM-Comments-on-CPM-Final-Proposal-Aug-31-2023.pdf (caiso.com)

[5] 2022 Annual Report on Market Issues and Performance, CAISO DMM, July 11, 2023, p. 249: 2022-Annual-Report-on-Market-Issues-and-Performance-Jul-11-2023.pdf (caiso.com)

[6] Order Instituting Rulemaking, Agenda ID #21887, CPUC, October 2023:https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M519/K949/519949114.PDF

[7] The CPUC Exceedance values are for the recent October 4, 2023 update of exceedance values. Profiles are for wind in northern California, and solar tracking values for southern California.

[8] Details of the methodology can be found here: Decision Adopting Local Capacity Obligations for 2024-2026, Flexible Capacity Obligations for 2024, and Program Refinements, CPUC ED, June 29, 2023. https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M513/K132/513132432.PDF

[9] Special Report on Battery Storage, CAISO DMM, July 7, 2023:  https://www.caiso.com/Documents/2022-Special-Report-on-Battery-Storage-Jul-7-2023.pdf

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

6. Please provide any additional comments.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

Energy Division Staff (hereafter, “ED Staff” or “Staff”) provides the following comments on the California Independent System Operator Corporation’s (CAISO) Resource Adequacy Modeling and Program Desing Working Group discussion paper, issued on September 22^nd, and discussed at the October 5, 2023 working group meeting.

ED Staff appreciates CAISO’s commitment to enhancing it reliability requirements and RA program in light of the evolving resource mix as well as other changing grid conditions across the West. Reevaluating reliability requirements to complement the State RA program implementation efforts is prudent at this time. In general, Staff is supportive of the working group process which will allow more stakeholder input to develop robust problem statements and potential solutions.  ED Staff believes that the working group process should expressly consider the effects on ratepayers in California, and, thus, recommends that CAISO ensure that ratepayer interests are given equal priority and weight, regardless of the sheer number of parties weighing in on one topic or another.  While Staff supports the intent of the working group process, it recommends that CAISO narrow its focus and exclude consideration of regional inter-operability issues in its problem statements at this time.  While this is an important topic that deserves time and attention, Staff does not believe this is the appropriate venue for this topic. 

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

Problem Statement 1: Overall System Reliability Information

CAISO identifies the need for consistent, transparent and timely information to assess the sufficiency of the RA fleet in CAISO’s BAA.  Without such a check, CAISO notes that it will have trouble assessing and communicating system wide sufficiency and addressing concerns in a timely and efficient manner.  CAISO also lists a group of sub-issues including; updates to the default planning reserve margin (PRM), visibility into non-RA resources and local regulatory authority (LRA) contributions to overall system reliability. 

Staff appreciates CAISO’s desire to undertake its own reliability studies.  However, it is not clear to Staff how these studies would be different from the reliability studies currently undertaken by the CPUC in the IRP and RA proceedings.  It will be critical that the CAISO work to align its future reliability modeling with inputs and assumptions being used by the CPUC in setting RA obligations and the ones used in the SB 846 Joint Reliability Report (authored by the CEC and CPUC) to avoid confusion regarding reliability and procurement.  The CPUC has committed to running a regular LOLE studies in its annual RA proceeding to look at the need for adjustments to the PRM.[1] In addition, to translate the results of an LOLE study to the CPUC’s new Slice of Day (SOD) Framework, the Commission adopted a SOD calibration process that will utilize SOD accounting rules to calculate the PRM level to be used in setting RA requirements. It is important that CAISO studies are aligned with these regular RA LOLE studies and the PRM calibration process to ensure there is no confusion regarding reliability and procurement needs.  The inputs and assumptions used in these studies (particularly import and new resources) drive the results of these studies and that is why alignment of input assumptions is so critical.

ED Staff agrees that CAISO should have more visibility into non-RA (i.e., resources that are not shown on a supply plan) as it is critical to maintaining the grid on high load days. Staff would like CAISO to also be able to identify what non-RA resources have been contracted for reliability, but not shown on a supply plan, and to identify those resources in its reliability analysis and market processes as committed to California load.  California ratepayers are paying extremely high prices to ensure reliability and it is imperative to ensure that there is no double procurement or that penalties are not imposed on California customers because of lack of visibility regarding these non-RA, but contracted resources.

Problem Statement 2: Requirements for RA Capacity and Program Tools

CAISO identifies the need to assess the current RA capacity requirements and program tools which may need to be updated in light of the evolving market.  CAISO identifies the following tools/rules that this may include bid insertion, outage rules, and resource performance and availability rules.  Within this problem statement, CAISO also identifies some sub-issues, including: the need to evaluate the RA Availability Incentive Mechanism (RAAIM), the need to develop a performance incentive mechanism, whether the flexible RA requirements are still needed, the need to look at energy sufficiency, and the need to examine interoperability with WRAP. 

The ED Staff is supportive of the broad problem statement and most of the sub-issues identified.  Staff agrees that many of the market mechanisms identified by CAISO need to be reevaluated to account for the evolving grid. ED Staff is particularly supportive of CAISO assessing the following rules and mechanisms:

1) The Need for Flexible RA Requirements: 

In the RA Reform Track of R.21-11-002, parties had requested the elimination of the flexible requirements as they may no longer be needed. In D.23-04-010 The Commission recognized that while eliminating the Flex RA requirements has merit, it must be coordinated with CAISO’s tariff and process.  ED Staff is supportive of CAISO evaluating the Flex RA requirements and requests that particular attention be given to relationship between the Flex MOO and exposure to RAAIM penalties for the 17 hours and 7 day per week period.  Absent this requirement, how would RAAIM penalties be assessed on weekends, if at all, and how would this change bid insertion practices?

 2) The Need to Reassess RAAIM and a Performance Incentive Mechanism: 

In D.22-06-050, the Commission stated that: “As discussed in D.21-07-014, the Commission continues to see merit in the UCAP framework and observes that embedding forced outage rates into a resource’s RA value would better reflect the resource’s contribution to reliability across the 24-hour framework.” In the most recent round of RA reform working groups a UCAP-light mechanism was considered and ultimately not adopted by the Commission, noting that:

“[w]e concur with parties that at this stage, it is appropriate to forego development of a UCAP-light mechanism and explore a comprehensive application of UCAP to account for other types of forced outages, not just ambient derates. We recognize the concerns and limitations with CAISO’s current outage data that have hindered development of an implementable proposal. We encourage CAISO to work through these data limitations to further develop a full UCAP mechanism for consideration in this proceeding.”

On October 12^th the Commission voted out the new RA OIR proceeding which identified a preliminary scope of issues including UCAP and performance incentives.

“Unforced Capacity Methodology (UCAP). In D.23-04-010, the Commission expressed interest in exploring comprehensive application of a UCAP for resource counting that would account for ambient derates and forced outages. In addition to consideration of UCAP, parties should consider modifications to the RA product that would penalize LSEs if their contracted RA capacity underperforms or is not available for CAISO dispatch due to forced outage.”[2]

ED Staff believes that both availability and performance incentives are critical components of a future reliability framework and are committed to working with parties in both the CAISO stakeholder process and in the CPUC process to evaluate and develop durable mechanisms that will ensure RA resources are available and performing as needed in the markets.  Outages are currently accounted for in the PRM and the only availability incentive in place is an outdated RAAIM mechanism that does not function as intended.  Staff support development of an effective availability and performance mechanism in this working group process and support exploring a comprehensive application of a UCAP mechanism at a resource level. 

3) Coordination with the CPUCs Slice of Day (SOD) Framework:

ED Staff is supportive of CAISO enhancing its process to ensure alignment with CPUC’s newly adopted SOD requirements. As part of the last round of RA Reform working groups, the CPUC dedicated working group 3 entirely to coordination with the CAISO.  These efforts resulted in the D.23-06-029 determining that:

The Commission will provide the California Independent System Operator (CAISO) with: (1) maximum showing values from load-serving entities (LSE), (2) peak showing values from LSEs, and (3) the greater of the peak hour value and a very small non-zero value (e.g., 0.01 MW) if the minimum value is zero, for each resource type whose counting methodology is modified under the slice-of-day framework to develop CAISO’s net qualifying capacity list and to ensure CAISO’s visibility into the Commission’s contracted fleet.[3]

Further, the Commission encouraged parties to participate in CAISO’s stakeholder process to explore other compliance options.  

4.) Assessing Energy Sufficiency:

Under the new SOD framework, the CPUC will assess energy sufficiency as part of the RA compliance program. ED Staff is supportive of CAISO also doing a similar assessment on its side to ensure that any backstop needs align with the up-front requirements. 

The one sub-topic Staff recommends excluding at this time is the interoperability of WRAP. This issue is characterized by CAISO as, “Interoperability with WRAP: The CAISO has not undertaken a comprehensive analysis of translatability and transactability between the WRAP and CAISO’s RA program, to evaluate potential friction in trading.”

As this program will not be fully binding for all participants until Summer 2028[4] , addressing interoperability of WRAP and the CAISO’s RA program seems premature. ED Staff recommends that CAISO focus its efforts on CAISO reliability efforts and programs and processes, and consider interoperability issues at a later date, given that WRAP program is still in its infancy. 

More pressingly, ED Staff recommends CAISO focus on needed rule changes to the RA program mechanisms in light of the Extended Day Ahead Market changes.  This may include bid insertion rules for RA resources, RUC bidding requirements, availability incentives for RA resources, planned outage management, and other RA mechanisms that interact with CAISO markets. Staff also notes that some of these topics may also be appropriate to include in the CAISO’s Extended Day-Ahead Market ISO Balancing Authority Area participation rules initiative. 

Problem Statement 3: LRA Resource Adequacy Responsibility & Cost Allocation

CAISO identifies the concern of inequitable cost allocation across market participants and the need to have a transparent and common framework for evaluating the planning reserve margin and counting rules.  While this problem is more closely tied to cost causation and potential leaning, ED Staff believes there is some overlap with Problem Statement 1, particularly in relation to assessing reliability, default planning reserve margins, and resource counting conventions.

To understand the problem the CAISO is trying to address, it would be helpful if CAISO explained whether it intends only to update its default rules or if it is seeking to create a set of standard rules that will be used in assessing backstop procurement. Staff is concerned that if it is the latter, there may be a disconnect between front stop decision (i.e., RA requirements) and backstop decisions. ED Staff is not supportive of the latter at this time, as it would create two different RA programs and paradigms. This would result in duplicative (but potentially not overlapping) requirements, which could result in double payments, penalties, and unnecessary and/or expensive backstop procurement.

[1] In D.23-06-0 at 25, the Commission authorizes Energy Division to update and publish the LOLE study annually by February of each year with a baseline resource list published by November of the prior year.

