Comments on Straw Proposal

1. Please submit your organization's comments on the straw proposal Jan 27 meeting discussion:

• BAMx appreciates the efforts made by CAISO to address questions and ensure stakeholders are working from common knowledge regarding the current SPTO design.
• BAMx supports focusing on the option to convert Subscriber rights to CRRs using the ETC/TOR conversion model already implemented for PacifiCorp and TANC. This will enable economic bidding from Subscriber generation and thus a more efficient dispatch of resources.  
• BAMx is concerned that the current SPTO scheduling design allows non-subscriber importers free use of the transmission, while shifting costs from the non-subscribers to CAISO PTOs and LSEs.
  • To alleviate this concern BAMx supports CAISO’s proposal to limit who can bid at intertie points to those with rights to deliver to the SPTO interties.
  • CAISO should add a hurdle rate equal to the non-Subscriber Usage Rate to the non-SPTO Intertie bids to guard against the potential cost shift.
  • If a hurdle rate is not feasible, BAMx requests that CAISO monitor and report on frequency and magnitude of cost shifts that occur.

2. Please submit any additional feedback:

1. Please submit your organization's comments on the straw proposal Jan 27 meeting discussion:

Pattern appreciates the effort from CAISO staff on the revised proposal. The option to convert ETC’s to CRR’s based on existing mechanisms (such as PacificCorp and TANC) is a significant design improvement, creating a streamlined process for implementation.  

Pattern requests CAISO affirm that the underlying TSP OATTs and the TCA that governs SPTO transmission usage and scheduling of the transmission is retained if either ETC or CRR are selected. Two examples: 

Scenario 1: From PC to PV SZN has 711 MW of rights, SZS has 1420 MW of rights. There’s a problem with the North gen tie line; we resell all the AZ service to SZS so that SZS can fully schedule and use 2131 MW. How is SZS recognized as the subscriber for the full amount? And do the CRRs care which subscriber is benefiting from them? 

Scenario 2: From PC to PV SZN has 711 MW of rights, SZS has 1420 MW of rights. There’s been several main bearing failures with the turbines SZS purchased and no subscriber has the ability to use 100 MW of firm PC to PV transmission service. TEP has posted 100 MW of ATC from FC to PV, SunZia performs a short-term resale (to a third party) and redirect (PC-PV to FC-PV) of 100 MW of transmission service. Thus, for a period of 1 day, SZS AZ rights become 1320 MW. How does that affect the allocation and implementation of CRR?  

In the presentation starting on slide 17, the example contemplates a single subscriber bid, import, and export. Pattern would appreciate if CAISO could also supply an example where there are multiple subscribers with a variance in the day ahead to real time market and how each of those subscribers is protected from the non-subscriber usage fee?  

Given that the allocated ETC’s on SunZia transmission are bi-directional rights, can SunZia select either ETC or CRR for either direction (W-E, E-W)? Specifically, can SunZia elect for 500 MW ETC & 2500 MW CRR East to West; then 3000 MW ETC West to East? Additionally, can different elections be made for different segments of transmission? For example, can the elections from Pete Heinrich to Pinal Central be entirely ETC’s and the election for  PInal Central to Palo Verde be CRR’s? 

Can CAISO please confirm that SunZia (which includes a North and a South resource ID) will be able to register two resource ID's eligible to use the same ETC? 

In some of the scenarios, the SPTO entity can reimburse or reallocate fees or revenue to the subscriber base. To calculate the reimbursement or reallocation, Pattern is seeking confirmation that in the settlement process the SPTO entity is provided each of the various subscriber entities schedules and market rates. Also, notice of bilateral SRS as the BPM states the CRR transfer must be registered with ISO five business days prior to the effective date of transfer of revenues. Transfer of revenue implies T+9B initial settlement period, can CAISO confirm this interpretation? In the CRR Secondary Registration System (SRS) there is a binary bilateral system for on/off peak hours. Many other bilateral transmission products on OASIS are based on a hourly profile. Pattern believes the SRS market would see more activity and market benefits if this market functioned on a hourly, not binary, day. A separate effort around CRR enhancements, consideration of this design would be appreciated.  

2. Please submit any additional feedback:

?The CAISO has provided a helpful set of current and expected implementation examples in this proposal.   This stakeholder initiative is well on its way to a refined product and Pattern supports the progress being made. 

1. Please submit your organization's comments on the straw proposal Jan 27 meeting discussion:

The Six Cities appreciate the CAISO’s additional examples of how the “balanced Existing Transmission Contract (“ETC”)” option and the “Congestion Revenue Rights (“CRR”)/economic bidding” option are proposed to be implemented.  The complexities of the different scheduling options overlaid with the Western Energy Imbalance Market (“WEIM”) and Extended Day Ahead Market (“EDAM”) structures make it difficult to fully evaluate each proposal.  Notwithstanding the details included in the Straw Proposal and the examples reviewed during the stakeholder meeting, it is clear that stakeholders would benefit from an additional opportunity to discuss the examples provided by the CAISO.

