Comments on Draft final proposal posting

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO’s) Storage Bid Cost Recovery (BCR) and Default Energy Bid (DEB) Enhancements DFP. The CAISO’s proposed approach would move forward with a near-term, interim solution focused on addressing the existing incentive for storage resources to bid strategically to maximize its combined BCR and market payment. CalCCA supports the CAISO adopting an interim approach to address this existing loophole. However, BCR payments may be warranted when buy-backs or sell-backs result from the CAISO’s storage market participation model, market power mitigation, or the multi-interval optimization. CalCCA appreciates the CAISO’s commitment to commencing a storage initiative following the Board of Governors and Western Energy Markets Governing Body's approval of the interim solution to holistically review storage uplift, DEBs, and other issues. Within this effort, the CAISO should aim to clearly differentiate between “unwarranted” and “warranted” BCR and tailor its solution to those differences. The CAISO should immediately begin this holistic review following approval of the interim solution and, when presenting its interim solution for approval, clearly communicate a targeted time to transition from the interim solution to the longer-term solution.

The interim approach advanced in the DFP would modify the cost proxy in the real-time BCR calculation using the formula proposed by the California Energy Storage Alliance (CESA). It adopts a modified formula for calculating proxy energy costs within the BCR calculation and proposes to apply this modified formula in all intervals. While the CAISO states that applying the modified formula in all intervals is necessary to eliminate the opportunity for bidding strategically to inflate BCR payments, CESA recommends, and other stakeholders support, applying CESA’s proposed formula only to a subset of intervals in which certain triggering conditions occur. While the DFP appears to be an improvement over the status quo with a well-documented existing loophole and overly punitive proposals put forth early in this initiative, the logic behind when to include the modified cost proxy in the BCR calculation is not apparent. It is also not clear from the examples provided by the CAISO in the DFP or posted to the website on October 15, 2024, which approach most closely ties to when BCR is “warranted” or “unwarranted.” For these reasons, CalCCA supports the adoption of the modified cost proxy as an improvement to the status quo but does not take a position on whether to apply it to the BCR calculation in all intervals or a subset of intervals. Because the interim solution is imperfect, the CAISO should expeditiously conduct its holistic review following approval of the interim solution.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

See response in Section 1.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

See response in Section 1.

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

See response in Section 1.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

See response in Section 1.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

See response in Section 1.

7. Please provide your organization’s comments regarding the examples included in the DFP.

See response in Section 1.

8. Please provide your organization’s comments regarding the Governance Classification.

CalCCA supports the joint authority classification.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

CalCCA has no additional comments at this time.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

Please see the attached comments.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

7. Please provide your organization’s comments regarding the examples included in the DFP.

8. Please provide your organization’s comments regarding the Governance Classification.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

Energy Division (ED) Staff appreciates the opportunity to comment on CAISO’s Final Draft Proposal to address unwarranted Bid Cost Recovery (BCR) for storage resources. ED Staff reiterates its continued support of CAISO’s initial proposal to redefine dispatch unavailable due to state of charge constraints as “non-optimal energy,” thus making it ineligible for BCR payments. Doing so would prevent unwarranted payments through strategic bidding and protect ratepayers from artificially inflated and unwarranted costs. As DMM has correctly pointed out, CAISO’s initial proposal is the only solution that would address the primary concerns regarding strategic bidding, market inefficiencies, and diminished reliability.[1]

If, instead, the CAISO decides to move forward with CESA’s modified BCR proposal as a solution, then the CPUC would support it as an interim compromise provided the CAISO (1) applies it across all intervals and (2) commits to a framework and timeline for finding a more durable solution. CESA’s proposal would modify the sell-back and buy-back BCR calculation but apply it only to intervals that meet certain state-of-charge and scheduling conditions. The modification itself would reduce but not eliminate unwarranted BCR payments, and, if limited to a subset of intervals, would result in only a subset of unwarranted BCR payments being reduced while other unwarranted payments would persist. As CAISO has aptly pointed out, applying CESA’s proposal across all intervals would be more appropriate “since BCR is calculated over the course of the whole day and modifying the formulae for only a subset of intervals would not fully remove the impact a resource’s bid has on BCR payments”.[2] Doing otherwise would only slightly reduce BCR payments in select circumstances that would not meaningfully protect ratepayers from unwarranted costs.

Additionally, CAISO should commit to a stakeholder framework and timeline with interim goalposts to develop and implement a more durable solution as quickly as possible. It was made clearly evident in both CAISO’s analyses and stakeholder comments that addressing unwarranted BCR payments for storage resources is complicated by the particular requirements and limitations of opportunity costs, state of charge, market power mitigation and the multi-interval optimization process. While this challenging framework requires a corresponding degree of analyses and discussion, the potentially large unwarranted costs faced by ratepayers in the absence of a fair, durable solution require an expedient timeline to find solutions that will improve market efficiency, ensure reliability, and protect customers.

[1] DMM Comments, August 26, 2024.

[2] Revised Draft Final Proposal for Track 1, October 10, 2024.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

7. Please provide your organization’s comments regarding the examples included in the DFP.

8. Please provide your organization’s comments regarding the Governance Classification.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) October 10, 2024 Revised DFP.[1]  Throughout the Storage Bid Cost Recovery (BCR) and Default Energy Bids Enhancement initiative, Cal Advocates has sought to protect ratepayers from the costs of unwarranted storage BCR and to ensure that storage resources are properly incentivized to respond to CAISO market awards in a manner that most efficiently and effectively maintains system reliability.  Cal Advocates agrees with CAISO that the current BCR construct is not suitable for energy storage.[2]  Cal Advocates shares CAISO’s dual objectives to 1) eliminate unwarranted BCR borne by ratepayers that shields storage resources from real-time (RT) prices and thus fails to incentivize storage to efficiently manage RT state-of-charge (SOC) and; 2) expeditiously close the loophole that allows storage resources to bid strategically in RT to inflate BCR payments.[3]

The Revised DFP only partially meets CAISO’s objectives.  While the Revised DFP eliminates storage’s ability to strategically bid to inflate BCR, it preserves ratepayer borne BCR payments that result from operator driven insufficient SOC.[4]  CAISO originally proposed to eliminate all SOC-driven BCR by triggering BCR ineligibility in the binding RT interval if the initial SOC of a storage resource is at its maximum or minimum value.[5]  CAISO subsequently determined that the trigger would not be effective due to complexities of the real-time multi-interval optimization (MIO) and thus dropped this component of its proposal.[6]

Cal Advocates’ comments on the Revised Straw Proposal recommended that CAISO eliminate all RT BCR for storage as an interim solution because CAISO could not effectively identify unwarranted SOC-driven BCR.[7]  However, as discussed in the Revised DFP, elimination of all BCR may also eliminate some amount of warranted BCR due to uneconomic dispatch resulting from CAISO’s MIO and Local Market Power Mitigation (LMPM).[8]  Due to the technical limitations in implementing a near-term solution that would eliminate unwarranted BCR, Cal Advocates recognizes that a compromise interim solution is a sensible interim step.

CAISO’s proposal in the Revised DFP to apply a modified BCR formula to all intervals as an interim solution[9] is a reasonable compromise between disallowing all storage BCR and applying the modified BCR formula to a restricted sub-set of intervals, as proposed by the California Energy Storage Alliance,[10] the Western Power Trading Forum,[11] and Vistra Corp.[12]  Application of the modified BCR formula to a sub-set of intervals would result in higher unwarranted storage BCR payments.[13]

Recognizing that the Revised DFP represents only a partial solution, Cal Advocates agrees with CAISO that a comprehensive reform of storage BCR is needed and supports CAISO’s  intent to initiate a follow-on stakeholder process in a timely manner.[14]  Cal Advocates urges CAISO to promptly address the technical challenges in the MIO in order to identify instances when BCR is not warranted, consistent with CAISO’s stated commitment to eliminate unwarranted SOC-driven BCR.

[1] CAISO, Revised Draft Final Proposal – Storage Bid Cost Recovery and Default Energy Bids Enhancements, October 10, 2024 (Revised DFP).

[2] Revised DFP at 8.

[3] Revised DFP at 9.

[4] Revised DFP at 14.

[5] CAISO, Storage Bid Cost Recovery and Default Energy Bid Enhancements, Issue Paper and Straw Proposal for Track 1, July 26, 2024 at 26.

[6] Revised DFP at 11.

[7] Cal Advocates’ Comments on Revised Straw Proposal, September 23, 2024, Response to Question 1.

[8] Revised DFP at 24 and 29.

[9] Revised DFP at 33.

[10] Revised DFP at 15.

[11] Revised DFP at 19.

[12] Revised DFP at 20.

[13] Revised DFP at 33.

[14] CAISO, Storage Bid Cost Recovery and Default Energy Bid Enhancements presentation, October 9, 2024. Stakeholder Meeting, at slide 32.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

The examples in the Revised DFP provide an indicative comparison of the alternative proposals.  The examples show that CAISO’s proposal would reduce BCR payments relative to the status quo and to the alternative proposals.[1]  However, the simplified examples are based on representative market dispatch observed by CAISO staff[2] and do not fully capture historical BCR or the actual reductions that any of the proposals would yield.  CAISO should conduct a historical analysis that compares the various proposals as a basis for considering comprehensive BCR reform in the follow-on BCR initiative.

[1] Revised DFP at 37-41.

[2] Revised DFP at 34.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

Cal Advocates supports CAISO’s interim solution to apply the modified BCR formula to all intervals as a reasonable compromise to disallowing all RT storage BCR, with one modification discussed in response to Question 6.  Cal Advocates opposes the alternative proposals that would apply the BCR formula to a restricted sub-set of intervals and thereby trigger additional unwarranted BCR that must be borne by ratepayers.[1]

[1] Revised DFP at 33.

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

Cal Advocates’ comments on the Revised Straw Proposal agreed with CAISO and DMM analysis that showed LMPM and MIO impacts on BCR are minimal and thus, should not delay implementation of CAISO’s interim solution.[1]   

[1] Cal Advocates’ Comments on the Revised Straw Proposal, September 23, 2024, Response to Question 2 and Question 6.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

See Cal Advocates’ response to Question 4.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

Cal Advocates supports the Revised DFP as described in Section 7 of the DFP as a reasonable interim compromise solution, with one modification.  As stated in Cal Advocates’ comments on the Revised Straw Proposal, CAISO should pick up the dropped component of its original proposal to classify energy as non-optimal in the RT binding interval if a storage resource’s SOC is at the minimum or maximum value.[1]  Although the condition may not identify all intervals in which unwarranted BCR occurs, it would provide an additional layer of protection against unwarranted BCR when the condition is triggered.

[1] Cal Advocates’ Comments on the Revised Straw Proposal, September 23, 2024, Response to Question 2.

7. Please provide your organization’s comments regarding the examples included in the DFP.

 See Cal Advocates’ response to Question 2.

8. Please provide your organization’s comments regarding the Governance Classification.

Cal Advocates does not have comments at this time. 

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

Cal Advocates does not have additional comments or feedback.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

The California Energy Storage Alliance (CESA) appreciates the opportunity to comment on the Storage Bid Cost Recovery (BCR) and Default Energy Bids (DEB) Enhancements initiative.  CESA appreciates the collaboration among stakeholders and CAISO’s evaluation of alternative interim proposals given the initial CAISO proposal was not implementable.  However, CAISO changed its objective for an interim solution from addressing forced buy-backs and sell-backs.  CAISO’s proposal in the DFP seeks to redesign real-time BCR by replacing the energy bid used in the calculation of BCR shortfalls.  The new BCR calculation will apply in all intervals when there is a buy or sell in the real-time market.  CESA’s alternative proposal was not developed to address a complete overhaul of real-time BCR as CAISO has inappropriately done in the DFP.

CAISO stated that applying the new BCR calculation in all intervals was needed for quick implementation.  This justification is not logical.  The data necessary to perform the CESA proposal is existing settlement data.  The logic to check if a day-ahead schedule exists is required under both the CAISO proposal and CESA proposal since if a day-ahead schedule does not exist, the CAISO proposal must set the day-ahead LMP component to null.  Lastly, since settlements already have the necessary data to implement the CESA proposal, CAISO can request an effective date at the filing date with FERC.  CAISO can then develop and test the changes over the next few months and retroactively re-settle storage BCR back to the effective date.

CESA requests CAISO to reflect the following changes to the DFP in is final proposal:

• CAISO should apply the modified BCR formulation, which replaces the real-time bid component with a reasonable proxy cost, only in intervals where there is a reasonable expectation that forced buy-back/sell-back is occurring due to a constrained dispatch and not market economics or market design features.
• CAISO should immediately commence the Energy Storage Enhancements initiative.  This initiative will address market design improvements to enable storage scheduling coordinators to better manage the storage resource’s state-of-charge (SOC) in the real-time market, address shortcomings of the real-time DEB calculation, and understand better other market design features impacting out-ot-merit dispatches of storage. By addressing holistically storage participation in the real-time market, a more comprehensive consideration and development of appropriate BCR measures can be developed.

In the event CAISO does not modify the DFP, CESA requests that no references be made to the CESA bid cost recovery calculation in the CAISO proposal.  Making reference to CESA’s proposal creates a misperception that CESA supports applying the settlement logic CESA developed in all intervals.  CESA does not support applying the settlement logic in all intervals.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

See above.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

CESA believes that Section 5 overstates differences in alternative proposals.  CESA, PG&E, Vistra, and WPTF collaborated closely to develop an implementable approach to address inflated BCR caused by forced sell-backs and buy-backs which was CAISO’s stated objective for the interim solution.  

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

CESA supports reviewing BCR issues caused by LMPM as part of the Energy Storage Enhancements initiatives review of the shortcoming of the current real-time storage DEB. 

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

CESA does not believe CAISO has clearly demonstrated there is an issue with the MIO inappropriately inflating BCR.  The CAISO’s example in figures 4 and 5 show how a self-schedule in the advisory intervals can cause a forced out-of-merit charge or discharge schedule in the binding interval which can lead to inflated BCR.  But this MIO issue was addressed as part of ESDER 4 by not allowing BCR in market intervals for the hour proceeding a real-time self-schedule. 

CAISO has not identified the root cause why the MIO advisory pricing does not materialize when the advisory interval becomes binding.  The MIO ensures that resources are dispatched consistent with charging and discharging bids over the horizon, not in each individual interval.  If the advisory prices materialize when the interval becomes binding there will be no BCR because interval shortfalls and surpluses are netted across the operating day.

For example, assume a charge bid of $50, discharge bid of $120, and 100% round trip efficiency. In the binding interval the price is $100, the storage resource is dispatched out-of-merit to charge in the binding interval.  This means the discharge price in the advisory interval was at least $170.  Assume that nothing changes in the net load forecast over the market horizon, i.e. the advisory interval does not change when it becomes binding in the subsequent market run.  The storage resource is dispatched to discharge and the price is at least $170.  In the charging interval, the resource has a BCR shortfall of $50.  In the discharging interval, the resource has a BCR surplus of $50.  The storage resource real-time BCR is $0 for the day.

If the $170 price does not materialize or the resource is not dispatched to discharge, the storage resource should receive a BCR payment.  CAISO should research the root causes why advisory intervals are different when the intervals become binding.  High BCR payments to storage resources are a symptom of a potential market design issue that should be addressed to improve the convergence between advisory interval dispatch and prices when the interval becomes binding in a later real-time market run.  By addressing the root causes, market efficiency will be improved and BCR will naturally be reduced.  CAISO’s approach in the DFP to apply the change in BCR calculations in all intervals is akin to sweeping the root causes under the rug.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

CESA is concerned that the examples included in Appendix A do not accurately reflect the CESA proposal.  In addition, CAISO stated that the resource scenarios were created examples.  CESA and others requested that the actual spreadsheet behind the summary data presented in Table 1 be provided in order to understand how CAISO implemented the CESA proposal.  CAISO did respond to this request but provided a different spreadsheet that shows various interval scenarios.

CAISO should provide masked data for actual resources which CAISO believes have inflated BCR for a given operating day.  CAISO should provide the day-ahead, FMM, RTD schedules/dispatch, and current BCR calculation for the day.  CAISO could implement the alternative proposal using the actual data and provide the spreadsheet to stakeholders so that it can be validated that CAISO is implementing the proposal as intended.

7. Please provide your organization’s comments regarding the examples included in the DFP.

No additional comment. 

8. Please provide your organization’s comments regarding the Governance Classification.

Support.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

No additional comments.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

We appreciate the CAISO staff for taking the time to provide the addendum and spreadsheet with the examples to the DFP.  Given the complexity of the proposed formulas, we would like to request that the CAISO host a web meeting with stakeholders to step through some of the examples.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

7. Please provide your organization’s comments regarding the examples included in the DFP.

Given the complexity of the proposed formulas, we would like to request that the CAISO host a web meeting with stakeholders to step through some of the examples.

8. Please provide your organization’s comments regarding the Governance Classification.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

PG&E appreciates the CAISO’s ongoing efforts to provide a collaborative stakeholder process with the aim of closing loopholes for unwarranted bid cost recovery (BCR) payments. PG&E’s comments on the Revised Draft Final Proposal can be summarized as follows:

• PG&E agrees with comments offered by the CAISO’s Department of Market Monitoring (DMM) that the only way to appropriately address BCR eligibility is by integrating state-of-charge (SOC) data into the Settlements system, which has been described as infeasible for an interim (short-term) solution.
• PG&E supports the most recent CESA proposal as an interim solution with written commitment by the CAISO to integrate SOC data in the long-term solution (as recommended by the DMM).
• PG&E questions whether the issues identified with multi-interval optimization (MIO) can be addressed in a longer-term solution or require broader market design changes.
• The additional detail and examples provided in the addendum illustrate the complexity of the BCR issue and the importance of quality assuring any potential implementation.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

PG&E supports the most recent change to the CESA proposal which excludes the day-ahead (DA) locational marginal price (LMP) from the formula during intervals without DA schedules. Please refer to PG&E’s responses to question 6 for more feedback on the DFP.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

PG&E continues to support the latest iteration of the CESA proposal as the most appropriate and feasible interim solution to the unwarranted BCR issue. Due to the complexity of the BCR formulas and the impact to Settlements, PG&E stresses the importance of quality implementation.

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

No comments.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

The CAISO contends that challenges introduced by MIO warrant action to be taken on an interim basis. While this may be true as it relates to strategic RT bidding (see PG&E’s response to question 6), the MIO topic is very complex and requires more stakeholder discussion to adequately address. It would be imprudent to assume that MIO challenges can be remedied by disallowing BCR for optimization signals resulting from advisory intervals. Advisory intervals, by their nature, are not settled like binding intervals. PG&E questions whether a Track 2 of the Storage BCR initiative is the appropriate place to address MIO challenges or whether the topic belongs in another market design or energy storage enhancements initiative.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

PG&E recognizes that there is general consensus over implementing a fix for intervals with day-ahead (DA) schedules, however less agreement between stakeholders on appropriate treatment for intervals without DA schedules. As the BCR issue was initially presented, the risk of strategic bidding was demonstrated during “buy-back” or “sell-back” situations for storage assets with DA awards. This was the context in which the CESA proposal was designed (and further iterated upon). As the initiative progressed, however, the CAISO proposed applying the CESA “buy-back” and “sell-back” formulas to additional scenarios, namely RT discharge and RT charge intervals with no DA awards. PG&E considers these RT-only scenarios are better described as “buy” (charge) or “sell” (discharge). The CAISO’s concern that storage assets are not exposed to real-time (RT) prices for deviating from day-ahead schedules (concern #1) no longer applies in these scenarios since there are no DA schedules. The CAISO’s concern that storage assets are incentivized to bid strategically to maximize the combined BCR and market payment (concern #2) may still persist without DA schedules, although it is less clear how strategic behavior could manifest.

PG&E underscores how SOC data is pertinent in determining whether an uneconomic RT dispatch with no DA schedule is warranted for BCR. A reasonable approach for the CAISO is to allow BCR for intervals in which the storage asset had the SOC to deliver the uneconomic dispatch and disallow BCR for intervals without the necessary SOC. In lieu of integrating SOC data in the Settlements system, PG&E understands and supports the CAISO’s approach of modifying the BCR formula for all intervals (with and without DA schedules) as an interim solution. However, without the necessary follow-up steps, this solution is incomplete. PG&E therefore recommends the CAISO to explicitly state that it will integrate SOC data in its long-term solution to address the more nuanced scenarios. 

7. Please provide your organization’s comments regarding the examples included in the DFP.

The examples presented by the CAISO were illustrative of how BCR is almost entirely eliminated for storage assets in the sample intervals, due to applying the current formula to all RT intervals. The subsequent addendum was further helpful to show the details of the proposed formulas, although the initial publication of the workbook contained some errors (which were later corrected in the 10/18/2024 republished version).

8. Please provide your organization’s comments regarding the Governance Classification.

 No comments.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

PG&E seeks clarification on whether the CAISO’s proposal for a new BCR formula would apply to all resources using the NGR model or only limited energy storage resources (LESRs). PG&E also assumes that the status quo RT BCR formula will remain the same for other resources (e.g. thermal, hydro). If this isn’t the case, the CAISO should explicitly state which resources (other than NGRs) will be impacted by the proposed BCR formula.

PG&E also reiterates its previous comments[1] on the importance of launching a comprehensive storage enhancements initiative following the implementation of this BCR initiative. There are several crucial issues in the queue for the CAISO and broader storage community to address, such as improving the storage default energy bid (DEB), which warrant prompt action.  

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/04a134b1-3874-498a-ab08-e075048095e5#org-0cb37983-2a36-4b2c-9ad3-aaa06e8d34f2

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

SDG&E appreciates the effort that CAISO has put into developing a Draft Final Proposal on the Storage BCR initiative that summarizes the various solutions, and the subsequent modifications to those solutions, put forward by both CAISO and stakeholders on this topic. SDG&E recognizes the complexity of the BCR rules and the complications any modifications present for both the policy development and implementation phases. While SDG&E agrees with the intention of this initiative and believes an interim solution to Concern 2 should be adopted, any adopted interim solution should move forward methodically to ensure it is implemented correctly and does not cause unintended complications. Additionally, SDG&E requests that CAISO move expeditiously to the next phase of this initiative to develop a durable long-term solution for storage BCR and revised DEB methodology.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

The modified CESA proposal appears to be a workable compromise that reduces the magnitude of BCR payments, therefore addressing Concern 2 within the Track 1 objectives. However, SDG&E is still weighing the application of this proposal across all intervals.  Applying the modified formulas across all intervals as contemplated in CAISO’s proposal would not specifically target instances of unwarranted BCR. Rather, BCR payments would be reduced broadly without consideration of what is driving the buy- or sell-back of energy schedules, whether it be SOC constraints or aspects of the market design (such as mitigation). At the very least, SDG&E strongly supports that any solutions developed in a future track of this initiative or the upcoming Energy Storage Enhancements initiative make the distinction between warranted/unwarranted BCR and develop a framework that allows storage resources to be uplifted accordingly.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

SDG&E appreciates the breadth of proposals included in the DFP for consideration by stakeholders.

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

No comment.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

No comment.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

SDG&E supports moving forward with the modified CESA proposal (outlined below) to reduce the magnitude of BCR payments as a short-term, temporary solution for Concern #2. The development of these formulas and general approach represents a compromise position from multiple iterations of proposal development. Based on our initial evaluation of how the formulas would be implemented, the modified CESA proposal provides a reasonable cost approximation that protects storage resources while ensuring that BCR payments are not artificially inflated by bidding behavior. Although SDG&E did not initially envision or support applying this formula to all intervals in real-time, we understand that a solution that includes triggering conditions could significantly increase implementation risks and might not be feasible under this expedited timeframe. However, it is unclear if this approach would represent a more fundamental change to the BCR rules than is needed to address Concern #2. Further, SDG&E agrees with the comments of other stakeholders that the modified CESA proposal below should only be applied when there are day-ahead schedules, and the formula should be changed to exclude the DA LMP when there are none (as outlined in the updated addendum).

FMM Bid Costs:

• If(Differential FMM Dispatch > 0, (FMM Dispatch – DA schedule) * ([Min(FMM Bid, Max(DA LMP, Charge Portion of RT DEB, FMM LMP)] – FMM LMP), 0)
• If(Differential FMM Dispatch <= 0, (FMM dispatch – DA schedule) * ([Max(FMM Bid, Min(DA LMP, Discharge Portion of RT DEB, FMM LMP)] – FMM LMP), 0)

RTD Bid Costs:

• If(Differential RTD Dispatch > 0, (RTD Dispatch – FMM Dispatch) * ([Min(RTDBid, Max(DA LMP, Charge Portion of RT DEB, RTDLMP)] – RTD LMP), 0)
• If(Differential RTD Dispatch <= 0, (RTD dispatch – DA schedule) * ([Max(RTD Bid, Min(DA LMP, Discharge Portion of RT DEB, RTD LMP)] – RTD LMP), 0)

Note: These formulas were outlined in the updated addendum on October 21, 2024 and would be applied in the case of a buy back/sell back of energy based on the difference between the FMM dispatch and DA schedule.

7. Please provide your organization’s comments regarding the examples included in the DFP.

SDG&E thanks the CAISO staff for providing numerical examples and analysis of how each stakeholder proposal would impact BCR payments in the Draft Final Proposal’s Appendix and the Addendum.

8. Please provide your organization’s comments regarding the Governance Classification.

No comment.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

No comment.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

The Six Cities support the CAISO’s efforts to address issues related to unwarranted or inflated Bid Cost Recover (“BCR”) payments to energy storage assets as identified in Track 1 of this initiative.  The Six Cities appreciate the insights provided by the CAISO and other stakeholders that highlight the complexity of designing appropriate and effective solutions for such issues, particularly with respect to multi-interval optimization and local market power mitigation.  That said, the Six Cities agree that the CAISO’s current proposal appears to be reasonable as a near-term, interim solution, and therefore do not oppose the CAISO’s decision to move forward with adopting a modified version of the California Energy Storage Alliance’s proposed formula for calculating real-time energy bid costs in the real-time BCR settlement for storage resources.  Adoption of the modified BCR calculation as discussed in the Draft Final Proposal will allow the CAISO to timely address the existing design gap and limit the ability of resources to bid strategically in a manner that unduly inflates BCR in the near-term, pending development of a new uplift mechanism for storage assets to be addressed in future tracks.  The Six Cities strongly support close monitoring of the implementation of this solution so that the CAISO and market participants will be poised to address and consider any unintended consequences.  In terms of a more permanent approach, the Six Cities urge the CAISO to move forward expeditiously with the next phase of this initiative. 

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

Please see the comments provided above in response to question no. 1.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

Please see the comments provided above in response to question no. 1.

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

Please see the comments provided above in response to question no. 1.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

Please see the comments provided above in response to question no. 1.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

Please see the comments provided above in response to question no. 1.

7. Please provide your organization’s comments regarding the examples included in the DFP.

Please see the comments provided above in response to question no. 1.

8. Please provide your organization’s comments regarding the Governance Classification.

As indicated in previous comments, the Six Cities do not oppose the governance classification as joint authority.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

The Six Cities have no additional comments at this time.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

The Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to provide feedback on the DFP and the materials shared on October 9. SRP requests the CAISO to provide more clarity on how the proposal will affect WEIM-only resources. SRP also encourages the CAISO to ensure there is adequate time for further review and ensure the proposal supports both efficient operations and equitable outcomes for storage resources.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

SRP believes additional discussion and time are required to conduct prudent review of the WEIM only examples that were provided on October 15 and the impacts of the DFP to WEIM only scheduling coordinators. The DFP may unintentionally penalize SC’s only participating in the RT market by excluding from BCR on WEIM-only resources any opportunity cost caused by market-imposed MIO and binding SOC constraints due to the shuffling of advisory schedules. SRP appreciates the additional examples, but more time is required for a complete analysis of these scenarios.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

SRP would like clarification that under LMPM conditions, whether the RT Bid used in CESA’s Alternative Solution BCR calculation is the actual RT Bid submitted by the entity, or the capped and potentially modified DEB, the proposal appears ambiguous in this regard. Specifically, SRP requests clarity if the BCR calculation remains static under LMPM conditions.

Regarding the DMM analysis of BCR impacts, SRP is less optimistic than CESA regarding the results. DMM uses recent 2024 data but in aggregate likely mitigates the impacts of extreme days. The analysis of specific extreme days relies on 2023 data, when the level of battery capacity was lower than it is now and will be next Summer.  Additionally, while Figure 4 of DMM’s September 23 comments suggest revenue greater than bid cost as a driver of BCR, the proportion of bid cost is not inconsequential. It would be useful to see a more detailed analysis of the relationship of actual LMP level to both BCR and impacted MWh.

SRP remains concerned that entities will continue to incorporate opportunity costs into bids based on LMP forecasts, which may negatively impact system reliability under circumstances of extreme stress. This concern relates to Concern 1 rather than Concern 2, and appears to remain unresolved.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

SRP requests further clarity on how the MIO will impact financial outcomes and dispatch decisions, such as examples where RT awards are lower than FMM awards. Additional analysis may help ensure storage resources are not disadvantaged.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

As mentioned in question 2, the DFP does not adequately explore impacts to WEIM-only resources or provide enough time to review the additional WEIM-only examples provided on October 15. SRP is aligned with the DMM recommendation to avoid rushing the implementation of an interim solution as noted in the October 19 presentation.

Additionally, SRP requests clarification on the CAISO’s timeframe for the proposed solution to be replaced by a holistic and long-term solution.

7. Please provide your organization’s comments regarding the examples included in the DFP.

SRP appreciates the examples the CAISO provided to review and acknowledges the “Cases with No DA Schedule” examples and formulas provided as part of the addendum posted on October 15. One point of clarification, the DFP suggested replacement of DA LMPs with “null” while the examples utilize “$0.00.” SRP requests confirmation on whether this distinction has any impact to market optimization or SIBR.

Further, the WEIM-only examples (“Cases with No DA Schedule”) only address RTD dispatch lower than the FMM dispatch for the charging schedule (represented on the spreadsheet as negative schedule values), but do not cover scenarios where the discharge RTD Schedule (DOT) is less than the discharge FMM Schedule (resource commitment happens in the FMM). SRP requests an example from the CAISO for this scenario.

8. Please provide your organization’s comments regarding the Governance Classification.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

No additional comments at this time.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

Terra-Gen appreciates the opportunity to provide comments on the Storage Bid Cost Recovery (BCR) and Default Energy Bids (DEB) Enhancements initiative. While we appreciate CAISO's evaluation of alternative interim proposals, we are concerned about the direction the initiative has taken.

CAISO's proposed changes to real-time BCR, as outlined in the Draft Final Proposal (DFP), are significant and depart from the original intent of addressing forced buy-backs and sell-backs. We believe that the proposed modifications are overly broad and could have unintended consequences for storage resources.

Terra-Gen opposes the CAISO’s latest change to its proposal to apply the modified calculations across all intervals of the real-time market.  Terra-Gen expresses significant concern that the application of the proposed modified calculations to all periods is overly conservative and unwarranted.  CAISO has not justified its late change to apply this proposal in all periods rather than only a more limited subset of intervals as CESA had previously proposed. Furthermore, even if the CAISO proposal to apply modified BCR calculations on an interim basis,

Given prior outcomes with CAISO initiative planning and scheduling following interim and emergency changes related to storage provisions, Terra-Gen has no confidence that CAISO will follow through on any commitments to revisit these complex issues on a timely basis.

Storage supply resources that will be affected by these changes are most likely to be subject to unfair BCR payment modification for an extended period. Terra-Gen believes that CAISO should slow down its process further and extend the timeline to continue more holistic storage discussions to develop a more robust proposal.  We strongly urge CAISO to extend the timeline for finalizing the proposal for Board of Governor consideration, and to reconsider its approach and adopt a more targeted solution.

Additionally, Terra-Gen concurs with the following feedback from other stakeholders:

Prioritizing the Energy Storage Enhancements Initiative: Terra-Gen fully supports the California Energy Storage Alliance (CESA) recommendation to prioritize the Energy Storage Enhancements initiative. This initiative will address market design improvements to enable better storage management, improve real-time DEB calculations, and understand the impact of market design features on out-of-merit dispatches. A comprehensive approach to these issues is essential for developing appropriate BCR measures.

Continuing Discussions in Track 2: We also support the Western Power Trading Forum (WPTF) recommendation to continue discussions directly into Track 2 to allow more time to consider the holistic discussion of a make-whole payment framework for storage resources. This is a critical step in developing a more comprehensive and sustainable solution for storage participation in the real-time market.

We believe that a more targeted and collaborative approach can lead to a more effective and equitable solution for storage resources.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

See response to question 1, above.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

Terra-Gen opposes CAISO’s intention to ignore the impact of LMPM in its proposed interim approach. CAISO’s Market Surveillance Committee agreed with stakeholders that noted that instances in which resources were mitigated in intervals prior to a buy- or sell-back of a day-ahead schedule may merit specific BCR provisions. Simply because CAISO and CAISO Department of Market Monitoring (DMM) analysis indicates that the impact of the proposed modified BCR calculations related to mitigated periods is minimal does not justify the proposal to disregard the principle of this aspect of its proposal. If CAISO disregards the stakeholder recommendations to extend the initiative for further consideration and development, then it should commit to review and modification of its interim approach to ensure that the approach is not unfairly impacting resources that have been subject CAISO LMPM.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

Terra-Gen believes CAISO’s proposed changes to real-time BCR are not justified by the complexities of its Multi-Interval Optimization (MIO) process.

Terra-Gen understands that the MIO can contribute to uneconomic scheduling, however, we concur with WPTF and believe that the existing BCR eligibility criteria, which address factors such as end-of-hour state-of-charge, self-scheduling, and awarded ancillary services, are sufficient to mitigate these issues. The only other reasons why a storage resource would be uneconomically scheduled in an interval are due to market optimization features, not by bidding behaviors, and the remaining drivers result only in warranted BCR.

CAISO has not provided clear evidence to support the claim that the MIO is inappropriately inflating BCR in all intervals. Terra-Gen concurs with CESA that the examples provided in figures 4 and 5 demonstrate how self-scheduling in advisory intervals can lead to forced out-of-merit charges or discharges, but these issues are already addressed by the existing BCR eligibility rules.

Furthermore, the CAISO has not identified the root cause of why advisory prices do not always materialize when the advisory interval becomes binding. CAISO should provide more concrete evidence to justify the application of the modified BCR formulas in all intervals.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

7. Please provide your organization’s comments regarding the examples included in the DFP.

8. Please provide your organization’s comments regarding the Governance Classification.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

Terra-Gen opposes the CAISO’s proposal as it departs from the original intent of addressing forced buy-backs and sell-backs. While we initially supported the collaborative approach and CAISO's evaluation of alternative interim proposals, the DFP introduces significant changes to real-time BCR that extend beyond the scope of the original issue.

Terra-Gen concurs with the WPTF recommendation that the modified BCR formulation should only be applied to specific intervals where either:

1. The storage resource has a day-ahead or base schedule.
2. The storage resource does not receive an increased schedule in either FMM or RTD where FMM or RTD increases its discharge schedule or charge schedule from an earlier market run.

This approach would limit the application of the modified formula to instances where the storage resource is truly buying-back or selling-back energy, aligning with the original intent of the initiative.

Terra-Gen requests that CAISO reconsider its approach and adopt a more targeted solution that aligns with the original scope of the initiative.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

Vistra appreciates CAISO's commitment to stakeholder engagement throughout this initiative. The additional materials provided, particularly between October 9th and 15th, have clarified important aspects of CAISO’s proposal as well as raised additional questions needing addressed, and we thank CAISO for its efforts. After careful consideration, Vistra respectfully opposes CAISO’s Draft Final Proposal. We urge CAISO to pause the interim proposal and prioritize the Energy Storage Enhancements initiative, which can include a more comprehensive uplift replacement framework.

Given the complexities of implementation limitations, it would be unwise to allocate scarce resources to an interim solution if there is any risk that by implementing an interim approach will delay the implementation of a holistic framework. Vistra is concerned about CAISO's ability to manage two major storage BCR initiatives within 2024-2025, or even through 2026. Any implementation beyond this period would no longer be an interim approach but instead a new uplift framework. We believe focusing on the broader Energy Storage Enhancements is a more prudent and efficient path forward.

CAISO’s interim proposal to modify real-time bid cost recovery (BCR) across all intervals effectively eliminates BCR for storage resources, which we find unduly discriminatory and inconsistent with the original problem statement. The issue identified was specifically tied to bid cost recovery during intervals where storage has insufficient state of charge (SOC) to meet day-ahead awards—not across all intervals. While we support the modified calculations in constrained intervals, applying this change to all intervals unfairly penalizes storage. If we had understood that CAISO intended to extend the scope to apply to all intervals, effectively implementing a new uplift framework, Vistra would have proposed an alternative for the uplift replacement framework applying across the day. As CAISO proposal is to continue this interim solution for the foreseeable future, we find it unjust and unreasonable as an uplift replacement.

If CAISO stays its course against stakeholder opposition, Vistra respectfully requests that to mitigate the potential for unfair losses, CAISO support an after-the-fact cost recovery review for days in which storage resources incur significant losses due to this interim framework. Such a review would help identify pathways to reduce the risk of storage resources bearing undue losses and ensure a fairer outcome for these assets. Absent this process, Vistra will remain opposed to the draft final proposal as it is unjust and unreasonable unless it has a mechanism to address unfair losses.

We strongly encourage CAISO to shift its focus to developing a holistic framework through the Energy Storage Enhancements initiative, which better addresses the specific characteristics and operational complexities of storage resources.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

See the response above.

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

CAISO overstates differences in alternative proposals whereas Vistra views this as a joint stakeholder proposal across the CESA, PG&E, WPTF, and Vistra organizations to address the vetted problem statement of risks of strategic bidding increasing BCR in intervals that the market was constrained by state of charge. Of these four, Vistra and WPTF felt it might be possible for CAISO to implement a more sophisticated trigger for the targeted intervals that include Flexible Ramping awards or state of charge values. However, these were conditions requested above the joint proposal. Given CAISO’s concerns with implementation capacity for the joint proposal simpler criteria, Vistra believes there is seamless alignment on this compromise proposal without those additions and CAISO should refer to this as the joint stakeholder proposal instead of CESA proposal going forward.

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

CAISO should commence the Energy Storage Enhancements effort immediately within which the default energy bid enhancements should be within scope.

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

CAISO has not demonstrated that Multi-Interval Optimization (MIO) leads to unwarranted BCR. As shown in Vistra’s previous comments, CAISO has largely addressed concerns with stakeholder self-schedules or bidding functioning like self-schedules being made ineligible for BCR in those intervals. The two exceptions to this were raised by Vistra in prior comments. The concerns related to outages on state of charge levels and the use of state of charge bid parameters are addressed by the CAISO on page 24 of the Revised Draft Final Proposal, where the CAISO agrees these may constrain real-time schedules driving BCR shortfalls despite being the result of scheduling coordinator (SC) action. However, CAISO also states it will not address these issues in this effort but instead defer to future efforts. These efforts should be taken up in Energy Storage Enhancements.

Rather than supporting CAISO’s proposal instead, this section shows why doing so would be an unjust and unreasonable market outcome. While a single MIO run may appear economic, collectively, MIO runs across an entire day may fail to achieve an optimal outcome over the 24-hour period. This issue is further compounded when individual MIO runs appear economic due to mitigated bids that do not adequately reflect the value of managing intra-day opportunity costs. Market participants should not bear losses caused by CAISO’s market design, particularly when mitigation limits their ability to accurately reflect their willingness to charge, leading to lower-than-expected state of charge levels. This section underscores the risk of unjust and unreasonable outcomes if applied throughout the entire day.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

See the response above. 

7. Please provide your organization’s comments regarding the examples included in the DFP.

It remains unclear whether the examples in the Draft Final Proposal (DFP) accurately estimate the impacts of the joint stakeholder proposal. Our request for the underlying data was intended to verify that CAISO applied the conditions proposed by joint stakeholders and to assess how bidding and pricing behavior, both strategic and normal, were reflected in these sample days. However, the Excel spreadsheet provided by CAISO did not contain the underlying data for the examples, leaving these questions unanswered.

While we appreciate CAISO's effort to provide additional information, the data was not responsive to our specific request. Vistra has found that, although CAISO has been engaged with stakeholders, responses have not always addressed our core questions or concerns. We value this ongoing dialogue and remain hopeful that future communication will be more aligned, allowing for a deeper mutual understanding of needs and requests.

8. Please provide your organization’s comments regarding the Governance Classification.

Vistra supports joint authority designation.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

None.

1. Please provide a summary of your organization’s general comments on the Draft Final Proposal (DFP) and the meeting and materials shared on October 9th.

WPTF appreciates the opportunity to provide these comments. This was a policy effort that had the potential to reach a reasonable interim solution with general consensus at the onset. Unfortunately, the latest iteration of the proposal muted that outcome and instead has introduced a solution that no longer reasonably addresses the issue everyone agreed to address at the beginning of this effort as an interim solution. Instead, we are left with a proposal that entirely changes real-time BCR for storage resources, which was supposed to be the topic of discussion in Track 2 of this effort.

WPTF is disappointed in the outcome of the draft final proposal as it took what was a reasonable approach with stakeholder consensus and now proposing changes to the application of BCR for storage resources inappropriately. Storage resources will now be mitigated for BCR 24x7. However, we do believe that with a couple minor modifications to the CAISO’s proposal as noted in response to #7, there is still hope for common ground to be reached. We strongly urge CAISO to consider these modifications so we can move forward as a stakeholder community to having the robust holistic discussion around BCR for storage resources.

We respectfully request that the CAISO also continue these discussions directly into Track 2 – the holistic discussion of a make whole payment framework for storage resources. Key to this policy proposal was the understanding that this is an interim solution intended to address an exposed concern with the current BCR framework. As with any interim solution, the expectation is that it’s temporary. We are concerned that if the discussions pause, we may not reach a holistic solution until well after EDAM/DAME are implemented, which we would not consider to be an interim solution as it would likely be in place well into 2027.

WPTF’s comments also reflect the following:

• The latest proposal inappropriately applies buy-back and sell-back formulas to buying and selling conditions, which was not the issue originally set out to be addressed by this interim solution
• The latest proposal mitigates BCR payments for storage resources by placing a cap on the costs it will be made whole to whenever selling energy and a floor on the costs it will be made whole to whenever buying energy
• The data analysis does not support the CAISO’s latest proposal
• WPTF still has outstanding questions that the CAISO has yet to respond to

Given the outstanding questions and concerns that have not been addressed by the CAISO, WPTF does not believe this effort is ripe to be advanced to a final proposal and taken to the November board meeting less than three weeks away. CAISO should focus on continuing to develop a feasible proposal within scope of Track 1 only impacting targeted intervals. WPTF respectfully request the CAISO hold another stakeholder call to discuss the excel file and addendum posted on Friday October 18 and provide an updated proposal addressing the agreed upon scope.

2. Please provide your organization’s comments regarding the changes on the DFP relative to the Revised Straw Proposal (RSP)

Please see response to #7 below. 

3. Please provide your organization's comments regarding the proposals considered for Track 1 of the present initiative (Section 5).

Please see response to #7 below. 

4. Please provide your organization's comments regarding the issues related to local market power mitigation (LMPM) as described in the DFP and in the October 9th materials.

No comments at this time. 

5. Please provide your organization's comments regarding the issues related to applicable intervals and multi-interval optimization (MIO) as described in the DFP.

WPTF does not agree with the CAISO in that the MIO complexity justifies applying the modified BCR formulas in all intervals. As stated in our previous comments, all the factors that contribute to a storage resource being uneconomically scheduled in the binding interval due to MIO are already addressed by making the resource ineligible for BCR. Specifically (1) end-of-hour state-of-charge parameter, (2) self-schedule within the horizon, (3) self-schedule outside of the horizon, and (4) awarded ancillary services. Thus, the only other reasons why a storage resource would be uneconomically scheduled in an interval are due to market optimization features, not action by the SC. This is warranted BCR.

WPTF asked CAISO to identify any other instances that would lead to uneconomic scheduling in a binding interval justifying additional BCR adjustments. However, they did not provide any additional circumstances in response. Thus, we still are unsure what justification can be provided that warrants modified BCR in all remaining intervals.

6. Please provide your organization’s comments regarding the Draft Final Proposal as described in Section 7 of the DFP and the materials shared on October 9th.

No comment at this time.

7. Please provide your organization’s comments regarding the examples included in the DFP.

WPTF is disappointed in the outcome of the draft final proposal as it took what was a reasonable approach with significant stakeholder consensus, introduced scope creep, and now changes the application of real-time BCR for storage resources 24x7. Additionally, the data analysis does not support CAISO’s latest proposal. While WPTF appreciates the CAISO providing data analysis in this expedited policy process, the analysis no longer supports the final proposal. The original issue as described by CAISO was a concern with the ability for storage resources to bid in a way to exacerbate BCR payments when they do not have sufficient SOC to support day-ahead schedules. This was first supported by DMM’s analysis presented on Jul 8, 2024. The DMM showed that most of the real-time BCR to storage resources results from having insufficient SOC to meet day-ahead schedules and thus had to buy-back or sell-back previous energy schedules. But now, the CAISO’s proposal goes beyond the original issue that was supported with data and applies modified BCR formula to intervals even without day-ahead schedules and when a resource increases its position relative to the previous market run (i.e., discharging/charging more in FMM than in day-ahead).

To be clear, WPTF supports applying the modified BCR formulation as proposed by WPTF, CESA, Vistra, and PG&E to identified intervals. WPTF would be supportive of an approach where the modified BCR formulation was applied to any real-time interval where:

1. The storage resource has a day-ahead or base schedule, and
2. The storage resource does not receive an increased schedule in either FMM or RTD where FMM or RTD increases its discharge schedule or charge schedule from an earlier market run (i.e. increasing its previous position)

It’s imperative to keep in mind that the framing of this issue by the CAISO was in the context of instances where the storage resource was either “buying-back” or “selling-back” energy in real-time. This last-minute change to apply the modified formula to all intervals now expands it to all instances where the resource is buying or selling energy; this is drastically different than buying-back and selling-back energy and appears to extend beyond the original scope of the issue. This essentially places a cap on the cost a storage resource will be made whole to when selling energy and a floor on the cost when buying energy in all instances – effectively mitigation. Thus, applying condition #2 above ensures its only capturing the original intent – buy back and sell back conditions.

WPTF still has outstanding questions that have yet to be addressed, thus we still have the following concerns and questions with the proposal:

• CAISO is applying a sell-back formula to instances when the resource is actually selling (not selling-back) additional energy in real-time; this is when either (1) the resource does not have a day-ahead or base schedule but is discharging in real-time, or (2) when the resource is discharging more than in the prior market (e.g., higher discharge schedule in FMM than its DA  discharge schedule or higher discharge schedule in RTD than its FMM discharge schedule). This was not the original issue or intent of the interim solution.
• CAISO is applying a buy-back formula to instances when the resource is actually buying (not buying-back) additional energy in real-time; this is when either (1) the resource does not have a day-ahead or base schedule but is charging in real-time, or (2) when the resource is charging more than in the prior market (e.g., higher charge schedule in FMM than its DA  charge schedule or higher charge schedule in RTD than its FMM charge schedule). This was not the original issue or intent of the interim solution.
• Confirm that the charging bid will be used when the real-time (FMM or RTD) schedule is charging and the discharge bid when the real-time (FMM or RTD) schedule is discharging
• During the stakeholder call the CAISO noted that oftentimes an interval would only meet 2 of the 3 criteria proposed by CESA, WPTF, Vistra, and PG&E. The CAISO was unable to clarify which of the 3 criteria was often not met, which could have resulted in a slight modification to the proposed criteria that satisfied all.
• From an implementation perspective, is the CAISO able to implement the logic needed for the criteria or is the CAISO not wanting to propose the criteria due to a justified policy position? If the CAISO’s basis is a policy position, is it one that has been vetted sufficiently with stakeholders in this effort?
• What other conditions besides those listed in response to #5 above create conditions where a storage resource is uneconomically dispatched in binding intervals and results in unwarranted BCR?

8. Please provide your organization’s comments regarding the Governance Classification.

No comment at this time.

9. Please provide any additional comments, feedback, or examples regarding the DFP and the October 9th stakeholder meeting. You may upload examples or data using the “Attachments” field below.

WPTF appreciates the CAISO posting additional information following the last stakeholder call; specifically, the excel file that shows the application of the proposed formulation to various conditions and the addendum with the formulas. WPTF respectfully requests that the CAISO hold another stakeholder call to discuss the excel file and addendum posted on Friday October 18. The additional information provided was not only significant but highlighted several areas of concern where the modified BCR formulation would be inappropriately applied. It is important that all stakeholders have an opportunity to fully understand what the CAISO is proposing and also provide feedback in a manner and timeline that allows for the CAISO to make additional adjustments before taking to the Board of Governors meeting.