[2] At 4-5

[3] D.23-04-010 at OP 20

[4] WPP (westernpowerpool.org)- Participants can choose the season they wish to start the binding program, as early as Summer 2025 and going through Summer 2028 

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

CAISO staff identifies the following RA principles:  Reliable, Efficient/Cost-Effective, Implementable, Durable, Adaptable, Transparency

ED Staff is supportive of the draft principals at this time and notes that they appear to largely align with the principals used to evaluate the RA reform proposals in R.21-10-002 which included the following:

• Balance a Reliable Electrical Grid with Minimizing Costs to Customers
• Balance Addressing Hourly Energy Sufficiency with Advancing Environmental Goals
• Balance Granularity in Meeting Hourly Needs with Simplicity and Transactability
• Implementable in the Near-Term (2024)
• To be durable and adaptable to a changing electric grid
• Consider compatibility with existing Commission planning goals and programs, such as the Integrated Resource Plan and Renewables Portfolio Standard proceedings.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

No suggestions at this time.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

ED Staff is open to presenting on SOD and its implementation if needed and potentially on UCAP and performance incentives.

6. Please provide any additional comments.

ED Staff requests that CAISO also assess PRR 1280 in relation to its assessment of cost allocation. Pursuant to PRR 1280, CAISO does not count demand response (DR) when assessing an LSE for backstop procurement costs. This particular issue was highlighted during the August CPM events in 2023, which resulted in some LSEs incurring CPM costs when they were determined by the CPUC to be compliant in meeting their RA requirements. Therefore, Staff requests that CAISO look at this issue promptly to determine what changes can be made to align the front stop process with the back stop process. Further, ED Staff notes that CAISO has a line of sight into the CPUC's DR resources that are not bidding into the CAISO market, given that the IOUs provide frequent updates on availability and bid the programs into the market.

Thank you for your consideration. 

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the state-appointed independent ratepayer advocate at the California Public Utilities Commission (CPUC).  Our goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.  Our advocacy efforts to protect ratepayers include energy, water, and communications regulation. 

Cal Advocates recommends that the Working Group process utilize a cadence that facilitates at least two weeks for the submission of comments following each meeting, with no less than three weeks between each meeting.  This process will provide stakeholders with sufficient time to create meaningful comments that may involve several individuals and organizational work processes, and allow stakeholders at least one week to review other comments.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

The CAISO Should Clarify its Interpretation of its Jurisdiction Regarding Reliability

The problem statements consider issues typically addressed by Local Regulatory Authorities (LRA) such as evaluating the Resource Adequacy (RA) portfolio, determining a Planning Reserve Margin (PRM), parameters for resources to qualify as RA, and resource procurement.[1]  The CAISO already operationalizes some of these responsibilities[2] and the CAISO also performs evaluations of state energy reliability.[3]

However, the problem statements and sub-issues in the Discussion Paper may lead to proposals that would interfere with LRA’s RA programs and procurement decisions.  The California Public Utilities Code clarifies that the CPUC shall establish RA requirements for load-serving entities subject to CPUC oversight, with the CAISO able to act as a consultant but not as a decision maker.[4]  The Federal Energy Regulatory Commission (FERC) has also clarified that it is improper for the CAISO to set RA requirements, given federal deference to LRAs to design an RA program, though FERC recognized that the CAISO may implement default RA criteria if an LRA fails to do so.[5]

The current working group process would benefit from the CAISO’s explanation regarding how it interprets its own jurisdiction regarding reliability.  Transparency regarding the CAISO’s interpretation of its jurisdiction aligns with the “Implementable” principle.  Proposals in the initiative could then be informed by the knowledge of solutions that the CAISO currently has the authority to implement and an understanding of areas in which new authority or inter-agency coordination would be needed.  The CAISO’s explanation of its jurisdictional authority should include citations to documents that establish its functions and responsibilities, as well as more nuanced but relevant documents like the December, 2022 Memorandum of Understanding Regarding Transmission and Resource Planning.[6]

The CAISO Should Provide Additional Details on Existing Performance and Availability Incentives

The CAISO should include a problem statement directly related to evaluating, updating, and potentially improving the Resource Adequacy Availability Incentive Mechanism (RAAIM).  The working group process would benefit from a review of the RAAIM, its purpose and goals, methodology, and performance since inception.  Data on the volume of non-availability charges assessed and availability incentives paid out via the RAAIM on a monthly basis, along with summary statistics about the number and type of generators that were assessed non-availability charges over the same period would be useful for understanding the RAAIM’s effectiveness as an incentive. 

A problem statement related to RAAIM should include the following questions:

• Is the current RAAIM charge adequately high to incent availability?[7]
• Are the limited availability assessment hours for RAAIM sufficient to ensure RA availability if the CAISO moves to evaluate RA in all hours?  What are the potential efficiencies and tradeoffs involved for the CAISO in expanding RAAIM to all hours?
• Should RAAIM be assessed on the basis of resource performance rather than bidding behavior?  What consequences exist today for resource underperformance?
• How/should RAAIM and performance incentives and penalties be applied to out-of-market resources such as the Strategic Electric Reliability Resources?

Cal Advocates looks forward to evaluating the RAAIM and exploring potential solutions to enhance its effectiveness through the stakeholder process.

[1] CAISO, Resource Adequacy Working Group Discussion Paper, September 25, 2023 (Discussion Paper) at 5-6.

[2] For example, the CAISO has established a default minimum PRM and coordinates with LRAs on resource accreditation.  See CAISO Tariff 40.2.

[3] This includes reports describing grid performance for typical or exceptional conditions as well as forward-looking reliability analyses.  For more information, see: CAISO, 2023 Summer Loads and Resources Assessment, May 15, 2023.  Available at: http://www.caiso.com/Documents/2023-Summer-Loads-and-Resources-Assessment.pdf.

[4] California Public Utilities Code Section 380(a).

[5] In particular, the FERC denied a CAISO request to set a 15% PRM for LRAs unless an LRA did not implement a PRM itself.  The FERC considered California Public Utilities Code Section 380 and the Market Redesign and Technology Upgrade’s (MRTU) “deference to the RA programs of Local Regulatory Authorities.”  In the same document however, FERC acknowledged that the MRTU Tariff’s RA requirements like must-offer obligations help the CAISO to operate its grid consistent with AB 1890 and federal obligations.  116 FERC ¶ 61,274, Order Conditionally Accepting the California Independent System Operator’s Electric Tariff Filing to Reflect Market Redesign and Technology Upgrade, September 21, 2006 (FERC MRTU Order) at paragraphs 1153 and 1115.  Available at: http://www.caiso.com/Documents/September21_2006OrderConditionallyAccepting2_9_06MRTUfilinginDocketNos_ER06-615-000andER02-1656-027_etal_.pdf.

[6] Available at: http://www.caiso.com/Documents/ISO-CEC-and-CPUC-Memorandum-of-Understanding-Dec-2022.pdf.

[7] The RAAIM price is currently set at 60 percent of the CPM Soft-Cap Price.  CAISO Tariff at 40.9.6.1 (b).

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

Cal Advocates supports the six proposed principles.  Ratepayer concerns regarding costs and reliability of service are accounted for in the Efficient/Cost-Effective and Reliable principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

Cal Advocates has no additional comments on the draft goals at this time.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

Cal Advocates does not volunteer to present on a topic at this time.

6. Please provide any additional comments.

Cal Advocates does not have any further comments at this time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

LSA encourages CAISO to prioritize efforts to align its RA processes with the CPUC’s slice-of-day (SOD) framework and related proceedings/processes.  To ensure a smooth transition to this new regime, the market needs assurance that both the CPUC and CAISO have a solid understanding of how each party’s existing processes must change.  For example, which Net Qualifying Capacity (NQC) will the CPUC provide to CAISO now that it has 24 values to choose from?  Ideally questions like these would have been answered before Load Serving Entities (LSEs) began to prepare their SOD test year supply plans due at the end of this month.  At this point, however, CAISO should at least prioritize SOD alignment within this initiative.  LSA appreciates and supports CAISO’s efforts to review the entire scope of its RA program, including impacts to all Local Regulatory Authorities (LRAs).  However, because of the significant market impact and pending deadline for compliance, CAISO should create a separate, prioritized phase or tack of this initiative to quickly focus on SOD alignment. 

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

Problem statement 1 addresses CAISO’s need to overhaul its methods of forecasting the need for RA resources across its entire system.  LSA supports this effort and encourages CAISO to prioritize alignment with similar ongoing efforts at the CPUC to improve reliability analysis.  For example, the CPUC’s October 5^th, 2023, Ruling Seeking Comment on Proposed 2023 Preferred System Plan and Transmission Planning Process Portfolios includes a proposed reliability framework for the Integrated Resource Planning process.  The framework considers issues that overlap with CAISO’s efforts, like reliability standards and counting rules.  CAISO should coordinate with the CPUC on its efforts to improve reliability planning to develop a cohesive framework across agencies.

Problem statement number 2 currently includes the SOD alignment topics.  As mentioned above, LSE encourages CAISO to separate SOD alignment into a prioritized phase/track.  In addition, CAISO should expand the sub-issues for this SOD alignment track to include impacts to CAISO’s deliverability methodology.  For example:

1. How will development of hourly resource values impact dispatch assumptions?
2. Should CAISO consider hours outside of the High System Need period?
3. Should CAISO develop a deliverability framework that assesses a resource’s ability to deliver within certain zones rather than across the entire system?

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

LSA has no comment at this time.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

LSA has no comment at this time.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

LSA has no comment at this time.

6. Please provide any additional comments.

LSA has no comment at this time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

First, MRP appreciates the CAISO engaging an outside facilitator to help guide the working group discussions. 

Second, MRP recommends the working group process determine, and the CAISO then gather, the data needed to support the CAISO’s initial proposal(s) in this initiative.  Each working group meeting should identify the data or analysis necessary to build a solid framework proposal.  The working group should set deadlines for gathering such data and preparing and reviewing the associated analysis prior to the end of the working group process such that all stakeholders and the CAISO have a common understanding of the problems and potential solutions.  The working group process should result in a work product that sets forth all principles, goals, problem statements, supporting data and potential solutions.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

The first draft problem statement is:

1. There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in:

• Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and
• Addressing such concerns in a timely and efficient manner.

MRP comments:

MRP supports the need for additional information on the sufficiency of the RA fleet in the CAISO BAA.  Currently, no information is available to stakeholders with regards to whether all LSEs have, on a monthly basis, procured capacity to meet or surpass the aggregate RA requirements.  Of course, the underlying assumption is that the RA requirements for the CAISO BAA meets the 1-in-10-year Loss of Load Expectation (LOLE) reliability metric.  Yet there is no information available to validate whether that assumption is true.

Again, in addition to having insufficient information to determine if the RA requirements meet the 0.1. LOLE metric, there is not enough information to know if LSEs within the CAISO footprint have, in the aggregate, secured enough capacity to meet those requirements.  To that end, MRP recommends the CAISO provide the following information.  First, MRP requests the CAISO provide information regarding the RA planning reserve margin (“PRM”) for each LRA within the CAISO footprint.  Second, MRP requests the CAISO provide information regarding whether sufficient RA capacity was procured and shown in aggregate to meet those monthly requirements.  Finally, MRP requests the CAISO to analyze whether those monthly RA requirements, and the shown fleet shown to meet those requirements, was able to meet the 1-in-10-year LOLE reliability metric.

One of the sub-issues for this problem statement identified in the discussion paper is “The CAISO has limited visibility into resources not shown as RA.”  For the working group process, MRP believes the CAISO should first focus on whether the RA requirements within the CAISO footprint and the capacity shown to meet those requirements meets the 0.1 LOLE metric before attempting to address the visibility of non-RA capacity.

  Finally, the CAISO properly observes that its default PRM is another sub-issue under this problem statement.[1]  MRP adds that PRM is a function of the RA counting methodology established by the CAISO, CPUC and other Local Regulatory Authorities (“LRAs”)..  MRP recommends that the CAISO consider how the counting methodology interacts with the default PRM to ensure reliability in the overall program design.

The second draft problem statement is:

2. The CAISO’s current requirements and tools (e.g., outage, must-offer, bid-insertion, and resource performance and availability rules) have not been updated recently in light of evolving market and regulatory structures, and could result in

• RA supply not available when and where needed
• Inefficient procurement and investment (e.g. maintenance and capital upgrade) decisions; and
• Implementation challenges for the CAISO and market participants

MRP comments:

MRP notes that there is a nexus between this problem statement and the previous problem statement, namely, the CAISO’s inability to evaluate whether the RA fleet shown to it meets the 0.1 LOLE metric.  Additionally, it’s not clear that the current monthly program design is even able to achieve the annual 0.1 LOLE metric.  The issues caused by the confluence of the monthly program design’s ability to meet an annual metric aside, an uncorrected deficiency in a monthly showing jeopardizes the ability of the shown fleet to meet the 0.1 LOLE metric. 

MRP also agrees that the lack of an energy sufficiency evaluation is problematic given the rapid buildout of limited duration energy storage over the past few years and the potential inability for the CPUC’s new slice of day (“SoD”) RA program to ensure sufficient charging energy.

With regards to concerns about the insufficiency of the Resource Adequacy Availability Incentive Mechanism (“RAAIM”), MRP understands that the CAISO expressed concern that, due to the current prices in the bilateral market compared to the level of the non-availability penalties, resources are increasingly more willing to simply accept the RAAIM penalty rather than providing availability. First, MRP would like the CAISO to clarify if this understanding is correct.  Second, MRP requests the CAISO provide information to support this assumption.  For example, the CAISO should provide data on the amount of RA and nameplate capacity associated with resources that are RAAIM-exempt versus non-exempt by technology type.  The CAISO should also provide analysis on the types of outages that occur during net peak and peak load hours to show the difference between the shown RA amount and the actual RA that’s available from RAAIM-exempt and non-exempt resources.  This data will highlight if there is a difference between how RAAIM exempt and non-RAAIM exempt resources react to prices in the bilateral market and how each type of resource supports reliability during critical hours of the day.  MRP believes the underlying cause of the concern is that the RA program is not reliably procuring sufficient capacity to meet the load during net load peak and peak load hours because of (1) the counting methodologies of various resources and (2) because the PRM is below the value that is required.  

MRP also agrees that the current rules requiring replacement capacity for all planned outages must be revisited, as the current tight market for replacement capacity often leaves generating unit owners in a dilemma with no good solution: cancelling a long-scheduled planned outage and risking a forced outage during a time when the resource is needed, or converting a planned outage to a forced outage, with the attendant additional scrutiny that comes with such a move to preserve the planned outage needed to maintain unit performance.  MRP is also aware that certain capacity contracts, which mandate that the associated capacity be shown on an RA plan, restrict the ability for the buyer of that capacity to use the capacity as substitute capacity.  This additionally limits the amount of capacity in the bilateral market when RA capacity is on outage for a portion of the month.  This creates additional burdens on the current tight market during non-summer months with lower RA requirements but capacity must be shown on a supply plan, even if it’s above the RA requirement, and generators are attempting to contract for substitute capacity for planned outages.

The third proposed draft problem statement is:

3. Market participants are concerned about inequitable costs and cost allocation. Stakeholders have expressed a need for a transparent and common framework for evaluating reserve margins and counting rules and understanding an LRA RA program’s contribution to overall system reliability.

MRP comments:

This problem statement should be broken down into two statements – one dealing with cost allocation and a second dealing with the need for a consistent framework for evaluating counting rules, reserve margins and how individual LRA programs contribute towards either meeting or not meeting the overall program’s ability to achieve the reliability target.  As stated previously, MRP recommends the CAISO help provide information with regards to the RA programs of other non-CPUC LRAs to educate stakeholders.

[1] Discussion Paper at page 5.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

The CAISO’s proposed principles – and MRP’s reactions to those principles – are:

• Reliable.   It is the CAISO’s responsibility to plan and operate the grid in an efficient and reliable manner.  Therefore, it is the CAISO’s responsibility to ensure that the RA program secures the capacity needed through the aggregation of various LRA RA programs to achieve a 1-in-10-year LOLE reliability metric.  If the aggregation of the LRA programs does not yield a reliable fleet of RA resources, then it is the CAISO’s role to backstop additional capacity.  To know whether the sum of the various RA program parts is reliable, the CAISO must dersign a program with minimum/default criteria that  all RA programs within its footprint must meet or exceed.
• Efficient/Cost-Effective:  While MRP supports this principle, MRP requests additional discussion to better define this term.    Specifically, how is compliance with this principle measured? 
• Implementable.  While MRP agrees with this principle, the CAISO should inform stakeholders as to which CAISO systems may affect this principle and whether it is willing to make changes to such systems.  This will help the dialog during the workshop process.    
• Durable.  MRP supports and values consistent, predictable program rules that support and encourage forward procurement, consistent with the goals of cost-effectively securing capacity in advance. 
• Adaptable.  MRP agrees with this principle and believes adaptability goes hand in hand with durability.  For a durable RA program to function properly into the future, inputs and assumptions must be updated regularly to ensure that sufficient capacity continues to be procured.  Without such regular updates, the program will not be reliable regardless of how “durable” it is.
• Transparent.  MRP strongly agrees with this principle, especially as it relates to: (1) setting RA program requirements; (2) backstopping procurement deficiencies; and (3) forward price discovery.

Based on discussion during the October 3 meeting, MRP requests the CAISO add this principle: Transactable.  Transactability was originally based on the standard capacity product that the CAISO developed in 2010.  A standard product which market participants can transact in the bilateral market will foster efficiency and cost-effectiveness when compared to a non-standard product. 

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

The CAISO’s proposed goals (and MRP’s comments on those goals) are:

1. The CAISO’s established modeling, and visibility enable a reliable overall system.   

While MRP agrees that proper modeling and visibility contribute to a reliable overall system, reliability is maintained only when an RA fleet sufficient to meet 1-in-10-year LOLE is procured.  To that end, MRP urges the CAISO to (1) design an RA program in which all LSEs procure sufficient capacity to meet the 1-in-10-year LOLE standard and (2) utilize its backstop authority to cure any and all deficiencies. 

2. Procurement and trading is efficient, cost-effective, fungible, and affordable.   

First, MRP respectfully urges the CAISO to identify what metric it will use to measure “affordability” – total procurement cost, the impact on retail rates, what?  Second, when the CAISO refers to “cost-effective” trading, is the CAISO referring to transaction costs or the cost of the products traded? 

3. The RA program is implementable, adaptable, and compatible with different programs.  As noted above, MRP recommends the CAISO provide information regarding which existing CAISO systems may need to be altered or which new systems would need to be created.  Knowing which systems are available for modifications will influence the overall design of the RA program as it would change the scope of the project.  The workshop process should not waste time considering certain changes if the CAISO’s systems cannot be changed accordingly.  MRP is concerned that “implementable” could be taken to mean “does not require significant changes to CAISO systems”, which MRP would find problematic. 
   
   MRP also requests additional description as to what “compatible with different programs” means.  Assuming that RA capacity can count towards meeting requirements only within a single jurisdiction at a time, MRP does not see a problem with, for example, a certain amount of capacity being assigned one RA value in one jurisdiction and a different amount of RA value in another jurisdiction, as long as only one jurisdiction counts that capacity towards meeting its RA requirements at any given time. 

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

While MRP will consider presenting on RAMPD topics in future working group meetings to help with the dialog and to surface issues, MRP has no specific area on which it wishes to present at this time.    

6. Please provide any additional comments.

MRP has no other comments. 

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

New Leaf Energy, Inc. ("NLE") does not have any comments on this item.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

NLE does not have any comments on this item.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

NLE does not have any comments on this item.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

NLE does not have any comments on this item.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

NLE does not have any comments on this item.

6. Please provide any additional comments.

NLE thanks the CAISO for the informative meeting with stakeholders on October 5, 2023, and for confirming that exploration of a separate Local Resource Adequacy deliverability designation is properly scoped within this initiative. Stakeholders have previously raised this issue in the CAISO's generation deliverability methodology review initiative. NLE understands that the detailed policy development work of this initiative will not begin immediately but looks forward to participating in those discussions at the appropriate time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

No comment at this time.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

Problem Statement 1: Overall System Reliability Information

Sub-issue (a) – RA Portfolio Evaluation: NCPA does not support a multi-year Resource Adequacy program requirement at this time.  NCPA believes that the current Year-Ahead and Month-Ahead Resource Adequacy program requirements are appropriate, and that CAISO’s current role of evaluating Year-Ahead and Month-Ahead Resource Adequacy demonstrations (including providing such assessment results to the applicable Local Regulatory Authority (LRA)) is appropriate.  Notwithstanding this position, NCPA does seek to contract for RA resources for multiple years whenever possible, but unfortunately one of the barriers to doing so is the ever-changing nature of the RA program design. It is difficult to contract for long term supply due to frequent rule changes, requiring costly mid-term re-negotiations of contracted supply. NCPA is happy to work with CAISO to consider how the RA program should evolve in the future, but changes should be phased in appropriately to allow for the need to change contracts.

Sub-issue (b) – Non-RA Visibility: CAISO has often noted that LSEs do not show CAISO all the generating assets they have in their RA showing and LSEs have similarly noted that because of the structure of the outage program, they need to hold back RA qualified generation in case they need to use it as substitution for other RA generation that goes on outage. The program actually disincentivizes LSEs from showing excess RA lest it become subject to outage substitution rules. As for non-RA generation, there is simply no requirement that it be shown to CAISO at this time. NCPA agrees that there may be some merit in CAISO having more information about the generation fleet within the CAISO BAA. NCPA is willing to consider changes that would provide CAISO with additional information about existing generation, provided that CAISO recognizes that generation is not shown for a number of reasons—NCPA is SC for some generation supply that does not belong to LSEs within the BAA and may not be subject to CAISO requirements.  Also, CAISO, acting as the Balancing Authority Area (BAA) operator, should have visibility to what generation is physically interconnected in its BAA and the associated availability (via OMS); as such, NCPA is somewhat unclear regarding CAISO’s claim that they have limited visibility into resources not shown as RA; NCPA requests CAISO to clarify how it is unable to determine what units are physically interconnected and available as a function of its role as BAA operator.

Sub-issue (c) – Updating the CAISO’s Default Planning Reserve Margin: NCPA has always appreciated CAISO’s history of partnering with its state and local LRAs and respecting their jurisdictional rights. Historically, NCPA’s members established their Planning Reserve Margins (PRM) in accordance with the CAISO’s default minimum PRM, thought they are not required to do so. (see, e.g., Cal. Indep. System Operator Corp., 119 FERC ¶ 61,076, P 555). NCPA also has a lengthy history of providing sufficient RA capacity to serve its loads.  NCPA operates in the CAISO as a Load-Following Metered Subsystem (LF-MSS).  As such, it already has strong performance incentives built into its contract with CAISO that are very well aligned with CAISO operational goals. An LFMSS is required to balance its portfolio of load and supply within a tight compliance deviation band during every 5-minute dispatch interval, or be subject to significant financial penalties. These penalties provide a strong incentive for a LF-MSS to ensure it has adequate capacity available at all times to meet its real-time load serving obligations, and to take appropriate measures to ensure that capacity performs in real-time. NCPA strongly believes that the operating characteristics and incentives of the LF-MSS model already align well with the goals that CAISO has identified for this initiative.

Although NCPA is comfortable that its current PRM and LFMSS requirements position it well to meet current needs and requirements, NCPA has been actively engaged with the California Energy Commission in its ongoing proceeding to examine the Planning Reserve Margins of non-CPUC jurisdictional LRAs. NCPA had anticipated that it would receive further direction on its members’ PRMs from the CEC. NCPA’s view is that the changing grid may require program changes, but that the PRM need not be one size fits all.

Problem Statement 2: Requirements for RA Capacity and Program Tools

Sub-issue (a) – Requirements for RA Capacity: NCPA does not object to CAISO taking a closer look at RA program components or how they function in the current market. However, NCPA does oppose the concept of expanding the focus of RA programs to encompass energy sufficiency.  RA programs were designed to ensure there is sufficient capacity in the system to respond to peak demand conditions; on the other hand, ensuring energy sufficiency is the focus of the Integrated Resource Planning process conducted by LRAs and LSEs.  This distinction should be retained.  Historically, LSEs have always been able to displace more expensive RA capacity with cheaper energy when available, a critical source of affordability for ratepayers. In addition, the RA rules have accommodated RA status for a wide variety of use-limited resources, including hydroelectric plants in particular, that provide critical reliability benefits to the grid even though they cannot realistically produce power at all times. Any program that looks at energy requirements for RA resources must be structured to ensure that the reliability benefits of use-limited resources are not lost.

NCPA could support retirement of the Flex RA product due to NCPA’s understanding that it will be effectively obsolete upon implementation of Imbalance Reserve Products.

Sub-issue (b) – Incentivizing Availability: CAISO incentivizes availability with the current RAAIM program. NCPA supports the current RAAIM program and the requirement for the RAAIM price to be set at 60% of the cost of new entry based Capacity Procurement Mechanism Soft Offer Price.  NCPA believes the Capacity Procurement Mechanism Soft Offer Price provides an appropriate incentive because it reflects the cost of new entry for the current resource technology that is predominate in the CAISO and RA market today. 

Sub-issue (c) – Incentivizing Performance: CAISO states that it lacks a mechanism to incentivize RA performance. CAISO already has multiple mechanisms and other tools in place to monitor RA performance; NCPA requests CAISO to expand on its stated concern, and provide specific examples of what types of performance is the focus of this sub-issue.

Sub-issue (d) - Outages: CAISO is concerned that substitution rules are obsolete and could be a disincentive to generally accepted good utility practices regarding generator maintenance. NCPA agrees that now is a good time review substitution rules and maintenance practices. CAISO has developed more reasonable outage scheduling practices by making available “opportunity” outages that CAISO has the discretion to approve or deny based on system conditions; NCPA supports these types of reasonable tools.  NCPA believes it would be appropriate to consider changes to the current outage and substitution process that better account for the dynamic nature of large, complex generating facility operations.

Sub-issue (e) – CPUC’s Slice-of-Day: CAISO states that the implementation of the CPUC’s Slice-of-day program will require a continued comprehensive review by the CAISO with stakeholder engagement to ensure continued operational, commercial, and regulatory objectives are met. NCPA would rephrase the final clause as “to ensure continued operational, commercial, and regulatory objectives of CAISO and LRAs (CPUC and others) are met.”  NCPA opposes requiring all LRAs to adopt a Slice-of-Day program structure in the CAISO Tariff; rather, NCPA continues to support each LRA’s authority to adopt RA program rules and requirements that enable their jurisdictional LSEs to accomplish their goal of supplying reliable electric service to their customers at a reasonable cost.  

Sub-issue (f) – Interoperability with WRAP: CAISO states that it has not undertaken a comprehensive analysis of translatability and transactability between the WRAP and CAISO’s RA program, to evaluate potential friction in trading. NCPA supports this type of analysis. There may be benefits in coordinating the RA programs of LRAs in the CAISO more closely with the requirements of WRAP.

Problem Statement 3: LRA Resource Adequacy Responsibility and Cost Causation

Sub-issue (a) – Definitions and Requirements: CAISO states that it lacks various elements to ensure that various LRAs bring a portfolio of resources that are accessible at the right place, available at the right time, and provide the right attributes.  NCPA believes these requirements are already set through local area capacity technical studies, flexible capacity requirements, must offer and other bidding obligations, and availability assessment hours so this problem statement is inapplicable and existing tools should be reviewed individually or holistically and modified or calibrated as necessary.

Regarding individual LRA counting rules, NCPA reiterates that CAISO must respect the jurisdictional rights of LSEs. Additionally, it is critical that CAISO properly value hydroelectric and other use-limited resources. For example, CAISO relied on dispatchable hydroelectric resources heavily during its recent tight supply conditions, and rightly so. Properly managed hydroelectric resources with storage capability plan to have water available for the most valuable periods of the year, when supply conditions are tightest. For example, regarding NCPA’s hydroelectric projects, NCPA manages water storage and releases during the course of each hydroelectric cycle to ensure there is sufficient water available at all times to enable full generation whenever grid conditions are tight, even in drought years.  LRAs must retain the ability to establish individual counting rules that reflect the unique operating characteristics of its assets.  For example, hydroelectric resources that have material elevation drop between its storage and the generator have the ability to operate at full output even during drought conditions. 

CAISO and CPUC appear to be moving toward a one-size-fits-all approach reflecting political compromise and convenience more than a realistic assessment of individual unit performance.  Non-CPUC jurisdictional entities have the ability to closely study and evaluate the resources in their jurisdictions and can adopt counting rules that allow for tailored and realistic results.  For this reason, any default counting rules have been secondary to rules established by LRAs, and NCPA requests that it remains so in the new paradigm.

Sub-issue (b) – EDAM RSE Cost Causation: EDAM and WEIM were initially conceived as economic displacement programs. Too much emphasis has been placed on the supposed reliability benefits of a program consisting of participants with vastly different planning requirements and policy objectives. RSE failures should result in EDAM disqualification and cures should be transacted and settled out of market in order to mitigate from anomalous penalties and prices entering market LMPs.   

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

The paper offers the following principles.

• Reliable
• Efficient/Cost-effective
• Implementable
• Durable
• Adaptable
• Transparent

NCPA proposes the following principles:

• Acknowledge the diversity and legal rights of all LRAs
• Affordability

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

• CAISO’s established modeling and visibility enable a reliable overall system.

• • The RA portfolio meets at least a 0.1 loss of load expectation (1 in 10 year) planning target - NCPA supports this objective and believes current PRMs are sufficient.  CAISO endured 1 in 20+ heat events[1] with minimal loss of load; loss of load that was arguably due to software or other types of communication issues.

• • Both planning assumptions and outputs are re-visited regularly – NCPA’s understanding is that this is accomplished via monthly filings and ongoing tracking of fleet performance.

• • The CAISO has visibility into both RA and non-RA resources for operational purposes, and the CAISO does not have to rely on out of market actions to maintain a reliable fleet – as stated above, NCPA believes that CAISO, acting as the BAA operator, has visibility into the availability and operational status of all CAISO interconnected resources (whether or not they are shown for RA).

• Procurement and trading is efficient, cost-effective, fungible, and affordable.

• • Incentives are in place for RA capacity to perform – as stated above, NCPA believes the current rules that are reflected in the CAISO Tariff provide proper incentives to the market.  NCPA further notes that LF-MSSs already have strong performance incentives that are very well aligned with CAISO operational goals. LFMSSs are required to balance their portfolio of load and supply within a tight compliance deviation band during every 5-minute dispatch interval, or be subject to significant financial penalties. These operating requirements and penalties provide a strong incentive for a LF-MSS to ensure it has adequate capacity available at all times to meet its real-time load serving obligations, and to take appropriate measures to ensure that capacity performs in real-time. NCPA strongly believes that the operating characteristics and incentives of the LF-MSS model already align well with the goals that CAISO has identified for this initiative, and as such, CAISO must recognize the unique operating characteristics of a LF-MSS as it considers changes to the existing RA rules and requirements.

• • The procurement of RA can meet reliability needs and environmental goals at least cost – NCPA believes this concept should be the objective of LRA adopted Integrated Resource Planning process for their jurisdictional LSEs, and should not be the objective or focus of the RA program enforced by the CAISO.

• • Cost allocation rules incent contracting and performance – NCPA has no comment at this time.

• • LSEs and LRAs are able to capture benefits of portfolio diversity within the region – NCPA’s believes that further review and evaluation may be required to consider how CAISO LRA adopted RA programs may work in coordination with the WRAP.

• • The CAISO’s RA Program: minimizes the need to procure expensive resources due to timing or informational limitations, allows for efficient trade of capacity products between California and the WRAP, balances standards and requirements for resource eligibility with costs and benefits, and is aligned with the CPUC’s IRP, modeling and assessments and should produce consistent results – NCPA wishes to point out that this goal must include the need to align with non-CPUC jurisdictional resource planning modeling, and assessments as well. Otherwise, NCPA supports this goal.

• The RA program is implementable, adaptable, and compatible with different programs.

• • It is automated and efficiently operated in CAISO systems – NCPA supports this goal.

• • It is adaptable to changing needs and regulatory structure, and fleet – NCPA supports this goal.

• • It is harmonized between CAISO and LRAs and reliability targets and counting are consistent – See NCPA comments herein regarding RA counting rules.

• • It is scalable so systems work effectively with EDAM and future regional market structures – NCPA supports consideration of how the RA program aligns with WRAP requirements.

[1] https://www.caiso.com/Documents/Final-Root-Cause-Analysis-Mid-August-2020-Extreme-Heat-Wave.pdf p 40

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

No comment at this time.  

6. Please provide any additional comments.

No additional comments at this time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

PG&E appreciates the CAISO’s efforts to proactively address the evolving needs of the electrical grid to ensure that California is adequately equipped to meet its system reliability needs.  PG&E supports CAISO in establishing the Resource Adequacy (RA) working group and encourages future discussions to focus the working group topics.  Below, PG&E highlights what it believes to be the key concerns in the RA landscape and recommends discrete working group sessions for each issue to facilitate the discussion and develop solutions.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

As a general matter, PG&E recommends that the problem statements be restated to reflect the core issue at hand.

Problem Statement 1:

• Original: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: (1) accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet and (2) addressing such concerns in a timely and efficient manner.

• PG&E’s Proposed Revision: Current processes and procedures do not provide sufficient visibility into the generation fleet to enable CAISO to ensure system reliability.

Problem Statement 2:

• Original: The CAISO’s current requirements for RA capacity and program tools (e.g., outage, must-offer, bid-insertion, and resource performance and availability rules) have not been updated recently in light of evolving market and regulatory structures, and could result in: (1) RA supply not available when and where needed; (2) Inefficient procurement and investment (e.g., maintenance and capital upgrade) decisions; and (3) Implementation challenges for the CAISO and market participants.

• PG&E’s Proposed Revision: CAISO’s availability requirements for RA resources (e.g., outage, must-offer, bid-insertion, and resource performance and availability rules) may require updates in light of evolving market and regulatory structures.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

PG&E supports the guiding principles the CAISO proposed in the discussion paper: reliable, efficient/cost-effective, implementable, durable, adaptable, transparent. However, PG&E suggests adding “simple” to these guiding principles. PG&E is concerned that, in some areas, CAISO’s requirements and rules have become overly complex.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

No comments at this time.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

Yes, PG&E is interested in addressing problem statements 1 and 2.

6. Please provide any additional comments.

At the current time, PG&E recommends that the CAISO RA working group place the following items as high as possible on the priority list.

• Alignment Between Local Regulatory Authorities’ Planning Standards: Problem statement 3 underscores the necessity for consistency across various LRAs’ programs in CAISO’s footprint and CAISO’s own RA obligations. It would be advantageous for CAISO to consider adopting a set of rules that harmonizes these diverse planning standards. If CAISO retains its existing RA program, PG&E is concerned that the different counting rules between the CPUC’s Slice-of-Day and CAISO’s RA could require additional procurement to address the disparity. Given the competitiveness in capacity markets, this additional procurement could result in significant costs for customers. The adoption of consistent rules would help mitigate these concerns.
• RA Substitute Capacity Rules: PG&E agrees with CAISO’s assessment that the current RA substitution capacity rules for planned outages require a revisit, especially given that the tight RA market has made it more challenging for scheduling coordinators. These existing challenges could also impact regular maintenance at plants, which could result in increased reliability risk. Dedicated time is needed within the working group process to discuss and collectively explore viable solutions to the RA substitution capacity rules.
• UCAP – RAAIM: Building on the CPUC’s expressed interest in D.23-04-010, PG&E advocates for a thorough exploration of the comprehensive application of UCAP in resource counting. This approach, including ambient derates and forced outages, deserves dedicated time within the working group to delve into and establish UCAP counting rules that support reliability.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

The Public Generating Pool (PGP) is made up of a group of generation-owning load serving entities in the Pacific Northwest who are also direct or indirect Western Resource Adequacy Program (WRAP) participants. As the region continues to step towards enhanced coordination in markets, we also need to consider the coordination that helps support capturing market benefits and avoiding risk, which includes interoperability of the region’s two main resource adequacy (RA) programs. As RA risks become more complex this work is a critical component of market design to ensure reliability, and markets do not become a discretionary alternative to true long-term resource adequacy. The backdrop laid out in the discussion paper aligns with the many concerns of regional participants who are considering the two potential Day-Ahead market options before them, and we appreciate the creation of this working group to focus on addressing these concerns that impact so many participants.

While PGP missed the first working group session, we look forward to engaging in this initiative and find it has some potential points of contact with the scarcity design conversation focused in the Price Formation Enhancements working group. In terms of process, we hope that where there is direct linkage between these initiatives, that can be articulated and communicated in both spaces. In our comments in the Price Formation Enhancements working group, we suggested that a slightly slower process that enables participants to review materials in advance of the meetings is preferable to a faster pace with limited time to preview materials. We recommend that the WG strives to post materials a week in advance, so that participants can come prepared to weigh in on discussion topics and advance the effort.  

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

PGP supports the problem statements outlined. Additional comments regarding each are below:

Problem Statement 1: PGP recommends that the CAISO choose language carefully, and use it consistently throughout the process. The problem statement is focused on sufficiency, and we consider this terminology to be focused on short-term measurements, while the sub-issues are focused on longer term Resource Adequacy, which is upstream of resource sufficiency.

Sub Issue 1. RA Portfolio Evaluation should be done in a timeframe that aligns with the potential to procure additional resources if needed. Looking a month out is inconsistent with providing the ability to remedy any shortfall that is found. PGP would support a clearer differentiation between the RA view and this month-out view that is closer to a sufficiency timeframe.

Sub Issue 2: Non-RA visibility, while perhaps historically relevant, is less so when the market is tight and the rest of the region now has a separate resource adequacy program. While this may be important from a system management perspective, this segment should not be monitored as a means to count on it as backstop resources, particularly if these resources have minimal performance incentives or obligations in this regard.

Sub Issue 3: Updating the CAISO’s Default Planning Reserve Margin should include planning to a regional standard that is consistent with best industry practices and the surrounding RA market, the Western RA Program. If markets are going to interoperate on a level playing field, or have any chance of creating a single regional market, they need to plan to a regional standard. Planning to a regional standard does not preclude each program from having unique implementation plans which may recognize unique features of the resource mix, topology, historical learnings, contracting structures, policy interplay, planning integration, and other aspects of the programs.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

PGP supports the principles listed but recommend inclusion of “equity” and “consistency” which reflect our Northwest Public Power Market Design Principles focused on Resource Adequacy and Resource Sufficiency below:

Resource Adequacy and Resource Sufficiency Requirement Promote Reliability, Ensure Equity and are Applied Consistently

• Market design includes resource sufficiency and/or resource adequacy frameworks that aim to ensure reliability and minimize the potential for a market participant to access market benefits without first adequately and independently demonstrating resource adequacy and/or resource sufficiency
• Processes assure that participants offering resources to the market satisfy their obligations and ensure deliverability to the market.
• Market rules and participation frameworks accommodate participation and management of fuel-limited resources to maximize system benefits.
• Market rules and accreditation contemplate unique characteristics of different resource types such as flexible hydroelectric resources.
• Enforcement measures for non-compliance do not allow for Resource Adequacy or Resource Sufficiency compliance to be a discretionary economic alternative.
• Requirements and counting rules are applied equitably and consistently to all entities subject to tests.
• Mechanisms are in place to signal when the resource adequacy or resource sufficiency framework is not functioning properly

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

 PGP, while supporting the goals of the program, notes that “cost-effective”, “least cost”, and “affordable” are subjective measures, that may be difficult to quantify. Resource adequacy needs to meet a minimum regional standard first, in the most cost-effective way possible with long-term resources. Penalties for non-compliance should be punitive enough to enforce compliance as the most affordable outcome. Performance incentives, short-term penalties, scarcity pricing, and general short-term price signals should only be in place to help drive performance and market participation of the resources that were already built and contracted to support the standard. In a regional market that has met a shared standard of planning and long-term resource acquisition, short-term signals can then be used to support resource sharing, system optimization, and the utilization of diversity benefits that should be available to those who have complied with such a regional standard.

While these concepts are reflected in the goals of the working group, this is an area where the goal of meeting an appropriate standard needs to be the lens through which these subjective measures are evaluated. For now, it seems that some of the problem statements support the reinforcement of “just in time” procurement and other programmatic elements that may support lower cost procurement when resources are available, but have no remedy in the event of a system-wide or regional RA challenge. This consideration is an important part of the changing landscape that should be addressed to make the RA program truly reliable, efficient, implementable, durable, adaptable, and transparent.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

We are not interested in presenting at this time, but we recommend a continuation or expansion of the materials shared in the Regional Issues Forum on December 7^th, 2022 last year in which a comparison of the WRAP and the CA RA program was presented. If this presentation could be enhanced and further developed, it could provide important educational background and level-setting to enable this conversation. That comparison can be found here: RA-Program-ComparisonSheet-Dec7-2022.pdf (westerneim.com)

6. Please provide any additional comments.

This initiative covers critical considerations as the region continues to expand on ongoing market efforts, resource sharing, and system optimization. Differentiating and addressing the perceived and real shortcomings of the RA programs in the West will support interoperability, improve reliability, and may provide learnings and improvements that are applicable to the WRAP program as it becomes binding and fully operational. If the CAISO MO is going to operate growing portions of the system, these elements are important to get in place and enable a level-playing field for those who participate in regional markets.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

SDG&E appreciates the opportunity to comment on the Resource Adequacy modeling and program design initiative. Please see our comments below.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

In reference to problem statement #2 Requirements for RA Capacity and Program Tools reads:

The CAISO’s current requirements and tools (e.g., outage, must-offer, bid-insertion, and resource performance and availability rules) have not been updated recently in light of evolving market and regulatory structures.

SDG&E believes CAISO program capacity requirements and California Public Utilities Commission’s (CPUC) Slice of Day (SOD) Resource Adequacy (RA) requirements should not only align, but match to ensure there are no reliability issues caused mismatched goals and requirements.

Problem Statement #3 regarding LRA RA Responsibility & Cost Allocation states that:

Market participants are concerned about inequitable costs and cost allocation. Stakeholders have expressed a need for a transparent and common framework for evaluating reserve margins and counting rules and understanding of an LRA RA program’s contribution to overall system reliability.

SDG&E notes that CAISOs process is inherently intertwined with the RA and Integrated Resource Plan (IRP) processes at the CPUC. CAISO and the CPUC should establish rules for use of a consistent counting methodology; CAISO recently switched to the exceedance methodology while IRP continues to utilize the Effective Load Carrying Capacity (ELCC). Changing the requirements could create an even bigger divide between the CAISO system requirements and IRP processes if methodologies are not reconciled. Additionally, misalignment could occur between IRP and short term and long-term reliability goals. Therefore, CAISO should work closely with the CPUC’s Resource Adequacy and IRP proceedings to develop a consistent methodology.

SDG&E sees an opportunity for convergence between the CAISO modeling and IRP modelling to review the impacts of the constraints of RA program, such as transactability. Considering such constraints could improve forecasting to make it more applicable to daily operations.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

 No Comment

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

 No Comment

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

Not at this time 

6. Please provide any additional comments.

SDG&E would appreciate more information about system requirements and how the CAISO calculates these requirements, particularly the counting methodologies and adjustments made by the CEC.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

SEIA is very supportive of CAISO’s use of the working group process as it allows for a better understanding of the issues and the interests of both the ISO and stakeholders. SEIA believes the RA enhancements effort will benefit from the working group process for these reasons. SEIA recommends that CAISO, in both the RA Working Group process and future working groups, begin the process with a more formal education session to level-set stakeholders and establish a reference point. A more formalized education phase will benefit issue identification and solution development.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

SEIA proposes a minor edit to the second goal: “Procurement and trading is efficient, cost-effective, fungible, and affordable.” The affordability goal is vague as written – it is unclear if CAISO is interested in affordability for ratepayers or transactors. SEIA suggests removing “affordable” from this goal since an RA program that is efficient, cost-effective, and fungible should produce more “affordable” outcomes or increase total welfare.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

6. Please provide any additional comments.

SEIA encourages CAISO to provide more education on the existing RA framework and identify potential gaps that could arise as the RA landscape changes. SEIA also proposes that CAISO enhance the existing Reliability Requirements page to serve as an RA repository with relevant trainings, reference materials, etc.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

The Six Cities support renewed consideration of Resource Adequacy (“RA”) objectives and design elements, and the use of a working group process to better define RA issues may be constructive.  The Six Cities understand the CAISO’s focus within this initiative to encompass a potentially broad range of issues relating the design and implementation of the RA program within the CAISO.  To appropriately shape discussions in the working group process, an initial focus on the development of problem statements makes sense, but the problem statements will be most useful in guiding the development of RA enhancements if they are specific and, to the extent available, supported by data.  Where supporting data have not yet been collected or analyzed, problem statements should include recommendations for data analysis.  Discussed below are areas where Six Cities have identified additional data needs. 

Among other objectives for this initiative, the Six Cities urge the CAISO consider and address ways to enable load-serving entities within the CAISO that have RA obligations, whether overseen by the California Public Utilities Commission (“CPUC”) or another local regulatory authority, to comply with evolving capacity needs.  The Six Cities believe that the CAISO is aware of current dynamics in the bilateral capacity markets, whereby shifts in resource availability (due to a variety of factors) have resulted in severe limitations on supply that is available for contracting, particularly during the third quarter of the year, when demand for such supply is greatest.  The answer to the CAISO’s evolving needs cannot simply be directives to procure additional supply through revised planning reserve margins or a more aggressive penalty structure.  Mandating additional procurement cannot create capacity that does not exist, and such measures at a minimum will result in additional costs to load serving entities (“LSEs”) that are already facing unprecedented increases in RA procurement costs.  The Six Cities therefore support consideration of measures in this initiative that are designed to address longer-term structural issues in the capacity market as well as increasing the ability of LSEs to rely on resources that can provide reliable capacity to the CAISO, but that may not be countable under the CAISO’s existing rules.  This latter category of reforms may address issues in the near-term until proposals under consideration in other initiatives, such as the Generation Deliverability Methodology Review and Interconnection Process Enhancements initiatives, can be implemented.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

Problem Statement 1: Overall System Reliability Information

There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in:

• Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and
• Addressing such concerns in a timely and efficient manner.

Sub-issues:

• RA Portfolio Evaluation: A comprehensive evaluation of the sufficiency of the current or expected CAISO BAA RA portfolio in forward time frames (e.g., monthly, yearly, multi-year) does not exist today. Such an assessment would provide the CAISO and stakeholders an understanding of the overall CAISO BAAlevel of system-wide reliability, LRA contribution to overall system reliability, and the implications of a growing diverse resource fleet.
• Non-RA Visibility: The CAISO has limited visibility into resources not shown as RA.
• Updating the CAISO’s Default Planning Reserve Margin: The CAISO’s default PRM is outdated and has not kept pace with changes in the RA  landscape.

Six Cities’ Comments:  Problem Statement 1 would benefit from additional specification and information from the CAISO.  The CAISO itself has the broadest access to information on existing RA resources and non-RA participating resources.  It would be helpful to understand what additional information the CAISO requires in order to analyze the sufficiency of the current RA fleet.  The Six Cities question the usefulness of an effort to predict the composition of the RA fleet beyond a relatively near-term time horizon (perhaps three years) given uncertainties with respect to availability of Maximum Import Capability (for import resources) and deliverability (for internal resources).  Consideration of modifications to the CAISO’s Default Planning Reserve Margin should coordinate with California Energy Commission and local regulatory authority (“LRA”) processes regarding planning reserve targets.

Problem Statement 2: Requirements for RA Capacity and Program Tools

The CAISO’s current requirements for RA capacity and program tools (e.g. outage, must-offer, bid-insertion, and resource performance and availability rules) have not been updated recently in light of evolving market and regulatory structures, and could result in:

• RA supply not available when and where needed;
• Inefficient procurement and investment (e.g. maintenance and capital upgrade) decisions; and
• Implementation challenges for the CAISO and market participants.

Sub-issues:

• Requirements for RA Capacity: It is not clear if the current CAISO requirements for RA capacity are sufficient. For example: 1.) The CAISO does not evaluate the RA fleet for energy sufficiency which could pose a reliability risk to the CAISO BAA, and 2.) As the resource fleet has evolved, the CAISO has not conducted a comprehensive study to assess the overall need for a Flex RA product since the CAISO implemented the Flex RA product in 2015. It is unclear if the currently designed Flexible RA provides reliability benefits commensurate to the administrative burden on stakeholders and the CAISO.
• Incentivizing Availability: In light of current high RA prices, the current CAISO mechanism for incentivizing capacity to be available, the Resource Adequacy Availability Incentive Mechanism (RAAIM), may be insufficient and incentivize less reliable generation to be contracted or not provide sufficient signals for maintenance investments.
• Incentivizing Performance: The CAISO lacks a mechanism to incentivize RA performance.
• Outages: Current rules requiring substitute capacity for all planned outages on RA capacity were designed assuming there was excess capacity available at commercially reasonable prices and may require revisiting. As a result, today planned outages often cannot find substitution which risks the health of the resource if this results in potential delays in performing maintenance. In addition, current substitution rules for planned outages may be overly burdensome.
• CPUC’s Slice-of-Day: The implementation of the CPUC’s Slice-of-Day program will require a continued comprehensive review by the CAISO with stakeholder engagement to ensure continued operational, commercial, and regulatory objectives are met.
• Interoperability with WRAP: The CAISO has not undertaken a comprehensive analysis of translatability and transactability between the WRAP and CAISO’s RA program, to evaluate potential friction in trading.

Six Cities’ Comments:  The Six Cities agree with the overall premise of Problem Statement 2 that comprehensive re-evaluation of RA requirements is necessary.  As drafted, however, Problem Statement 2 is unmanageably broad.  The Six Cities recommend that the working group process initially focus on breaking down the components of Problem Statement 2 by identifying which RA program elements currently in effect appear to be working as intended to support reliability and which may be undermining reliability by imposing unnecessary restrictions or infeasible requirements.  The process then should prioritize exploring modifications of those elements identified as being counter-productive or impractical under current market conditions.

With respect to the sub-issues of incentivizing availability and performance, the Six Cities encourage the CAISO to provide data about the scope and extent of both non-availability of RA resources and non-performance.  If available, it would be useful to see if there are particular patterns (season, time of day, weather, technology type) that correlate to non-availability or non-performance that may point to the underlying cause of any availability or compliance issues.  Data along these lines might also help inform the degree to which additional reforms in these areas are needed and assist stakeholders in evaluating if this is a compliance issue with respect to a limited number of resources or a broader problem that demands a more structural or comprehensive solution. 

With respect to the CPUC’s slice-of-day program, the Six Cities support the CAISO’s initial step of scheduling a working group meeting to inform stakeholders about this program.  From an organizational perspective, the slice-of-day implementation issues might be one area where the CAISO could advance or accelerate proposals falling under this problem statement, especially if the CAISO determines that extensive modifications to its program to address slice-of-day reforms by the CPUC are not necessary or appropriate.  The Six Cities are not subject to slice-of-day rules and take no position on this program as reflected within the CAISO at this time, except to reiterate their position that non-CPUC jurisdictional local regulatory authorities should retain discretion to adopt their own RA programs using other formats and methodologies, which the CAISO should continue to accommodate. 

Intensive consideration of interoperability with the WRAP seems premature at this time.  It is the Six Cities’ understanding that details of WRAP implementation remain to be determined.  While it would be appropriate to consider potential impacts of WRAP elements that have been defined, the usefulness of attempting to evaluate potential interactions of two moving targets (potential modifications to CAISO RA rules and evolution of WRAP requirements) is questionable. 

Problem Statement 3: LRA Resource Adequacy Responsibility & Cost Allocation

There is concern about inequitable costs and cost allocation among market participants. There is a need for a transparent and common framework for evaluating reserve margins and counting rules, and understanding of an LRA RA program’s contribution to overall system reliability.

Sub-issues:

• Definitions and Requirements: The CAISO lacks a common definition, method of measurement, or standard to ensure that various LRAs bring a portfolio of resources that are accessible in the right place, available at right time, and provide the right attributes needed to evaluate if LRA programs are reliable.
• EDAM RSE Cost Causation: Stakeholders have expressed the need for a policy that more directly aligns cost and benefit allocation with causation associated with the Extended Day Ahead Market (EDAM) Resource Sufficiency Evaluation (RSE), when the CAISO needs to assign costs accrued as a result of a deficiency or procurement of cure capacity.

Six Cities' Comments:  It is more appropriate to reflect concerns identified in Problem Statement 3 in the context of Principles.  As drafted, Problem Statement 3 raises complex questions regarding jurisdictional roles, distribution of planning responsibilities, and relationships between forward planning and operational cost impacts.  In particular, the Six Cities do not agree that cost responsibility for resource sufficiency evaluation (“RSE”) failures should be based on satisfaction of forward procurement targets.  It is not obvious to the Six Cities that considerations of RSE surcharge cost allocation issues belong in this initiative. 

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

The Six Cities have no conceptual objections to any of these principles as they relate to RA policies.  In addition to those listed, the Six Cities request that the principles for this initiative reflect the concept of acknowledgement for the role of local regulatory authorities in the formation of RA policy and resource procurement. 

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

The RA program is reliable, affordable, and implementable. This means:

Goal 1 - The CAISO’s established modeling, and visibility enable a reliable overall system.

• The RA portfolio meets at least a 0.1 LOLE planning target.
• Both planning assumptions and outputs are re-visited regularly.
• The CAISO has visibility into both RA and non-RA resources for operational purposes, and the CAISO does not have to rely on out of market actions to maintain a reliable fleet.

Six Cities’ Comments:  Goal No. 1 should be revised in two key respects:

First, the Six Cities suggest that the first bullet point be revised to state that the “RA portfolio meets LOLE planning targets that are consistent with identified reliability needs for the CAISO balancing authority area.”  It would be preferable not to bind the CAISO and its local regulatory authorities to a particular planning target in an initial goal statement.

Second, the Six Cites encourage the CAISO to revise the third bullet point under this goal statement to reflect an objective of “minimizing where practical” the use of out-of-market actions that are intended to address or compensate for unmet needs within the RA program and to remove references to and discussion of out-of-market activities in the operational horizon.  It is not clear that the RA program should have the job of correcting for all situations necessitating out-of-market actions in the operational timeframe, where out-of-market actions should remain an available tool to address emerging issues.  The RA program should focus on sufficiency of resources in the planning horizon and ensuring that such resources are available through real-time.  Additionally, the Six Cities note that out-of-market actions in the context of RA may entail activities such as resource procurement through the Capacity Procurement Mechanism (“CPM”) or Reliability Must Run programs.  Given the tightness of the current RA market, it may not be practical or realistic at this time—or even a good idea—to restrict or limit the CAISO’s ability to rely on such programs, although the Six Cities agree that use of these programs should be secondary in most cases to LSEs’ procurement of RA capacity directly. 

Goal 2 - Procurement and trading is efficient, cost-effective, fungible, and affordable.

• Incentives are in place for RA capacity to perform.
• The procurement of RA can meet reliability needs and environmental goals at least cost.
• Cost allocation rules incent contracting and performance.
• LSEs and LRAs are able to capture benefits of portfolio diversity within the region.
• The CAISO’s RA Program: minimizes the need to procure expensive resources due to timing or informational limitations, allows for efficient trade of capacity products between California and the WRAP, balances standards and requirements for resource eligibility with costs and benefits, and is aligned with the CPUC’s IRP, modeling and assessments and should produce consistent results.

Six Cities’ Comments:  In the Six Cities’ view, the reference to meeting “environmental” goals in the second bullet point should be removed.  It is not clear what is contemplated by the inclusion of this item, nor is it clear how the CAISO would address whether RA resources do or do not meet environmental goals.  Instead, the composition of RA supply portfolios should remain the purview of local regulatory authorities, who should have the ability to determine if their LSEs’ RA supply meets environmental objectives.

The Six Cities encourage the CAISO to revise the last bullet point to state that the CAISO’s RA program “will allow for efficient trade of capacity products throughout the Western region.”  This would include WRAP, but it would also include areas that may not be participating in WRAP.  The goal should be to maximize the ability of CAISO LSEs to procure resources throughout the West, consistent with applicable market rules and tariffs.

Additionally, the last bullet point should be revised so that it references local regulatory authorities other than the CPUC. 

Goal 3 - The RA program is implementable, adaptable, and compatible with different programs.

• It is automated and efficiently operated in CAISO systems.
• It is adaptable to changing needs and regulatory structure, and fleet.
• It is harmonized between CAISO and LRAs and reliability targets and counting are consistent.
• It is scalable so systems work effectively with EDAM and future regional market structures.

Six Cities’ Comments:  With respect to the first bullet, the Six Cities question whether automation should be a separately stated requirement.  In addition, the Six Cities recommend that the third bullet be modified to state that “It is harmonized between CAISO and LRAs and reliability targets and counting are consistent with reliability and resource performance.”  The Six Cities generally concur with the other elements of this goal statement. 

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

The Six Cities are contemplating the development of proposals to address selected topics within this initiative and may be interested in presenting at a future working group meeting. 

6. Please provide any additional comments.

The Six Cities have no additional comments at this time.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

SCE appreciates the CAISO seeking out stakeholders’ input through the Working Group process before launching into the formal stakeholder initiative process, however the CAISO must remain cognizant of the importance and time dependent nature of many of the issues in the RA space. Reliability issues over the last few years have demonstrated that  RA reforms cannot be delayed for too long. Most pressing is ensuring that the CAISO’s RA systems are ready to coordinate with the CPUC’s new Slice-of-Day (SOD) framework which will be in full effect in 2025. The CAISO needs to deal with any changes required to the CAISO’s RA structures in order to accommodate the SOD, and any potential changes to the CAISO’s reliability calculations based on the information provided to CAISO from the SOD program before the LSEs begin procuring RA for the 2025 RA year, which will likely start next spring or summer. Stakeholders and the CAISO should consider that the RA Enhancements Stakeholder Initiative may require several phases with the initial phase (or phases) occurring simultaneously with the continuing RA Working Group process.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

1. Overall System Reliability Information

Recent events have shown that the historical CAISO focus on peak load for accessing RA sufficiency is no longer adequate. Indeed, the CAISO 7-day RA Capacity Trend in Today’s Outlook already acknowledges this by also providing information on the net RA capacity compared to net demand. SCE believes the CAISO and stakeholders need to consider alternative methods for assessing the reliability contributed by the RA fleet, and possible changes to the RA requirements. It is clear that there have been significant changes to the California electricity markets since RA was developed almost 20 years ago. The fleet of resources available to California LSEs has changed dramatically, both in its composition and the level of excess resources available within California and the larger western market.  California is no longer its own marketplace but is part of the wider EIM market and will soon be a part of EDAM. In addition, the frequency and occurrence of extreme events, such as droughts, heat waves, and wildfires may impact the amount of resources needed to guarantee specific levels of reliability going forward.  

2. Requirements for RA Capacity and Program Tools

As previously stated, SCE believes that the CAISO should conduct a comprehensive review of the CPUC’s SOD RA proposal. This should actually be two separate topics. First, the CAISO and stakeholders must review the SOD to determine that for 2025 the CAISO’s mechanisms and reliability accounting are coordinated with the SOD. Second, the CAISO and stakeholders should examine the new structures in the SOD to see if the CAISO should adopt a similar mechanism and how the SOD framework may impact must-offer-obligations (MOO), bid insertion, resource availability and performance rules (including substitution and how resources deal with planned outages), and incentive mechanisms, such as RAAIM. These issues will be of increasing importance as renewable variable energy resources as well as storage and other use limited resources become an increasing proportion of the resource fleet. SCE believes that discussion of these issues will be an important part of this RA Working Group, as well as the subsequent Stakeholder Initiative, and that this discussion should be influenced by the additional information about resource expectations and availability obtained through the consideration of the SOD mechanisms.

SCE also suggests that an important item for discussion is how WRAP will interact with EIM and EDAM, especially since the obligations that WRAP participants will take on will involve non-EDAM entities. Additionally, it is not clear that all EIM or EDAM entities will be participants in WRAP; these programs must work with, and treat fairly, three different types of RA, California LSEs, subject to CAISO RA requirements, WRAP participants, and entities with their own or no RA program. Two important RA functions are to prevent LSEs from leaning on other LSEs and to prevent double counting of resources – it will be critical to ensure that these RA functions are preserved with the disparate RA programs. The problem is similar, but potentially more complicated, to that the CAISO faces with the different LRA RA programs in California; in California, the CAISO has adopted default RA rules which help ensure that the various LSEs are treated similarly.

3. LRA RA Responsibility and Cost Allocation

Within California it is the LRA that determines the RA requirements for the various LSEs. This does not mean that the CAISO’s role is not important. Because CAISO is the only entity that has visibility of both the generators and the LSEs, it is the CAISO that must provide the validation of the LSE and generator RA showings. It is also the case that the CAISO must ensure that all LRAs, and thus the LSEs, are providing sufficient RA resources to ensure the reliability of the CAISO grid and that all are bearing their fair share of the responsibilities.

SCE is not sure that the EDAM RSE Cost Allocation discussion belongs in this working group. It might be more appropriate in the CAISO BAA EDAM participation initiative. However, SCE does feel that a discussion about the relationship between RA and EDAM RSE is appropriate for this working group.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

SCE believes that the six Principles are a reasonable articulation of the principles that should be considered but recognizes that there may be differences among stakeholders in the exact meaning of specific Principles. To SCE, creating a durable RA program means that it must function not just in today’s environment, but also in the future with a different generation fleet and with the CAISO participating in EDAM. SCE also feels it would be helpful to discuss relative priorities among the Principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

SCE agrees that the first goal of RA should be to establish modeling and visibility to ensure a reliable system. SCE also agrees that the RA mechanism should be implementable and encourage efficient and cost effective procurement and trading. However, SCE also believes that RA must be considered as an element of the overall electricity market (please see our answer in Question 6) and that RA should, along with the CAISO’s energy market prices, provide signals to assist resources in making decisions about entry into and exit from the market. SCE also believes that the market power mitigation provided by a properly functioning RA program is a goal to be considered.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

SCE has been a leader in RA development in the past and will continue in that role. SCE would be happy to present to the Working Group on topics that the either stakeholders or the CAISO feel would be appropriate. Two possible areas that SCE can provide experience and expertise on would be:

• The SOD mechanism. SCE was a major participant in the development of the SOD mechanism and would be happy to share its expertise.
• RA as a part of the overall market structure, in both the CAISO and EDAM markets. SCE has been involved in RA in California since RA initial development and has a comprehensive understanding of RA, as explained in our answer to Question 6.

6. Please provide any additional comments.

As the CAISO and stakeholders consider the CAISO’s RA program and how it should be updated or modified, SCE believes it is important to first consider how RA fits into the overall market structure and the various roles it fulfills. Obviously, ensuring the reliability of the grid is the most important function of RA, but it also provides several other functions in California’s electricity market:

• It provides the “missing money” to generators so that the marginal generator needed only rarely during peak demand periods is able to remain in the market even though its energy market revenues likely only recover its marginal costs during the few times each year it runs.
• By virtue of the MOO, for all but exceptional conditions, it ensures that there is sufficient supply in the market to avoid scarcity and hence, at least in general terms, to prevent generators having the potential to exercise market power. This is important in providing incentives for generators to bid into the energy markets at their marginal costs.
• It ensures that all LSEs are providing their share of resources in the market and prevents LSEs from leaning on other LSEs, while still allowing the markets to achieve efficient resource usage.
• With a well-designed availability mechanism, it provides generators with incentives to meet their energy market commitments and to undertake necessary maintenance to keep their generators operating reliably.

SCE believes that reviewing how RA fits into the overall market structure and the roles that RA plays in the market is an important starting place to consider how RA will continue to contribute to California’s electricity marketplace in the future. The changes that we have already seen in the resource fleet, and the changes that are expected in the future, have the potential to dramatically impact the functioning of the electricity market and how RA fits into that market. For example, consider these already occurring or expected potential changes:

• In many hours of the day the marginal resource in the market will be one with a zero marginal cost (such as solar or wind). Currently, energy market revenue is the major revenue stream for most resources, but this may change with prices often being set by resources with zero marginal costs, or possibly negative marginal costs for renewables with production-based tax incentives,
• Most predictions of the California grid continue to include significant amounts of natural gas fired generation remaining available, even in 2045 when all retail sales are to be from non-emitting resources. These natural gas fired resources will see their usage diminish, and even without the potential problem from the previous bullet, their energy sales revenues will decline. However, their fixed costs will likely remain similar to today, and may increase due to the maintenance required to make sure they remain reliable when only running sporadically. The current market structure with most of their revenue coming from energy sales, with RA payments making up the remainder, will likely need to evolve into one with a much larger proportion of their total operating costs recovered through RA payments.
• The continued expansion of storage behind the meter, both as dedicated electricity storage and increased amounts of electric vehicles may help provide elasticity in the short run to electricity demand. The current market structure of prices being set by the intersection of a vertical demand curve and an upward-sloping supply curve may change to one where it is the downward-sloping demand curve does more to determine prices where it intersects with the vertical section of a mostly flat supply curve.

As the CAISO and stakeholders discuss the future of RA in California, EDAM, and the west, understanding how RA contributes to the overall electric market will be critical in ensuring that those markets function properly without the potential for market power manipulation while providing the proper incentives for new plants to be built and existing plants that remain useful to continue to be in the marketplace.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

TEA comments regarding the CAISO Resource Adequacy (RA) Modeling and Program Design Working Group held October 5, 2023.

The Energy Authority (TEA) is a public power-owned, nonprofit corporation that as a national portfolio management company, evaluates challenges, manages risks, and executes solutions to help its clients maximize the value of their assets and respond competitively in the changing energy markets. TEA partners with over 60 public power clients, managing approximately 30,000 MW of peak load and 24,000 MW of generation in North America’s organized and bilateral wholesale energy markets. TEA’s Community Choice Aggregator (CCA) partners in California and TEA’s power marketing activity in the Western Interconnect are directly impacted by CAISO’s RA program policies.

TEA supports at a high level the comments and suggestions of the Western Power Trading Forum (WPTF), particularly regarding the need to prioritize grounding all stakeholders in the existing RA program and its processes through a 101-level training that covers the history and current state of CAISO’s RA policies, as well as a review of the drivers behind and intended outcomes for various elements.

TEA requests that the CAISO and stakeholders maintain a line of sight to other CAISO initiatives that have a bearing on RA program outcomes while focusing on the RA program scope items that are front and center for this initiative. For example, CAISO’s implementation choices regarding the Day-Ahead Market Enhancements and the Transmission Service and Market Scheduling Priorities initiatives, as well as policies developed regarding Gas Resource Management and Price Formation, will all have a material bearing on the performance of the CAISO RA program in practice. TEA notes that such efforts would also benefit from an alignment check with policy developed in this RA program initiative as each moves forward through critical design and implementation points.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

TEA also agrees with WPTF and other stakeholders that a top priority needs to be resolving any issues related to the implementation of the CPUC Slide-of-Day framework and cross-walking between its requirements and elements of the existing CAISO RA program that are impacted.

TEA supports exploring a multi-year RA framework as part of the initiative scope, as was suggested by WPTF and other stakeholders in comments and during prior meetings, and agrees with the importance of improving the transparency of the RA program across the board.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

6. Please provide any additional comments.

TEA requests that the CAISO and stakeholders, while considering broad RA program issues for California, also consider the risks and opportunities that day-ahead market developments and regional RA programs in the Western Interconnect pose to finding least-cost RA procurement and load service outcomes for California ratepayers. For example, TEA strongly supports the CAISO working with Southwest Power Pool and its stakeholders to promote mutually-beneficial seams management policies and practices, which will enhance resource owners’ ability to benefit from inter-regional optimization and to bolster system reliability, regardless the BAA in which they physically are sited or the market they participate in, and will prevent certain resources from being excluded in practice from providing valuable capacity to meet California RA demand.

TEA appreciates the opportunity to comment on the framing of the RA Modeling and Program Design Working Group / Initiative and looks forward to further dialogue.

1. Process: Please Provide your organization’s feedback on the RA Working Group process and any suggestions you have for improvement.

WPTF appreciates the opportunity to provide feedback on the CAISO’s RA modeling and program design working group meeting held on October 5, 2023, and to provide suggestions for how best to proceed. We commend CAISO staff for recognizing the importance of starting off this effort with clearly articulated problem statements and guiding principles. Ensuring that all stakeholders are on the same page – as to the precise issues and problems that need to be addressed, and the principles that should guide the development and assessment of potential solutions – will help promote an overall more efficient and productive working group process. 

WPTF has been pleased to see the CAISO embracing this new approach across parallel efforts, such as the Price Formation Enhancements and Greenhouse Gas Coordination working groups. In our experience, however, it is challenging to discuss principles without having first established clear definitions and accurate problem statements. To those ends, we recommend that the discussions started on October 5 proceed in the order set forth below, the idea behind which is to have the conversation proceed in order from one topic to the next, building up a solid foundation as we move towards the policy development phase of the working group process.

1. State the purposes and objectives of the existing RA program and processes: This first step would include the CAISO providing background information and education on the existing RA program. With this knowledge base, stakeholders will be able to more readily identify where the existing program design may be creating the problems that are manifesting in the market. That, in turn, will help enable stakeholders to engage more productively in the discussions around problem statements, principles, and potential solutions.

2. Develop problem statements: This step would first involve the drafting of a set of problem statements and then supporting the draft statements qualitatively and quantitatively. Based on stakeholder input and further analysis, the draft problem statements would then be revised as needed and finalized.

3. Establish principles for evaluating solutions: This step would involve identifying the fundamental market design goals and principles that the ideal solution set would satisfy in addressing the previously identified problems and achieving the original purposes and objectives of the market design process/program under evaluation. Having the discussion around principles after having first defined the problems will allow for the principles to be crafted within the appropriate context of the identified issues created by the existing RA program and processes.

4. Develop and evaluate solution sets: This step would be where the bulk of policy development efforts would occur, and where solutions would begin to be proposed for consideration. During this step, all solution sets would be evaluated qualitatively and analytically to identify which solutions best (1) address the stated problems, (2) encompass the established principles, and (3) achieve the objectives and intended purposes of the RA program. It should also be noted that during this part of the discussion (or in prior steps), it could be the case that the objectives and/or purposes of the RA program will need to be adjusted and/or refined. This is also the step where the tradeoff conversations can and should take place, with various proposals being objectively measured against one another in terms of each proposed solution’s ability to address the stated problem and adhere to the applicable principles.

With that order in mind, WPTF respectfully requests that the CAISO prioritize a stakeholder meeting or workshop that provides the necessary background information and overview of the existing RA program – essentially providing an RA 101 course. Within that venue, the CAISO can provide an overview of the RA program and identify how the various agencies’ roles (CAISO, CPUC/LRAs, CEC, etc.) intersect as it will be imperative that, to the greatest extent possible, all stakeholders understand the differing jurisdictional roles of each agency.[1] The overview should also cover long-term planning, medium/short-term planning, and finally moving into the operational space. This would allow stakeholders to better understand how the current program starts with long term planning and ultimately translates into the operational space through must-offer-obligations. Additionally, WPTF recommends the following topics also be covered in the RA 101 meeting:

• How RA requirements are set and who sets the requirements for system, local, and flexible RA, respectively

• How the CAISO administers the RA program from resource showings to identifying deficiencies to applying must-offer-obligations, bid insertion, and RAAIM

[1] For example, during the first working group meeting, it was suggested that the CAISO should consider a UCAP proposal. UCAP would involve changing the counting rules for thermal resources, and resource counting rules currently fall squarely under CPUC/LRA jurisdiction. Thus, to the extent a problem statement or proposed solution involves how counting rules are applied to thermal resources, it begs the question of whether the CAISO should have jurisdictional authority over counting rules for thermal resources and/or whether and how the CAISO should exercise that authority.

2. Problem Statements: Please share your organization’s feedback on the draft RA Working Group’s problem statements and/or provide your draft problem statements. What data analysis would help inform the WG’s understanding of the problem statement?

One of the top priorities for this effort should be alignment with the CPUC’s slice-of-day (SOD) framework, especially given that the SOD test year is only a few months away. Thus, we strongly encourage the CAISO and stakeholders to continue working on clearly articulating Problem Statement #2 as presented in the discussion paper. Without achieving alignment with the SOD framework, the CAISO will not be able to ensure contracted capacity that meets the SOD requirements directly translates into capacity that can be appropriately accounted for within the CAISO’s RA processes.

WPTF also supports the CAISO’s recognition within Problem statement #1 that the default PRM is outdated. We appreciate the CAISO clarifying during the first meeting that this problem statement encompasses outdated resource counting rules. A key purpose of the PRM and counting rules is to provide LRAs with a robust way to evaluate each resource’s contribution to reliability. Having an outdated PRM and outmoded counting rules results in the inability to rely on those values to properly plan to a reliability standard, such as a 1-in-10 LOLE.  

WPTF provides two additional problem statements for consideration. First, we recommend the CAISO establish a problem statement (or expand Problem Statement #1) that recognizes the current one-year RA program is contributing to premature and disorderly retirement of resources. Embedded within this issue is the fact that the CAISO is currently unable to evaluate resource retirements beyond a one-year period. When a resource initiates the retirement process, the CAISO has the ability to prevent retirement only if the CAISO can show that the resource is needed as local RA in either the current year or the following year. If the resource is needed for reliability two years out, or for a CAISO RA requirement, the CAISO cannot prevent that resource from retiring despite knowing it is needed in the short/medium term planning horizon. The lack of a multi-year RA construct for system RA is also contributing to premature and disorderly retirements.

Multi-year forward requirements provide additional assurance to resource owners that they will recoup major investment costs, helping to maintain existing facilities that may have otherwise opted to retire. Multi-year forward requirements can also help facilitate orderly retirement of resources as an asset owner that is unable to secure contracts may determine it is not worth maintaining the facility, thus allowing the owner to provide more advanced notice of the planned retirement than would otherwise be the case. The additional advanced notice would then provide the applicable LSA’s planning and procurement processes to incorporate that information into planning cycles earlier, leading to more efficient investment decisions. 

Second, WPTF recommends the CAISO include a problem statement specifically related to transparency. Transparency is key to allowing participants to make well-informed business and investment decisions leading to a more reliable and efficient outcome. However, the increased complexity of the RA program has resulted in a decrease in transparency. The problem statement should thus recognize the gap that currently exists between having data not only transparent, but available in a way that is easily accessible to participants and well understood.

3. Principles: Provide your organization’s feedback on the draft principles and/or provide your organization’s recommendations for RA principles.

4. RA goals: Provide your organization’s feedback on the draft RA goals and/or provide your organization’s suggestions for RA goals.

5. Presenting: Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support? Please include any additional comments.

6. Please provide any additional comments.