Comments on Alternative proposals

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the August 19, 2024, stakeholder call. The CAISO presented a revised schedule, alternative proposals put forth by the California Energy Storage Alliance (CESA) and Vistra Corp. (Vistra), and an analysis of the frequency of storage mitigation to inform potential instances of warranted Bid-Cost Recovery (BCR).

The concerns that the CAISO listed, lack of exposure to real-time (RT) prices and incentives to bid strategically, are legitimate issues that the stakeholder process should address.  The CAISO will need to determine how much of each objective can be addressed immediately and which may take a longer-term initiative to address.  In summary:

• CalCCA thanks the CAISO for extending the schedule of this initiative to allow more time to have a robust discussion of solutions that specifically target unwarranted BCR payments.

• The CESA proposal and Vistra proposals warrant additional discussion and consideration. The CAISO should explore the open questions associated with these alternative proposals to allow stakeholders to assess their merits fully.

• CalCCA appreciates the CAISO’s presentation of instances of mitigation, including cases in which BCR payments to storage resources would likely be warranted.

The CAISO’s revised schedule, presentation of alternative solutions, and presentations of cases where BCR may be warranted will allow for a more robust discussion of the potential of solutions that effectively address unwarranted BCR payments while providing fair compensation for storage resources.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

CalCCA appreciates the CAISO’s revised schedule of the initiative, which will provide more time for stakeholders to evaluate and comment on the CAISO’s proposal and stakeholder-proposed alternatives. It will also allow more time to consider which instances warrant BCR, like when resources are mitigated, and the magnitude of those instances. The revised schedule will allow more time to have a robust discussion of solutions that specifically target unwarranted BCR payments.  The CAISO should consider whether one of its concerns will be easier to address within the updated schedule than the other.  In addition, if one of the two concerns is more difficult to address, the CAISO should evaluate whether it is feasible to put forth proposals that address both within the updated schedule or if an additional phase of the stakeholder process will be necessary.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

Within the stakeholder initiative, the CAISO should include further examples and description of how BCR is triggered.  This information will help stakeholders to better understand the changes being contemplated. 

Unwarranted BCR payments can result from the current framework’s disincentives to consider RT market conditions due to limited RT price exposure that could incentivize resources to bid inefficiently to maximize BCR payments. The CAISO and the Department of Market Monitoring have identified an increase in BCR payments to storage resources related to the buy-back or sell-back of day-ahead schedules due to state-of-charge constraints. This can create market inefficiencies and increased costs that could be exacerbated by the ability of storage to bid above the soft-offer cap. However, BCR payments are warranted if the buy-back or sell-back results from the CAISO’s market design preventing resources from reflecting RT conditions in the RT energy bids and, therefore, dispatching storage in a way that makes them eligible for BCR. In these cases, BCR is warranted, and the CAISO should aim to develop a solution that differentiates between unwarranted and warranted BCR.

CESA and Vistra proposed alternative solutions to the CAISO’s straw proposal. CESA’s proposal would modify the RT BCR calculation to replace the resource’s RT bid price with the day-ahead energy price. This proposal intends to allow storage resources to continue existing bidding practices without inadvertently increasing BCR payments or offering strategic RT bids to increase revenues through BCR payments. Vistra makes a similar proposal to CESA but would use the resources’ default energy bid rather than the day-ahead energy price in the BCR calculation. It also advances a proposal to exclude resources from BCR in the intervals where the scheduling coordinator has submitted an outage card or bid parameters that derate or rerate the resource. While CalCCA does not take a position on its preferred approach at this time, the CESA and Vistra proposals warrant further consideration, as they could offer improvements to the CAISO’s proposed blunt mechanism for excluding storage resources from BCR. The CAISO should continue to explore the open questions it identified associated with these proposals so that stakeholders can assess the merits of these proposed alternatives.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

CalCCA has no alternative proposals at this time.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

Stakeholders and the Market Surveillance Committee have noted that if storage is mitigated prior to the buy-back or sell-back, they may warrant BCR payments. This is one case beyond the resource operator’s control that can prevent a resource from having sufficient state of charge to follow its day-ahead schedule and prevent it from recovering its costs fully through market participation. The CAISO’s presentation indicates that about 41 percent of BCR payments to storage were paid to mitigated resources. This number is not insignificant and signals that the ultimate solution must consider instances where BCR is warranted.

6. Please provide any additional comments, feedback, or examples regarding the 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 meeting regarding alternative proposals.

Please see the attached comments.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

Please see the attached comments.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

Please see the attached comments.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

Please see the attached comments.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

Please see the attached comments.

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

Please see the attached comments.

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

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) August 19, 2024 storage bid cost recovery (BCR) and default energy bids enhancements workshop.  As 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.  In this initiative, Cal Advocates seeks to protect ratepayers from the costs of unwarranted BCR and to ensure that storage resources are properly incentivized to deliver CAISO market awards in a manner that will most efficiently and effectively maintain system reliability.

Cal Advocates supports the position of the CAISO’s Department of Market Monitoring (DMM) that Track 1 of the initiative must simultaneously address each of the risks (opportunities for market gaming, market inefficiencies, and diminished reliability) that the current BCR rules create.[1]

The CAISO’s proposal (CAISO proposal) to reclassify energy associated with state-of-charge (SOC) constraints during the real-time (RT) binding interval as non-optimal, and thus ineligible for BCR,[2] addresses all three risks.  The CAISO proposal is the most effective and viable option to address the need to protect ratepayers from the high costs and risks that the current BCR rules create.[3]  In contrast, the alternative proposals from the California Energy Storage Alliance (CESA) [4] and Vistra Corp. (Vistra)[5] fail to simultaneously mitigate the risks identified by DMM. 

Cal Advocates recognizes that there are broader issues with the overall BCR construct, as applied to energy storage resources, that the CAISO and stakeholders should address in the ongoing initiative.  For example, the CAISO explains that BCR was originally designed for thermal units to allow for the recovery of unit commitment and minimum load costs.[6]  Energy storage resources lack these conventional drivers for BCR.[7]  Moreover, thermal units are ineligible for BCR payments when unable to fulfill day-ahead (DA) schedules due to unavailability, while energy storage resources are eligible for BCR when unable to fulfill DA schedules due to insufficient SOC.[8]  This leads to materially different treatment of storage resources that may warrant a technology-specific BCR design.

However, the longer-term need to fundamentally address how and under what specific circumstances modified BCR rules should or should not be applied to storage resources should not delay the implementation of the CAISO proposal that is immediately necessary to protect ratepayers from unwarranted costs and system outages.  Adoption of the CAISO’s proposed policy changes on an interim basis would be acceptable if the CAISO includes broader reform of BCR rules for energy storage in the scope of a subsequent track of the initiative.

[1] CAISO DMM, Comments on Storage Bid Cost Recovery and Default Energy Bids, Issue Paper and Straw Proposal for Track 1, August 8, 2024 at 1.  Available at: https://www.caiso.com/documents/dmm-comments-on-storage-bid-cost-recovery-and-default-energy-bids-straw-proposal-aug-8-2024.pdf.

[2] CAISO, Storage Bid Cost Recovery and Default Energy Bids Enhancement Issue Paper and Straw Proposal for Track 1, July 26, 2024 (IPSP) at 25.  Available at:  https://stakeholdercenter.caiso.com/InitiativeDocuments/Issue-Paper-and-Straw-Proposal-Storage-Bid-Cost-Recovery-and-Default-Energy-Bids-Enhancements-Jul-26-2024.pdf.

[3] IPSP at 9, 16, and 18.

[4] CAISO, Storage Bid Cost Recovery and Default Energy Bid Enhancements, August 19, 2024 (August 19 Workshop) at 17-24.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Bid-Cost-Recovery-and-Default-Energy-Bids-Enhancements-Aug-19-2024.pdf.

[5] August 19 Workshop at 25-26.

[6] IPSP at 8.

[7] IPSP at 9.

[8] IPSP at 9.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

Cal Advocates continues to support the original schedule for Track 1 that would result in the implementation of policy changes before October 2024.  Ratepayers are currently exposed to unwarranted and potentially high BCR payments given the August 1, 2024 implementation of the elimination of the soft offer bid cap for energy storage resources.[1]  The same stakeholders that urgently sought removal of the storage bid caps now oppose measures to mitigate harms associated with removal of the bid caps that leave ratepayers vulnerable to gaming and gouging.[2]  Any further delay to this proposal would be inappropriate and is likely to result in direct ratepayer harm.

[1] See FERC Order Accepting Proposed Tariff Revisions re California Independent System Operator Corporation under ER24-2168, July 31, 2024, available at: https://elibrary.ferc.gov/eLibrary/filelist?accession_num=20240731-3037.

[2] For example, see the comments of CESA, Vistra, Terra-Gen, and the Western Power Trading Forum on the July 8, 2024 Workshop on Storage Bid Cost Recovery and Default Energy Bids Enhancements.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/f7f6fb35-66cd-4279-821d-8711799e4468#org-0bc6d1d3-4167-4c94-a5db-d1a44a4fa3eb.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

Under the status quo, energy storage resources receive RT BCR payments when they are unable to fulfill DA schedules due to insufficient SOC.[1]  The BCR payment is calculated as the difference between RT dispatch and the DA schedule times the difference between the RT bid and RT locational marginal price (LMP): (RT dispatch – DA schedule) * (RT bid – RT LMP).[2]  Negative values are payments to the storage resource resulting from its inability to meet the DA schedule.

The CAISO proposes to make storage resources ineligible for BCR if the resource’s SOC is at its maximum or minimum value at the start of the binding 5-minute RT interval.[3]  The CAISO’s proposed solution addresses two concerns: 1) storage resources are not exposed to RT prices for deviating from DA schedules, and 2) storage assets are incentivized to bid strategically to maximize the combined BCR and market payment.[4]  Storage resources are not exposed to RT prices because they are fully compensated for failing to meet their DA schedule.  A storage resource can maximize BCR payments by dropping its RT bid to the bid floor in anticipation of a failure to meet DA schedules.

CESA proposes to maintain energy storage’s eligibility for BCR payments when it is unable to fulfill its DA schedules due to insufficient SOC.[5]  Instead, CESA proposes to change the formula that calculates the BCR payments for storage.  CESA would modify the BCR payment formula by replacing the RT bid with the DA LMP from the corresponding hour: (RT dispatch – DA schedule) * (DA LMP – RT LMP).  CESA asserts that this change would eliminate the opportunity for market gaming, since the CAISO would no longer take the resource’s bid into consideration.[6]

However, CESA’s proposed solution fails to resolve the CAISO’s Concern 1. Storage would remain insulated from RT prices because BCR payments protect non-performing resources from having to buy-back unfulfilled DA schedules at potentially high RT prices.  Instead, those high real-time buy-back costs are passed on to other market participants and to ratepayers.  As the CAISO has observed, RT prices remain significantly higher than DA prices for a significant portion of the day under stressed grid conditions.[7]  CESA’s proposal would continue to compensate storage at the potentially high differential between DA and RT prices.  Moreover, RT prices under stressed grid conditions may increase further due to the elimination of the soft-offer cap for storage, which will increase ratepayer’s exposure and continue to shield storage resources.

Another weakness in CESA’s proposal, as noted by the CAISO, is that it is unclear how the CAISO can implement the DA LMP for storage resources in the Western Energy Imbalance Market (WEIM).[8]  WEIM storage resources do not have a DAM LMP to reference because they do not participate in the DA market.[9]  About 3,500 mega-watts (MW) of battery resources participate in WEIM as of June 2024, compared with 11,200 MW of storage in the CAISO balancing area.[10]  RT BCR payments to WEIM resources in the 4^th Quarter of 2023 accounted for approximately 20% of total RT BCR payments, or $7 million, of which approximately 10% are paid to batteries,[11] which amounts to several million dollars per year.  Under CESA’s proposal, RT BCR payments to WEIM will only grow as more storage resources are added in the WEIM footprint.  Without a DAM LMP to reference, CESA’s proposal will result in inconsistent treatment of resources inside and out of the CAISO Balancing Area (BA).  The inability to apply the same solution to all battery resources participating in the RT market should disqualify the CESA proposal from consideration.

Like CESA, Vistra would retain energy storage’s eligibility for BCR when unable to meet DA schedules due to insufficient SOC, and thus would also keep energy storage shielded from RT prices.  Also like CESA, Vistra proposes to modify the BCR payment formula, but instead of using the DA LMP, Vistra would modify the BCR formula by replacing the RT bid with the storage resource’s Default Energy Bid (DEB).[12]  The storage DEB is a single value produced in the DA market run for all hours based upon a storage resource’s energy costs, variable operations costs, and opportunity costs.[13]  The opportunity cost component is determined by the 4^th highest LMP in the DA market run.[14] 

Application of the DEB would be no more effective in mitigating unwarranted BCR than would the DA LMP.  As with the DM LMP, the CAISO finds that DEBs are lower than RT prices under stressed grid conditions.[15]  Recent CAISO analysis of a set of high priced days between 2022 and 2024 indicates that the DEB does not regularly rise above $1,000/MWh during conditions when RT prices rise above $1,000/MWh.[16]  As in CESA’s proposal, large differentials between RT prices and the single DA storage DEB would expose ratepayers to large BCR payments and shield storage resources from the same high RT prices.  Vistra’s proposal to use the DEB in the BCR formula poses the same risks to ratepayers as CESA’s proposal to the DA LMP.

Vistra further proposes to classify RT energy as non-optimal, and thus ineligible for BCR, in the intervals in which the storage resources submit outage cards or bid parameters that reduce the resource’s minimum or maximum capacity or the maximum of minimum continuous storage energy.[17]  Vistra argues that this narrower limitation on BCR eligibility is less punitive.[18]

However, in comments on the CAISO 2024 Policy Roadmap, Vistra noted that there is no CAISO tariff outage reporting requirement for standalone, co-located, or hybrid storage resources.[19]  In that context, Vistra argued that the outage reporting gap for storage resources poses reliability risks, and that the same outage reporting requirements that apply for other generation resources should also apply to storage resources.[20]  However, Vistra’s proposal in this initiative would perversely incentivize storage resources to not submit outage cards in order to remain eligible for BCR payments.  As Vistra argued in its Policy Roadmap comments, this would adversely affect CAISO system reliability.  Vistra’s proposal in this initiative would impose additional negative impacts on CAISO system reliability.  At the very minimum, the CAISO should not consider Vistra’s proposal to classify RT energy as non-optimal until the gap in energy storage outage reporting is closed.

Setting aside the problems with each alternative proposal, both proposals are designed to retain some amount of BCR for battery operators.  But the DMM aptly describes these as “situations where batteries may receive inappropriate or inefficient bid cost recovery payments.”[21]  Storage owners engaged in intertemporal energy price arbitrage should not be exempt from the same risks faced by any market participant.  Cal Advocates recommends that the CAISO adopt its own proposal, not the alternative proposals.

[1] CAISO, Storage Bid Cost Recovery (BCR) and Default Energy Bid (DEB) Enhancements, Stakeholder Meeting on Issue Paper and Straw Proposal, August 5, 2024 (August 5 Workshop) at 20.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Bid-Cost-Recovery-and-Default-Energy-Bids-Enhancements-Aug-5-2024.pdf.

[2] August 5 Workshop at 16.

[3] August 5 Workshop at 25.

[4] August 19 Workshop at 7.

[5] August 19 Workshop at 17.

[6] August 19 Workshop at 18.

[7] CAISO, Energy Storage and Distributed Resource Phase 4 Final Proposal, August 21, 2020 (ESDER 4 Final Proposal) at 30-31.  Available at:  https://stakeholdercenter.caiso.com/StakeholderInitiatives/Energy-storage-and-distributed-energy-resources; and Rule for Bidding Above the Soft Offer Cap Final Proposal, May 17, 2024 (Soft Offer Cap Final Proposal) at 16.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Final-Proposal-Price-Formation-Enhancements-May17-2024.pdf.

[8] August 19 Workshop at 21.

[9] August 19 Workshop at 21.

[10] DMM, 2023 Special Report on Battery Storage, July 16, 2024 (DMM 2023 Storage Report) at 4.   Available at: https://www.caiso.com/documents/2023-special-report-on-battery-storage-jul-16-2024.pdf.

[11] DMM, Q4 2023 Report on Market Issues and Performance, April 24, 2024 at 56.  Available at: https://www.caiso.com/documents/2023-fourth-quarter-report-on-market-issues-and-performance-apr-24-2024.pdf.

[12] April 19 Workshop at 25.

[13] ESDER 4 Final Proposal at 22.

[14] ESDER 4 Final Proposal at 26.

[15] ESDER 4 Final Proposal at 30-31.  The CAISO examined stressed conditions in August and February of 2019, and showed that in August there were 2.7 hours where RT prices exceed the DEB, with RT prices upwards of $1,000/MWh.  At that time the energy storage soft offer cap bid cap of $1,000/MWh was in effect.  Similarly, in February 2019 there were 5.3 hours when RT prices exceeded the DEB, during which prices also reached $1,000/MWh.   As of August 1, 2024, the soft-offer cap was eliminated, and storage can bid up to $2,000/MWh during stressed grid conditions.

[16] Soft Offer Cap Final Proposal at 16.  With the elimination of the soft offer bid cap in the RT market, RT prices can reach up to $2,000/MWh.

[17] August 19 Workshop at 17-18.

[18] Vistra, Comments on the Storage Bid Cost Recovery and Default Energy Bids Enhancements Issue Paper and Straw Proposal, August 8, 2024, response to Question 1.  Available at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/storage-bid-cost-recovery-and-default-energy-bids-enhancements.

[19] Vistra, CAISO 2024 Policy Roadmap Storage Outage Improvements, May 15, 2024 (Vistra Roadmap Comments) at 4.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/VistraCorp-Storage-Outage-Management-Improvements-May-15-2024.pdf.

[20] Vistra Roadmap Comments at 2.

[21] DMM, Comments on Price Formation Enhancements:  Rules for Bidding above the Soft Offer Cap Draft Final Proposal, May 8, 2024 at 3.  Available at: https://stakeholdercenter.caiso.com/Common/DownloadFile/4b4c5dd5-61f3-4a39-81e1-f7f44b90055e.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

Cal Advocates does not have an alternative proposal at this time.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

Some stakeholders argue that storage resources, whose bids are mitigated downward to the DEB in the Local Market Power Mitigation (LMPM) process, may have their real-time SOC driven to its minimum value by incremental energy dispatches, and thereby be ineligible for BCR payments under the CAISO proposal.[1] 

However, analysis by the DMM indicates that incremental RT energy associated with bids that were lowered in the LMPM process was very low in 2022 and 2023.[2]  The CAISO’s analysis of mitigation in 2023 and 2024 is consistent with DMM’s conclusion.[3]  As such, mitigation of storage resource bids may not significantly impact storage BCRs.  In any case, consideration of mitigation issues should not delay the implementation of the CAISO’s proposed solution.  It is appropriate to consider how bid mitigation or other CAISO market actions could impact storage SOC and BCR, but these issues should be considered in the subsequent track of this initiative in parallel with modifications to DEBs and as part of a long-term, durable, and fundamental reform of storage BCR.

[1] April 19 Workshop at 28.

[2] DMM, 2023 Annual Report on Market Issues and Performance, July 29, 2024 at 208.  Available at: https://www.caiso.com/documents/2023-annual-report-on-market-issues-and-performance.pdf.

[3] August 19 Workshop at 30.

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

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

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

The California Energy Storage Alliance (CESA) appreciates the opportunity to provide comments on the Storage Bid Cost Recovery and Default Energy Bids Enhancements August 19, 2024, workshop.  During the workshop, CAISO misrepresented alternative proposals, including CESA’s, by assuming that alternative proposals would apply in all settlement intervals versus just settlement intervals where the state of charge (SOC) is binding.  CESA is befuddled by CAISO making this misrepresentation when CESA’s comments state the following:

“The settlement examples below illustrate the current CAISO BCR implementation, the CAISO’s proposed change, and CESA’s proposed change.  The examples show the settlement of the buy-back of a day-ahead discharge schedule when the SOC is binding in the interval (emphasis added).”

In addition, CESA had several conversations with CAISO staff the week prior to the workshop.  Initially CAISO had discussed having CESA present its alternative proposal; however, the Friday before the workshop CAISO informed CESA that it planned to present all the alternative proposals.  At no point during conversations prior to the workshop did CAISO seek clarifications to CESA’s proposal with regards to applying in all settlement intervals.

The CAISO has stated that unwarranted BCR can stem when the following conditions occur:

• A buy-back of a discharge DA schedule can occur when a storage asset’s real-time SOC is too low to support it.
• A sell-back of a charge DA schedule can occur when a storage asset’s real-time SOC is too high to support it.

It is important to identify correctly when a buy-back or sell-back has occurred because the generic SOC constraint is binding.  The generic SOC constraint ensures that the energy dispatch is feasible.  Other SOC constraints such as the ancillary services state of charge (ASSOC) constraint and the end of hour (EOH) constraint can trigger real-time dispatches that differ from the day-ahead schedules, but the settlement intervals are already not eligible for BCR.  As recommended in prior comments, the CAISO should review all SOC constraints and discuss with stakeholders whether the constraint should be included or excluded from BCR.

The examples CAISO presented do not illustrate scenarios where only the generic SOC constraint is binding. An interval where a buy-back of a day-ahead discharge schedule occurred needs to meet three conditions: (1) a day-ahead schedule or base schedule to discharge, (2) the real-time dispatch to discharge is lower than the day-ahead or base schedule, and (3) the real-time dispatch does not charge the resource.  Likewise, an interval where a sell-back of a day-ahead charge schedule occurred needs to meet three conditions: (1) a day-ahead schedule or base schedule to charge, (2) the real-time dispatch to charge is lower than the day-ahead or base schedule, and (3) the real-time dispatch does not discharge the resource.

The CAISO’s first example on page 20 of the presentation is not caused by the generic SOC constraint.  The CAISO’s second example on page 24 of the presentation is also not caused by the generic SOC constraint.  The ASSOC or EOH constraint could result in the real-time dispatches shown, but those intervals are not eligible for BCR.  Comparing the status quo, CAISO proposal, and alternative proposals in these examples is not relevant to addressing the immediate concerns regarding potential inflated BCR payments.

As stated at the beginning of this initiative, BCR is a very complex market design that is not conducive to an accelerated stakeholder process.  The CAISO’s near-term focus should be on developing a settlement rule that prevents inflated BCR payments when the generic SOC constraint is binding whether caused by strategic bidding or inadvertently.  The alternative proposals with additional improvements can address this issue.  The CAISO must then holistically review storage BCR, storage real-time DEBs, and the energy storage enhancements initiative to ensure that scheduling coordinators of storage resource can represent real-time conditions in their real-time energy bids.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

The updated schedule should allow time to develop a near-term design change to address inflated BCR payments.   But is insufficient to address broader issues regarding storage BCR and real-time bidding.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

The CAISO should address the issue of inflated BCR payments by improving the alternative proposals.

1. Clearly identify 5-minute intervals where the buy-back or sell-back is caused by the generic SOC constraint binding.  Triggering the alternative BCR settlement by using the buy-back and sell-back conditions discussed above may be more straightforward than using the SOC.
2. Consider combing and enhancing the CESA and Vistra proposal to modify the BCR bid cost settlement logic in intervals when a sell-back or buy-back has occurred to minimize inflated BCR payments.  When a buy-back has occurred, CESA recommends using the MAX (IFM Price, Real-Time DEB, Real-Time Bid) in the intervals bid cost recovery calculation.  Using the IFM Price addresses the example shown in CESA’s prior comments.  Since the day-ahead price for WEIM participating resources is zero, the Real-Time DEB can be used for both WEIM participating resources and internal CAISO storage resources.  Lastly, the RT Bid is needed to ensure that the new settlement logic will not trigger a BCR payment when current rules would not.  When a sell-back has occurred, CESA recommends using the MIN (IFM Price, Real-Time DEB, Real-Time Bid).  While the proposed logic can still result in bid cost recovery payments, the ability to strategically or inadvertently bid in a manner that inflates payments is addressed.
3. If the buy-back and sell-back conditions cannot be used, it may be more appropriate to look at the SOC at the end of the binding 5-minute interval versus the beginning to more accurately identify the dispatch was limited by the generic SOC constraint.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

No comment. 

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

The CAISO must address market power mitigation and its impact on BCR. 

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

CESA has provided an illustrative spreadsheet of its proposal.  CESA provides the spreadsheet to assist in validating the approach.  CAISO should validate that the spreadsheet accurately reflects the real-time bid cost recovery settlement and uses the correct settlement sign conventions.  CAISO should develop numerous real-time scenarios (prices and dispatch) and provide sufficient time for stakeholders to review to ensure the alternative proposal behaves as intended.

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

PG&E thanks the CAISO for holding another engaging discussion on the topic of bid cost recovery (BCR) for storage resources. Stakeholder meetings such as these are useful to educate and inform parties on complex Settlements rules and discuss theoretical examples.

PG&E’s comments can be summarized as follows:

• Framing of the issue is paramount to understand how BCR applies to real-time (RT) hours with a day-ahead (DA) schedule versus RT hours with no DA schedule.
• In the Proposal, BCR formulas should be consistent and fully referenced with corresponding Settlement formulas in CAISO Business Practice Manuals.
• PG&E offers an additional proposal for consideration, which is a slight modification of the CESA proposal:
  • Western Energy Imbalance Market (WEIM only) and CAISO/EDAM batteries should be handled differently for RT BCR as WEIM (only) Day-Ahead schedules are essentially self-scheduled and CAISO/EDAM Day-Ahead schedules are a product of the Integrated Forward Market
• PG&E does not currently support any storage RT BCR proposal based on DEB values

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

PG&E thanks the CAISO for extending the timeline to accommodate additional stakeholder meetings/discussions.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

PG&E highlights that storage resource’s RT bids for hours with a DA schedule are inherently different from RT bids for hours without a DA schedule. In other words, RT bids for hours with a DA schedule represent the opportunity cost of buying back that DA schedule. Therefore, the RT BCR calculation should work differently depending on whether the storage resource has a DA schedule in that particular hour. For example, a $1,000 bid price in an hour with no DA schedule represents the resource’s unwillingness to be discharged unless prices reach the soft offer cap. That same $1,000 bid price for an hour with a full DA schedule represents the resource’s willingness to buy back that schedule at any price below $1,000.

PG&E requests that the CAISO confirm whether the RT BCR calculation does indeed work differently for hours with DA schedules and if not, explain why.

Based on the conclusions above, PG&E no longer considers the Vistra proposal viable given that using a DEB value for BCR only makes sense for RT hours with no DA schedule. In comments for the ASSOC emergency tariff filing in September 2022, PG&E recommended a proposal which included using the storage DEB in lieu of a resource’s bid cost for hours where the ASSOC constraint was in effect. In this initiative, the nature of the problem is different in that this BCR calculation only pertains to RT hours with a DA schedule, and the RT bids represent buyback costs (instead of bids to discharge).  

PG&E generally agrees with the CESA proposal in that it addresses the concern of storage resources having an incentive to bid strategically. However, PG&E recommends improving this proposal with the slight modification described in our answer to question 4.

One concern raised by the CAISO regarding the CESA proposal is how it applies to WEIM storage resources. Importantly, WEIM entities have a base schedule which is different than a DA schedule. A WEIM battery bidding in the RT markets should be presumed to have control/knowledge of its state of charge (SOC) in forming its bids relative to its base schedule, which is also created independent of any CAISO market optimization. Since the base schedule of a WEIM entity was not the product of any CAISO market process, these resources shouldn’t be eligible for RT BCR due to buyback of what essentially is a self-schedule.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

PG&E recommends the CAISO consider a slight variation of the CESA proposal, which changes the BCR calculation for discharging as follows:

From: (RT dispatch – DA schedule) * (RT bid – RT LMP)

To: (RT dispatch – DA schedule) * (Max[RT bid, DA LMP] – RT LMP)

This alternative proposal is more conservative than the CESA proposal since it limits the BCR recovery amounts to the DA/RT price difference. The proposal also hypothetically allows a storage resource to manage its SOC risk as it pertains to BCR, although some risks remain related to intraday opportunity costs and the provision of ancillary services (e.g. regulation). Additionally, PG&E recommends that CAISO provide stakeholders BCR model spreadsheet examples with formulas that explain outcomes of different charging and discharging scenarios.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

PG&E appreciates the CAISO for providing initial analyses on the topic of mitigation. From the stakeholder call, it is PG&E’s understanding that any short-term (or interim) proposal to address unwarranted BCR would not address periods of mitigation due to implementation complexity. If this understanding is correct, the CAISO should state where in the long-term policy phase the topic should be placed.

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

PG&E stresses the importance of identifying where the BCR settlements calculation (shown on slide 17 of the CAISO’s 8/19/2024 presentation) is stated in the CAISO Business Practice Manuals. Without this, stakeholders cannot independently verify that the correct formula is being applied. Furthermore, it creates confusion during stakeholder calls that could easily be avoided. Two questions that remain unanswered are:

1. Why does the formula not breakout RT dispatch into fifteen-minute market (FMM) schedule and five-minute real time dispatch (RTD) terms?
2. Does the BCR calculation only apply to hours in which there is a DA schedule, or when there is no DA schedule?

PG&E requests the CAISO clarify BCR proposal formulas and cross-reference with the BPM Configuration Guide for RUC and RTM Bid Cost Recovery Settlement (CC6620). The BPM for CC6620 describes a RT interval as eligible for BCR when the following is true:

BAARUCNetAmount + BAARTMNetAmount > 0

Where:

BAARUCNetAmount = RUC cost – RUC revenue

BAARTMNetAmount = RTM cost – RTM revenue

The formula used in the CAISO’s presentations is the following:

(RT dispatch – DA schedule) * (RT bid – RT LMP)

Which, when multiplied out, becomes:

(RT dispatch * RT bid) – (DA schedule * RT bid) – (RT dispatch * RT LMP) + (DA schedule * RT LMP)

If (RT dispatch * RT bid) and (RT dispatch * RT LMP) translate to the RTM cost and RTM revenue (respectively), does this mean that the remaining terms with DA schedules represent RUC cost and RUC revenue?

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

PacifiCorp agrees with the CAISO’s decision to revise the initiative schedule in response to stakeholder feedback. This will allow more time for stakeholders and the CAISO to find agreement on a solution. It is still not clear to PacifiCorp whether the revised timeline can accommodate a holistic solution to the CAISO’s concerns about bid cost recovery (BCR) payments to storage resources. In PacifiCorp’s opinion, a durable enhancement may require a broad evaluation on the cost recovery framework for storage resources rather than a change to how instructed imbalance energy (IIE) is designated. PacifiCorp is supportive of finding an interim solution before November while having a full discussion of cost recovery mechanisms in the future.

PacifiCorp appreciates CESA and Vistra providing alternative proposals as it has led to robust discussions about what the range of possible solutions may be. Based on initial discussions, Vistra’s proposal to designate a resource’s IIE as non-optimal when the state of charge (SOC) constraint binds due to scheduling coordinator (SC) actions or use of bid-in parameters seems reasonable to PacifiCorp. There may also need to be a provision that allows storage resources to receive BCR when the resource was mitigated and incrementally dispatched in a previous interval. This likely is an interim solution, as it may not cover the CAISO’s concern about storage resources being exposed to real-time prices.

While the CAISO’s analysis on mitigation is interesting, PacifiCorp does not necessarily agree with the CAISO’s suggestion that a solution may not need to consider mitigation exemptions. A few stakeholders shared their views on why even the potential of not receiving BCR payments because of incremental dispatch due to mitigation, assuming the CAISO’s proposal was enacted, could be harmful to storage resource owners. This risk may in turn lead to storage owners managing their resources in a way that minimizes risk but decreases storage resources’ flexibility. PacifiCorp still believes it is necessary to design a solution that includes consideration for resources’ SOC constraints binding due to being mitigated and incrementally dispatched.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

PacifiCorp agrees with the revised schedule and appreciates the CAISO responding to stakeholder feedback. The timeline seems sufficient to develop an interim solution that covers the CAISO’s concern about resources strategically bidding to maximize BCR payments, but PacifiCorp is not sure if it is enough time to address the CAISO’s primary concern about storage resources not being exposed to real-time prices. PacifiCorp agrees with the CAISO, and other stakeholders, that storage resources should be exposed to real-time prices, like other resource types. However, it seems that there are other challenges related to market timelines and price formation that may be hindering storage resources from reflecting intra-day opportunity costs in their bids. These challenges may need to be discussed before more comprehensive changes can be made to the BCR framework for storage resources.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

PacifiCorp appreciates the efforts by other stakeholders, namely CESA and Vistra, to provide alternative proposals. PacifiCorp also appreciates the CAISO allowing these alternative proposals to be discussed in the initiative. Vistra’s proposal to use the default energy bids (DEBs) in the BCR payment calculation and to have conditions for when IIE is deemed non-optimal seem like a good place to continue discussions on the BCR enhancements. Based on previous discussions, PacifiCorp believes that conditionality is needed because there may be situations under the CAISO’s proposal where storage resources would not receive BCR payments because its SOC constraint is binding for reasons outside of the SC’s control. Furthermore, an enhancement to the BCR rules should include a provision protecting storage resources from situations where the SOC constraint is binding due to being incrementally dispatched in previous intervals due to mitigation.

PacifiCorp acknowledges that this may be an interim solution because it does not cover the CAISO’s concern about storage resources not being exposed to real-time prices. A full solution may require more discussions about the BCR framework with respect to storage resources. As the CAISO has stated, the current BCR rules were designed for conventional resources that are able to reflect their marginal costs through bids. For resources with intraday opportunity costs, like storage resources, there are challenges reflecting those opportunity costs in bids. PacifiCorp believes more discussion is needed on the challenges SCs face to represent opportunity costs in their bids to find an enhancement that exposes storage resources to real-time prices without adding unmanageable risks. To be clear, PacifiCorp agrees with the CAISO and other stakeholders that storage resources should be exposed to real-time prices like other resource types are. There may be opportunity to discuss this in Track 1, but in PacifiCorp’s opinion, it may be better suited for Track 2. At this time, PacifiCorp’s preference for Track 1 would be that a solution is found that limits SC’s ability to strategically bid to maximize BCR payments.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

PacifiCorp appreciates the CAISO providing analysis on storage resources being mitigated. While the data is useful, it doesn’t show some information that may be important for deciding whether it is necessary to include considerations of mitigation in a future BCR enhancement. The CAISO and CAISO DMM’s analysis shows that that there is incremental dispatch of mitigated storage resources. While this incremental dispatch may be insignificant from a system perspective, it may be non-trivial for the resources that are being mitigated.  As a stakeholder pointed out, the analysis does not show whether it is a few resources that are mitigated frequently because they are in a constrained area. Under the CAISO’s proposal, a resource that is frequently mitigated and incrementally dispatched whose SOC constraint binds because of the mitigation would not be eligible for BCR payments. To PacifiCorp, this may be a situation where BCR payments are warranted.

In PacifiCorp’s opinion, the risk of not paying storage resources warranted BCR is that SCs may change their behavior to limit exposure by bidding their resource in a way that limits its flexibility. As a stakeholder stated in the last meeting, a bad day can affect a resource’s profitability for the entire year. Having to buy back a day-ahead schedule at peak real-time prices because SOC was diminished from incremental dispatch earlier in the day seems to PacifiCorp like the wrong incentive to be sending to storage resources. A BCR enhancement for storage resources should include safeguards for storage resources that are incrementally dispatched because of mitigation. 

6. Please provide any additional comments, feedback, or examples regarding the 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 meeting regarding alternative proposals.

Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to provide feedback on the recent working group discussion regarding proposals for storage Bid Cost Recovery (BCR) and Default Energy Bid (DEB) enhancements. SRP appreciates CAISO’s responsiveness to stakeholder concerns. In response to those concerns, SRP acknowledges and appreciates CAISO’s effort to extend the timeline, allowing for more thorough stakeholder review, but is concerned that the now-extended timeline still does not provide sufficient time for evaluation and participant implementation. While SRP supports the efforts to prevent intentional misuse and manipulation of BCR, SRP has remaining questions regarding the two Tracks and their timelines.

SRP strongly advocates for solutions that consider implementation for WEIM resources that do not have access to DA LMPs or the standard Storage DEB.

For proposals that have any potential for mitigation to financially harm a storage resource, SRP advocates for a make-whole solution to be incorporated in the proposal.  SRP does not believe analysis of historical mitigation justifies ignoring this potential impact.

SRP’s remaining concerns (following implementation of a Track 1 proposal) include treatment of hybrid or collocated resources, calculation of storage DEBs that consider RT opportunity costs, and potential for mitigated bids to prevent appropriate response to RT market conditions.  Therefore, a clear understanding of expectations for the Track 2 timeline and any anticipated policy discussions thereafter should accompany evaluation of the appropriateness of near-term Track 1 proposals.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

SRP appreciates CAISO’s decision to extend the timeline for this initiative, which aligns with SRP’s request for a more gradual approach. However, SRP encourages the CAISO to consider a timeline that more closely aligns with the current developmental state of entities’ battery energy storage management capabilities to mitigate potential of unintended outcomes. The extended timeline should ensure a review of all proposed solutions and allow stakeholders to understand the operational and financial impacts.

More detail on the expected timeline for the more comprehensive Track 2 and any subsequent processes may reduce concerns that the near-term Track 1 resolution would have lasting negative impacts.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

SRP appreciates the opportunity to review the alternative proposals put forth by stakeholders. However, the alternative proposals that were put forth fully do not appear to solve the issues that were identified by the CAISO. While proposals address inflated BCR payments in the short term, SRP encourages CAISO to consider exploring a holistic approach.

The CAISO correctly identified that WEIM storage assets do not have access to either the DA LMP or an appropriate standardized storage DEB, each referenced in alternate proposals.  SRP appreciates the CAISO’s consideration of WEIM storage assets in evaluating proposals.  SRP’s battery portfolio is included in this class, and SRP advocates for Track 1 solutions that treat all resources equally in RT without regard for whether the resource is participating in a DA offering.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

SRP agrees that market power mitigation is important. SRP recommends that CAISO further develop how mitigation measures might impact BCR eligibility for storage resources in real-time markets.

If the selected Track 1 solution demonstrates the potential for energy storage resources being inappropriately impacted by mitigation, SRP advocates for a path whereby mitigated resources are made whole as part of that Track 1 solution.  Even if considered negligible based on historical data, historical mitigation patterns are not appropriate indicators of the mitigation that may result as bidding strategies respond to Track 1 changes.  Further, SRP agrees with verbal comments provided by a stakeholder in the August 19^th meeting that the CAISO’s threshold for evaluating the significance or materiality of historical mitigation impacts may differ from the threshold of significance for the impacted resource and its owner.  Further analysis on the frequency and magnitude of mitigation impacts cannot fairly justify the Track 1 proposal avoiding making resources whole if mitigated dispatch causes a storage resource to financially suffer from the inability to meet a previously awarded schedule in RT.

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

SRP encourages CAISO to share if consideration has been given to implementing a distinct BCR scheme for storage resources. SRP would appreciate clarity if a distinct framework may address specific operational characteristics and cost associated with storage resources.

Additionally, SRP requests further clarification on the timelines associated with Track 2 defined on Slide 16 of the initial workshop on July 8, which we understand picks up after the Track 1 solution targeting standalone storage assets by focusing on hybrid and co-Located storage resources (potentially including DEB improvements applicable to all storage resources).  We also request clarity on whether other references to long-term improvements are captured in Track 2.

SRP would like further clarification on whether these two Tracks address systemic issues with RT opportunity costs and availability of a Storage DEB for WEIM storage resources.

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

San Diego Gas and Electric (SDG&E) appreciates the opportunity to comment on the presentation of alternative solutions proposed by stakeholders on the Storage Bid Cost Recovery (BCR) and Default Energy Bids (DEB) Enhancements initiative. SDG&E thanks CAISO for its efforts on this initiative and supports the updated Track 1 timeline and problem statements as discussed during the August 19 stakeholder meeting. SDG&E’s comments can be summarized as follows:

• SDG&E appreciates CAISO exploring options for an interim or alternative solution that prevents energy storage resources from engaging in uneconomic bidding or operational behavior for the purposes of receiving inflated BCR payments, which SDG&E agrees should be addressed expeditiously;
• The alternative solutions proposed offer creative temporary or short-term approaches to mitigating the quantity of BCR payments that result from bidding behavior or operator action and should be evaluated further in the Revised Straw Proposal;
• While SDG&E does not endorse or oppose any alternative solution at this time, we are concerned that using the Default Energy Bid in a modified BCR calculation is premature given the ISO’s expressed intention to re-evaluate the formulation of the storage DEB in a later track of this initiative; and
• SDG&E continues to advocate for storage BCR under appropriate circumstances, such as exceptional dispatch.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

SDG&E thanks CAISO for the additional time provided in the Track 1 schedule. This adjustment to the timeline will enable more effective stakeholder engagement and input on a full suite of proposals, while still fast-tracking a solution that will at a minimum, address concerns with unwarranted BCR payments that derive from strategic market participant bidding behavior. However, given that this initiative will still move forward expeditiously, SDG&E encourages CAISO to consider that these alternative proposals may be appropriate as an interim approach to a longer-term solution.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

As stated above, SDG&E supports consideration of alternative approaches to minimizing BCR payments in an interim Track 1 solution prior to a more comprehensive review of storage BCR and DEB issues in Track 2. Rather than eliminating all BCR payments for storage resources when the SOC constraint is binding, the alternative approaches offer methods to reduce the BCR payments while still offering reasonable protection for storage resources from losses incurred from market dispatch that is out of the scheduling coordinator’s control (such as exceptional dispatch). SDG&E views both adjustments to the BCR calculation and refined re-classification of energy associated with awards or instructions that are due to outages or due to direct scheduling coordinator action as plausible alternatives that warrant consideration in the upcoming Revised Straw Proposal.

While SDG&E supports a comprehensive evaluation of the alternative proposals at this time, we note some concern with using the storage DEB as a stand-in to approximate real-time costs in the BCR calculation. CAISO has indicated that enhancements to the formulation of the storage DEB are to be considered in Track 2 of this initiative. SDG&E strongly supports examining this calculation to more accurately estimate opportunity costs but given the need for an expedited Track 1 solution, it would be premature to use the DEB for this purpose.  Although adjustments to the logic and approach are needed to account for a wider range of scenarios, the revised calculation using the DA LMP (as suggested by CESA) may be a more suitable method to eliminate the impact of a resource’s bidding behavior on BCR payments.

SDG&E appreciates the opportunity to comment and looks forward to continued engagement with CAISO and other stakeholders on this initiative.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

No comment.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

No comment.

6. Please provide any additional comments, feedback, or examples regarding the 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 meeting regarding alternative proposals.

The Six Cities support the CAISO’s proposal to extend the timeline for this initiative to enable consideration of alternative proposals suggested by stakeholders and any other options that the CAISO staff may identify.  However, the Six Cities question the decision by the CAISO to forego implementation of an interim solution pending consideration of these alternatives.  For the reasons discussed by the CAISO previously, the Six Cities agree with the need to adopt revisions to the current Bid-Cost Recovery (“BCR”) rules and encourage the CAISO to implement its proposed solution on a temporary basis.  This will allow additional time to fully stakeholder the approaches proposed by various commenters.  In light of the CAISO’s identification of the risk of BCR uplift payments in circumstances where such payments may be unwarranted, an interim solution to reduce this risk appears to be appropriate.  Alternatively, is the CAISO able to provide assurances that it will, together with the Department of Market Monitoring, continue to identify and investigate instances of market behavior resulting in excessive or inappropriate payments?

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

Please refer to the comments above in response to question no. 1.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

The Six Cities have no comments on the alternative proposals at this time, pending a complete discussion of these options in the next iteration of the CAISO’s proposal paper in this initiative. 

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

The Six Cities have not identified additional proposals at this time.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

The Six Cities have no further comments on this topic at this time and refer the CAISO to their prior comments and the response above addressing question no. 1. 

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

The Six Cities have no further comments at this time.

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

SCE continues with its position of bid cost recovery (BCR) only being paid for performance. SCE also continues to support the CAISO proposal.

However, this initiative brings to light several complicated factors. SCE presents them in decreasing order of importance (reliability -> economics). Each of these factors must be addressed for a viable resolution to this initiative. Currently, the CAISO is focusing on a topic (BCR) that requires the resolution of at least two key prerequisites – state of charge (SOC) management and default energy bid (DEB) determination. Without addressing the prerequisites, any resolution to the BCR issue will be suboptimal and cause even more serious problems in the future. SCE urges the CAISO to first address SOC management and DEB determination before any further movement on this BCR issue.

While SCE agrees with the intent of the CAISO wanting to temporarily suspend BCR for real time (RT), it would be more optimal if the CAISO develops an appropriate mitigation strategy. SOC management is the most critical issue that needs to be addressed but it will take more time. SOC management should be followed by addressing DEB determination to ensure accurate settlements (whether economic with LMP or uneconomic with BCR).

Until the SOC management and DEB matters are addressed, SCE recommends that the CAISO replace RT Bid with DEB in the RT BCR calculation so that there are neither excess BCR payments nor the total absence of BCR which may lead to changed bidding behaviors with other market side effects.   

1. Is a resource or the CAISO responsible for managing a storage resource’s SOC? Due to being energy limited, storage resources are completely dependent on SOC to be able to provide service. If SOC is not optimally managed, the CAISO may not be able to count on storage at times of need. This question must be addressed before moving forward on any storage initiative. This question should also consider that if the CAISO is unable to improve price forecasting in RT, it should be able to offer alternative tools to resources (since the CAISO does have superior information to all market participants) such that they be able to better manage their SOCs.
   1. Case: Resource, rather than CAISO, manages SOC – If a resource bids in a manner to prevent its dispatch prior to its day ahead (DA) award, will the Department of Market Monitoring (DMM) consider this to be inappropriate behavior?
      1. If the answer to “a.a” is “no,” then will the CAISO find such behavior to be a reliability concern due to the reduced economic bidding in the supply stack?
      2. If the answer to “i” is “yes,” then should the CAISO manage the SOC, rather than the resource?

The envelope constraints were a decision from the CAISO to commit to managing a resource’s SOC when issuing awards. Since the CAISO has already chosen to manage SOC for award issuance, why does the CAISO choose not to manage SOC for dispatch?

2. How should the DEB be determined for storage? Should DA locational marginal price (LMP) continue to be used to determine the DEB for storage? The DEB determines economic bid costs which in turn drive the inputs into the supply stack. The same bid costs also determine BCR eligibility. Arriving at the right answer for Phase 1 depends on arriving at the right answer in Phase 2. However, the CAISO has proposed to make Phase 2 follow Phase 1 and therefore it may be necessary to combine the two phases in order to achieve an appropriate outcome, with order priority being given to the DEB determination.
    
3. Should a resource’s performance history determine its BCR eligibility? If a resource has been dispatched prior to a DA award hour and has performed as CAISO required for each dispatch, should it be eligible for BCR if it arrives in the DA award hour with a SOC that does not allow it to perform on the DA award?
   1. Should BCR eligibility at time t depend on the resource’s dispatch-following at all times prior to t or only at time t? If the former, then should the bids for all times prior to t also determine whether or not the bid cost at t is economic?
   2. How does the above answer change if the resource received BCR at any time prior to t?
       
4. Should DA and RT BCR continue to be netted separately? SCE understands that DA and RT BCR netting was separated about a decade ago.
   1. Do the DMM and the CAISO still see a need to maintain netting separation?
   2. Given the separation of DA and RT BCR netting, will any settlement proposal involving RT LMP and DA LMP in the same equation, violate the BCR netting separation? Note that LMPs determine DEB (and hence bid costs and hence BCR) for storage.

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

SCE broadly understands the CAISO’s urgency in addressing BCR loopholes. However, SCE prefers a less radical approach to changing it. SCE urges a comprehensive review of SOC management, DEB calculation and the pros and cons of separating DA and RT BCR.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

SCE appreciates other stakeholders’ comments on the proposed solution. SCE too supports replacing RT Bid with DEB for reasons outlined earlier in these comments.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

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

For the storage BCR and DEB Enhancements slides related to the August 19 Stakeholder meeting, SCE does not understand why the CAISO states (in the background slide) that storage resources are not exposed to the RT prices for deviating from day-ahead schedules. The issue is primarily around forced buyback and sellback associated with state-of-charge which may lead to excess BCR payments. SCE requests the CAISO to give a detailed example of how this concern comes into play.

1. Please provide a summary of your organization’s general comments on the meeting regarding alternative proposals.

Vistra appreciates the CAISO discussing the alternative proposals with stakeholders. To ensure that CAISO and stakeholders fully appreciate the nature of Vistra’s proposal, we provide the following clarifications.

On slide 17, CAISO stated that “[o]ther stakeholders, such as Vistra, have suggested something similar, which would use the asset’s DEB instead of the DA LMP in “modifying the formula used to calculate BCR”. In its description on this slide, it could be read that Vistra suggested a solution to modify the Bid Cost Recovery (BCR) calculation in all settlement intervals, which Vistra did not. Vistra’s proposal would limit the changes to BCR calculation only to settlement intervals where there is a credible risk of the CAISO’s stated concerns materializing. Our understanding is CESA’s proposal takes the same approach.

On slide 25, CAISO described our proposal. Vistra clarifies our proposal and seeks clarification on the following:

• Proposed element #1 to cure outages not being captured as outages: Reclassifying energy associated with Instructed Imbalance Energy (IIE) as non-optimal (thus excluding it from BCR) in the intervals when OMS ticket is submitted on the Availability, Load Max, or Minimum or Maximum Energy parameters. To address any confusion, Vistra clarifies that only the portion unavailable would be classified as derated or rerated energy ineligible for BCR if not fully out of service. It is our understanding that the CAISO intends to include this element in its proposal. Further, Vistra requests the CAISO clarifies that this is also their proposal for ensuring outages are being accurately reflected for BCR purposes.
• Proposed element #2 to cure issues where storage is taking control of its asset from the market through physical bid parameters adjusting its State of Charge (SOC): When any State of Charge bid parameter is used the settlement interval would be considered ineligible for BCR such that all energy is reclassified as non-optimal. It is our understanding that this is also in CAISO’s proposal, and we similarly request clarification that it is being included in the proposal or to clarify the proposed change when the bid parameters adjusting minimum or maximum continuous stored energy are adjusted.
• Proposed element #3 to mitigate risks of unwarranted BCR payments while recognizing interim solution will capture warranted BCR as well: Our proposal is largely consistent with what we understand the CAISO’s proposal to be with the exception that instead of making the settlement interval ineligible for BCR entirely it removes the adverse incentive to change bid prices to extract BCR rents from the market by making storage whole to its estimated costs (i.e., real-time Default Energy Bid) instead of its bids. This proposal is intended to be a compromise between CAISO’s “hammer” proposal to make these intervals fully ineligible for BCR as an interim approach until a durable, holistic uplift replacement can be designed and implemented. Consequently, we also proposed for this provision to be interim with a sunset date so that CAISO and stakeholders are committed to replacing BCR with a workable design for storage in near future.

Vistra encourages the CAISO to seriously consider whether the slight modifications to its proposed solution could be pursued so that the CAISO reduces the punitive impact of the future changes to BCR during intervals where the energy SOC constraint is binding by limiting make whole payments to RT DEB instead of making that interval fully ineligible for BCR. 

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

Vistra is skeptical that extending the timeline to November to finalize a new policy would be productive unless the CAISO is willing to afford stakeholders the chance to align on a consensus alternative proposal for it to consider. We encourage CAISO to consider whether an additional iteration of discussions on the stakeholder alternative proposals would be beneficial as it appears there is developing consensus on a workable interim approach.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

Vistra provides the following additional details on the third element of our proposal as well as on CAISO’s proposed solution.

CAISO’s proposal would apply when a given storage resource’s SOC at the start of the Real-Time Dispatch binding interval is equal to its minimum or maximum continuous stored energy value used in the market. In these five-minute settlement intervals, the CAISO proposes in Market Quality System (inferred) to identify a portion of the Instructed Imbalance Energy as rerate or derate by reducing the PMax or PMin to 0 MW in order to capture that the asset is completely full or empty.

Vistra proposes the following changes to this proposal in its third element above:

• Only apply the new settlement rule in settlement intervals where there is a credible risk of CAISO’s stated concern materializing through logic that flags intervals as meeting the following conditions:
  • Resource is Limited Energy Storage Resource
  • Resource received a Integrated Forward Market award or has a base schedule in that settlement interval.
  • Resource received an Instructed Imbalance Energy award from Fifteen Minute Market or Five Minute Market that is in the opposite direction of its IFM award or base schedule.
  • Resource had 0% or 100% SOC (i.e., equal to minimum or maximum continuous stored energy used by the market in the RTD binding interval.
• Settlement rule would not treat the IIE as rerate or derate energy indicating 0 MW Pmax or Pmin but instead would limit unwarranted BCR by changing the BCR settlement only in the triggered interval to an appropriate proxy for its costs, such as the real-time Default Energy Bid.

Please see responses to the first two elements of our proposal clarifying element #1 is a partial reduction of BCR eligibility based on actual outage submissions and element #2 makes the interval fully ineligible since it is equivalent to self-schedule.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

None.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

CAISO should adopt a less punitive interim proposal as Vistra and CESA suggest to better balance that these interim proposals will capture scenarios that are outside the Scheduling Coordinators control and warrant BCR. CAISO should immediately move to designing an improved RT DEB.

6. Please provide any additional comments, feedback, or examples regarding the 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 meeting regarding alternative proposals.

WPTF agrees with CAISO that storage resources should have proper market incentives for availability during peak times (CAISO’s Concern #1). Furthermore, we also agree with CAISO’s concern regarding the ability for storage resources to extract additional BCR payments (CAISO’s concern #2). WPTF acknowledges and appreciates the extended timeline CAISO has provided for policy discussions but urges that this additional time be used effectively to address the critical issue of inflated BCR payments first.

Thus, WPTF supports the CAISO moving forward with an interim solution focused on CAISO’s concern #2 (inflated BCR payments) to be presented at the November Board meeting and then continuing discussions around a more holistic review of storage BCR to address concern #1 (proper market incentives).

The interim solution should focus on identifying instances where there is a credible risk of the CAISO’s concern regarding inflated BCR payments materializing. Thus, our comments related to the proposals on the table at this time keep in mind the goal of identifying those intervals with a credible risk of inflated BCR payments. In addition to providing feedback on the proposed solutions, WPTF has also provided a hybrid approach in response to #4 that combines elements of the current proposals and adds additional logic to identifying intervals that receive the modified BCR treatment.

In summary,

• WPTF appreciates CAISO’s extended timeline but stresses the need to first focus on an interim solution to address inflated BCR payments for the November Board meeting
• WPTF supports ensuring proper market incentives are in place through an effort that continues beyond November
• Believes additional logic is needed to properly identify intervals that would be subject to a modified RT BCR calculation
• Prefers an interim solution using a modified RT BCR calculation rather than eliminating that interval from RT BCR calculation all together

2. Please provide your organization’s comments regarding the updated schedule of the initiative.

CAISO should use the updated timeline to focus in on an interim solution to address the more urgent concern of the ability to extract additional BCR payments and then continue discussions beyond November to consider more holistic changes to storage BCR.

WPTF appreciates the additional time the CAISO has added to the policy schedule but urges the CAISO to initially focus on a solution to address the concerns related to the ability to extract inflated BCR payments. While the updated schedule allows for two additional months before the Board meeting, it still only has two iterations of the proposal. The added time to the schedule provides for more time between papers, presentations, and comment deadlines – which we do appreciate – but not additional time for complex and holistic discussions.

We remain concerned that only two additional months still does not provide adequate time to conduct the holistic review of storage BCR to properly address all concerns raised by the CAISO. Therefore, we respectfully request that the CAISO continue discussions beyond the November board meeting as needed to conduct a holistic review of storage BCR. It will be challenging to fully discuss and vet proposed solutions to establish appropriate market incentives with only two additional iterations of a proposal. Additionally, the holistic discussion should be linked with enhancements to the DEB and ability for storage resources to utilize the reference level adjustment process, as committed to by the CAISO during the Bidding Above Soft Offer Cap policy discussions.

3. Please provide your organization’s comments regarding the alternative proposals put forth by stakeholders, the outstanding questions regarding their implementation, and how they compare relative to the status quo and the Proposed Solution.

WPTF appreciates the time and effort put forth by stakeholders to bring alternative proposals to the table for discussion. Based on our understanding of the current proposals by CAISO, CESA, and Vistra, WPTF believes using a value in place of the RT Bid component of the BCR calculation during limited intervals that meet certain conditions can strike an appropriate balance.  Additionally, there are some modifications that can be made (as discussed in response to #4 below) to each proposed approach that would further align the proposals that we believe warrants consideration.

Below is WPTF’s feedback on the three proposed approaches as currently described in the straw proposal as well as discussed during the stakeholder call. This feedback is based on our understanding of each proposal, so to the extent additional clarification is needed, we would appreciate that to be provided in the next iteration.

CAISO’s Proposed Solution

It is our understanding that the CAISO’s proposal includes one trigger that identifies when an interval would be flagged as ineligible for RT BCR. Specifically, whenever the SOC at the beginning of the 5-minute RTD interval is at the min or max SOC value, then that 5-minute interval is excluded from RT BCR.

First, WPTF believes that, at a minimum, one additional condition needs to be met when identifying which intervals to deem ineligible for RT BCR. Specifically, for an interval to be deemed ineligible for RT BCR, WPTF believes (1) the resource’s SOC at the beginning of the interval needs to be at min or max SOC value and (2) the resource has a day-ahead or base schedule that cannot be supported. Adding the second condition further narrows in on instances whereby there is a more credible risk of the CAISO’s concern regarding extracting inflated BCR payments materializing.

Take for example a resource that has the following schedules, bids, and LMPs:

• DA Schedule: 0 MW
• FMM Schedule: 0 MW
• RTD Schedule: 10 MW
• FMM and RTD Bid: $20/MWh
• RTD LMP: $19/MWh

It then follows that the BCR components would be calculated as the following:

• RT Revenue: $190
• RT Bid Cost: $200
• RT BCR Payment: $10

Assume the resource has 100% SOC going into this RTD interval. Per the CAISO’s proposed solution, this interval would be flagged as ineligible for RT BCR. However, notice that the resource was discharged at a bid price of $20/MWh but the resulting LMP at its location is $19/MWh. This is a situation where BCR is warranted; in fact it’s one of the reasons why BCR exists. Due to the complex market optimization, constraints, and binary variables, it can be the case that the resulting LMPs may not support the accepted offer price. BCR ensures that resources are kept whole to the bid costs that are accepted by the market. Furthermore, this scenario does not include any buy back or sell back of day-ahead schedules, which seems to be the crux of the CAISO’s concern.

Thus, we are concerned that CAISO’s proposed solution is overly punitive, and we strongly recommend the CAISO and stakeholders consider adding additional conditions that also have to be met to identify if an interval is ineligible for RT BCR under this proposed approach. In addition to the two conditions suggested above, the CAISO and stakeholders could also add a condition that a resource is ineligible for RT BCR only when (1) and (2) above is met and (3) the resource was not mitigated in a prior interval. This would address the concerns that mitigation may be the cause of a unit reaching its min/max SOC value – a market design element – rather than direct SC action.

Second, WPTF seeks clarification on what costs and revenues from the FMM market are deemed ineligible for RT BCR calculation under the CAISO’s proposed solution. Using the example on slide 20, the costs associated with the FMM market are $3,000 (-20*-$150). Does the $3,000 represent 1/3 of the total cost associated with the 15-minute market to convert it to the 5-minute granularity since the solution identifies 5-minute intervals as ineligible or is it the full cost of the 15-minute interval? Similarly on the revenue side; does the FMM revenue included in the example represent 1/3 of the total FMM revenue?

Lastly, WPTF questions if the conditions presented on slide 24 should in fact be considered ineligible for RT BCR. In this example the resource has a DA schedule of 10 MWs and then an FMM and RTD schedule of 15 MWs. The CAISO noted that this example assumes there is an SOC that is binding which is why it’s flagged as being ineligible for RT BCR. While we understand that this example was highlighting the need to discuss how to treat instances where the DA LMP is higher than the RT LMP and the resource is dispatched higher in RT than DA, WPTF believes that we should first be discussing if this should even be a case that is flagged in the first place.

Assume the resource had 100% SOC in the day-ahead market going into the interval where the market dispatched it to 10MW. Now also assume the same is true in the FMM; the resource had 100% SOC going into the interval and the market decided to dispatch it up to 15 MW (5 MW higher than its day-ahead schedule). In this example the reason the resource is receiving RT BCR is because the FMM LMP is lower than the bid. If the market is deciding to dispatch the resource above its day-ahead schedule based on its bid and the resulting LMP happens to be lower than the bid, this is not the fault of the SC and should still be eligible for BCR. Having an LMP lower than the submitted and accepted bid can and does happen in the CAISO market. For example, assume the resource was a 15 MW/60 MWh battery. When it’s dispatched up to 15MWs it’s no longer eligible to set the price since it’s not “marginal”; the market would have to go to another resource to serve one additional MWh of load. The next MWh of generation to serve the next MWh of load may require committing another resource. This will then decrease prices and we now have an LMP that is lower than an accepted bid.

If the CAISO includes the second condition noted above, this interval will be appropriately included in the RT BCR calculation. During the call the CAISO noted that the reason this should be excluded is because there is another constraint forcing the resource to be dispatched above the day-ahead schedule. If that is the case, then either (1) the LMP will reflect the bid and there will not be any BCR payments anyways, or (2) its due to either the end of hour SOC or ASSOC and both of those already have BCR provisions in place that would narrowly make those conditions ineligible for RT BCR; thus, we do not need to address those conditions again with this effort, especially if in doing so its overly punitive and capturing instances described above whereby the resource should be eligible for BCR.

Alternative Proposed Solutions

WPTF appreciates both CESA and Vistra for their time and effort in putting forward alternative solutions to consider. There are two main elements to all three proposals – (1) the intervals for which the resource would receive a different RT BCR treatment and (2) the new BCR treatment.

Regarding the first element; there is clarification between the CESA and Vistra proposal that we would appreciate. Based on the stakeholder discussion it seems as though the CESA proposal is applied 24x7 rather than only identified intervals, whereas the Vistra proposal is similar to the CAISO’s in that it first identifies intervals to apply the different RT BCR treatment. We ask that the CAISO and CESA confirm if the CESA’s proposal is applied 24x7 or limited to only a subset of identified intervals. WPTF is currently leaning towards an approach that only applies the new RT BCR treatment for identified intervals where the concerns of inflated BCR are likely to materialize. Otherwise, simply applying the updated RT BCR calculation to all intervals may end up being overly punitive.

Regarding the second element; both alternatives (CESA and Vistra) have the same element of using a proxy bid (DA LMP from CESA and DEB from Vistra) in place of the RT Bid in the BCR calculation. We believe these are reasonable approaches and a preferred element of a solution over CAISO’s proposed element which would simply eliminate RT BCR entirely in that interval. However, we believe this is an area that warrants further discussion – specifically what should be used in place of the RT bid. The CAISO presented a few scenarios that showed how varying relationships between the RT bid, RT DEB, DA LMP, and RT LMP can create different BCR calculations under the different approaches. It could be the case that it would make sense to apply some limits on the value used in place of the RT Bid to ensure the outcome aligns with the intent of this effort.

The CAISO did raise some valid questions that would need to be discussed on both proposals related to the use of the various proxy bids. Resources in the EIM areas do not have DA LMPs thus CESA’s proposal may end up having to treat EIM resources slightly different than CAISO BAA resources in terms of what is used for the proxy bid in the RT BCR calculation. Similarly, Vistra’s proposal uses the DEBs and the CAISO noted during the call that storage resources in the EIM do not have access to the same DEB options as storage resources in CAISO BAA. We believe additional discussion around the pros and cons of using DA LMPs with something different for EIM resources vs using DEBs with the understanding that EIM resources don’t have access to the same DEBs is warranted. Additionally, we may want to give further consideration to applying limits or floors to ensure the outcome aligns with the intent of this change while not creating additional harm or artificial benefit. To be clear, we do not believe these policy discussions are insurmountable; we as a stakeholder community should openly discuss the trade-offs to make an informed decision. One data point that would be helpful is for the CAISO to analyze the DEB values for CAISO storage resources vs EIM storage resources such that we can see how materially different those values are.

In summary, WPTF prefers an approach that modifies the BCR formulation rather than simply eliminate BCR in that interval all together while also only applying the modified calculation to intervals that meet certain circumstances. There are still more discussions that need to be had around (1) what proxy bid to use in place of the RT Bid and (2) the full scope of conditions or logic used to identify intervals subject to the modified RT BCR calculation.

WPTF provides a modified approach in response to #4 below that takes elements of all the proposed solutions, while adding a few more conditions that need to be met for an interval to identify for consideration.

4. Please provide any other proposals your organization considers the ISO should assess. Please include as much detail as possible.

WPTF believes that there is a reasonable approach to consider as an interim solution that is a combination of the CAISO, CESA, and Vistra proposed solutions. It starts with the similar approach of the CAISO’s solution – identifying intervals that meet certain conditions – then rather than eliminating that interval from RT BCR, replacing the RT Bid component of the RT BCR calculation with another value (similar to CESA’s and Vistra’s proposals). Additionally, WPTF believes two more conditions should be included in the logic when identifying which intervals are subject to the modified BCR calculation. Lastly, this would be considered an interim solution with a sunset date such that the CAISO and stakeholders can take the necessary time to holistically review BCR for storage while addressing the urgent concern of extracting inflated BCR payments.

Specifically, the approach would first identify any interval whereby (1) the resource’s SOC in the 5-minute market is at the min or max SOC value going into that interval, (2) the resource has a day-ahead or base schedule that it cannot support due to the SOC value, and (3) the resource was not mitigated in a prior interval. Then any interval identified has a slightly different RT BCR calculation applied. Rather than including the RT Bid on the cost side, the BCR calculation could use a proxy in place of the RT Bid. The proxy could consider incorporating RT DEBs, DA LMPs, and/or RT bids, in a way that addresses the concern while also ensuring it does not further increase BCR in that interval or create increased surplus revenues in that interval that would then offset shortfalls calculated in another interval.  Using a modified BCR calculation rather than simply eliminating the RT BCR in that interval strikes an appropriate balance with regards to not being overly punitive while still addressing the urgent concern. As discussed throughout this stakeholder process, there are some market design elements that may be the driver of a resource reaching its min/max SOC and not being able to support its day-ahead schedule. Eliminating all RT BCR is overly punitive and does not recognize that other drivers exist that are not the fault of the SC and thus still may warrant BCR.

To be clear, WPTF believes that any proposed solution coming out of this effort would be an interim solution and would have a specified sunset date. We agree that while these solutions primarily address CAISO’s Concern #2 (inflated BCR payments) it may not adequately address the market incentive concern. WPTF agrees that we need to ensure appropriate market incentives and tools are in place and that BCR for storage resources should not insulate resources from said incentives. However, that requires a much longer discussion and should be coupled with the continued discussion around enhancing storage DEBs and the reference level adjustment process to enable bidding above $1,000/MWh when the enhanced DEBs are above $1,000/MWh. These discussions should continue immediately following the Nov Board meeting such that a durable solution can be put into place within a reasonable timeline.

5. Please provide your organization’s comments regarding the issues regarding mitigation as well as the initial analyses presented by the ISO.

As noted in response to #4 above, the CAISO could consider adding an additional logic or condition when identifying which intervals to exclude from RT BCR to address the concern related to mitigation. Specifically, if a resource was mitigated in an interval prior to the one being evaluated, then it would not be excluded from BCR as it could potentially be at the min/max SOC due to mitigation and not the action of the SC. 

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