Pending any additional review of examples, the Six Cities do not oppose the proposal to proceed with the CRR/economic bidding option as an alternative that will be available in addition to the ETC option. 

2. Please submit any additional feedback:

The discussion during the stakeholder meeting suggested that there may be scenarios in which use of SPTO facilities by non-subscribers, particularly for wheeling transactions (or transfers) through and out of the CAISO under WEIM and EDAM, may result in either non-subscriber use being attributed to CAISO demand (thereby resulting in a payment to the SPTO from CAISO Transmission Access Charge revenues that ordinarily would be allocated to CAISO Participating TOs) or the CAISO Participating TOs foregoing recovery of Wheeling Access Charges (“WAC”) (because the WAC that is collected will be provided to the SPTO as compensation for non-subscriber use).  If the CAISO has determined that such cost shifts are unlikely or, alternatively, if the CAISO has determined that the existing cost allocation for non-subscriber use is consistent with cost causation principles, it would be useful for the CAISO to provide examples demonstrating that this is the case.  Because the SPTO model is new and represents a change in how the costs for transmission facilities within the CAISO footprint are recovered, the Six Cities encourage the CAISO to take the time to ensure that the details of this model are well understood by stakeholders. 

The Six Cities also ask that the CAISO provide more details in the next version of its proposal regarding the methodology that will be used to estimate historic use on SPTO facilities for purposes of the EDAM Access Charge.

1. Please submit your organization's comments on the straw proposal Jan 27 meeting discussion:

Southern California Edison (“SCE”) found the discussion to be very useful in understanding the proposal to include a new clarified “Merchant CRR” option, as well as eliminate the Unbalanced ETC option.

2. Please submit any additional feedback:

SCE believes the Merchant CRR option can be a useful addition to the ETC model, and that it should be further refined over the remainder of the stakeholder process.  SCE has previously proposed that Merchant CRRs should be used in lieu of a Non-Subscriber Usage Charge (“NSUC”), and still believes that approach would yield the greatest benefits and market efficiency, and so should be reconsidered as the only option.  Market efficiency would be enhanced under a pure “only Merchant CRR” option, because market dispatch would consider all costs that would be assessed to CAISO load (the NSUC option would bury NSUC costs paid through the ISO TAC/WAC so that they are not seen in the dispatch).  Of course, in a sense, the 100% Merchant CRR option (without any NSUC choice) is similar of the proposed new option, since the subscribers can choose to “convert” all of their ETCs to CRRs.  However, in SCE’s view, the new Merchant CRR method contains the potential for double recovery of costs by the SPTO when NSUCPA revenue is considered in conjunction with the CRR revenues.

To clarify this issue, the NSUC will be FERC-approved and presumably cost-based when an SPTO begins operation and is integrated with ISO markets.  If additional revenue is yielded by the facility relating to usage of Non-Subscribers (i.e., CRR revenue), then that revenue should be considered in some fashion in calculating the NSUC.  For example, the calculation of the NSUC could be revised to recognize a “revenue credit” against total facility costs, reducing the NSUC by some amount.  Since Non-Subscribers represent only a portion of the total usage (most usage will likely be subscriber usage), it would not be appropriate to revenue credit the entire amount of congestion revenue yielded by the CRRs, but it should be reflective of Non-Subscriber usage.

1. Please submit your organization's comments on the straw proposal Jan 27 meeting discussion:

WPTF appreciates the opportunity to submit comments on CAISO's Subscriber PTO market scheduling options straw proposal. The comments below focus on one aspect of the CRR option, specifically the settlement process for CRRs and whether they are subject to the CRR underfunding allocation that applies to all allocated and auctioned CRRs. It is important for market participants to have transparency and a full understanding of CRR settlement as they consider which scheduling option to choose.

WPTF understands that entities opting for CRRs instead of the Balanced ETC/TOR option will receive Merchant CRRs, which are options rather than obligations. This means that CRR holders will only receive payments and will not be charged if the congestion is in the opposite direction of the CRR. WPTF seeks confirmation that Merchant CRRs are not exempt from CAISO's CRR underfunding allocation process. In other words, will these CRRs be charged for CRR underfunding if it occurs? Assuming this is the case, WPTF believes it would be helpful for CAISO to clarify how CRR underfunding could impact the congestion payments received by these Merchant CRR holders. If our understanding is correct, and Merchant CRRs are not exempt, we anticipate that underfunding on the constraints where these CRRs create flows would result in reduced CRR payments for the holders. However, it is unclear at this point the potential magnitude of underfunding that may impact these CRRs, if at all. For example, will these CRRs only experience allocation of underfunding if the line itself is derated or are there other factors that need to be considered as well?

We appreciate the CAISO providing additional clarification and discussion at the next meeting.

2. Please submit any additional feedback: