Comments on June 7 workshop discussion

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

Boston Energy supports the ISO's initiative to review current penalty structure and ensure its penalties more proportionate to impact, while at the same time deterring non-compliance.  Boston Energy has no concerns with the items the ISO has targeted for track 1 and track 2.  

2. Provide your organization’s comments on the initial ROCE topics and potential changes

Boston Energy's comments at this time are focused on meter data penalties.  We believe a goal of the ISO should be to provide market participants submitting meter data with information and notices to avoid being assessed penalties in the first place.  This will hopefully result in more accurate initial settlement statements and fewer penalties having to be assessed.  

As we mentioned on the stakeholder call, Boston Energy encourages the ISO to implement meter data validation checks similar to what PJM does.  CAISO has all the data to perform such checks and could ultimately provide market participants notices if the meter data submitted in missing for a given hour(s) or is significantly different than what CAISO expects.  

Responsibility for accurate submission of meter data would still fall on the market participant and whatever penalty structure CAISO decided upon would still be applicable.  The meter data validation check would be a courtesy notice that the market participant should review the meter data.  It is up to the market participant to take all necessary actions. 

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

No additional comments at this time. 

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

No additional comments at this time. 

5. Please provide any additional comments on the workshop not mentioned above

No additional comments at this time. 

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

The full text of DMM's comments are pasted in response to question #1.  There may be some formatting errors.  For the fully formatted version of DMM's comments please see the PDF attached below the final question.

 Comments on Rules of Conduct Enhancements

June 7, 2023 Workshop

Department of Market Monitoring

June 19, 2023

Comments

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Rules of Conduct Enhancements - June 7, 2023 Workshop.[1]

DMM opposes eliminating rules of conduct deadlines and penalties for behavior the ISO deems important.

During the workshop, some stakeholders questioned the need for the ISO to continue to have penalties for some rules of conduct such as failing to meet meter data submission deadlines.  For behavior such as data submission that the ISO values market participants continuing to perform, DMM supports the ISO maintaining, and in some cases strengthening, strict data submission deadlines and financial penalties for failing to meet the deadlines. 

Some stakeholders cited the potential low amount of penalties actually levied as evidence for considering whether it would continue to be worth the ISO’s efforts to monitor and enforce rules of conduct deadlines.  DMM disagrees that a relative lack of historical levying of a particular penalty is an appropriate indicator of a lack of value of maintaining the penalty.  A strict deadline and financial penalty for not meeting that deadline creates important incentives for market participants to perform the desired behavior by the deadline.  Removing the penalty for a particular submission deadline could result in increased non-compliance of that deadline over time.

For example, the tariff has not defined a clear deadline for some data that proxy demand response providers must submit for the ISO and DMM to be able to monitor their self-reported load reduction performance.  In the absence of a firm deadline, the ISO has not been able to levy penalties on the demand response providers for non-compliance with the data submission required by the tariff.  Therefore, in the absence of these penalties, DMM has witnessed significant, ongoing problems with some proxy demand response providers ever submitting this required data.

DMM believes well-defined deadlines and financial penalties for not meeting those deadlines creates important incentives for market participants to perform the desired behavior.  DMM supports the efforts in this initiative to design penalties that are proportionate to the impact while deterring non-compliance.  DMM recommends that the ISO and stakeholders identify the behavior that it is important for market participants to comply with, and design appropriate penalties for incentivizing that behavior.  DMM cautions against using the historical lack of non-compliance with a particular rule as an indication that the ISO should eliminate the non-compliance penalty for that rule.

The next two sections of these comments highlight two particular rules of conduct that DMM believes warrant stricter deadlines and penalties.  It may be appropriate to strengthen other rules of conduct as well.

DMM recommends the ISO strengthen deadlines and penalties for proxy demand response providers submitting baseline and meter data.

The tariff requires proxy demand response providers to submit baseline and meter data that is necessary for the ISO and DMM to monitor the accuracy of participant-reported demand response performance.  As described above, DMM has witnessed significant ongoing problems with some proxy demand response providers ever submitting this required data.  DMM’s understanding is that a lack of a tariff-defined deadline for submission of this data has hindered the ability of the ISO to levy non-compliance penalties.

DMM believes this data is critical for the ISO and DMM’s ability to be able to monitor for potential fraudulent activity of proxy demand response providers.  Therefore, DMM recommends that in this initiative the ISO review the data that should be submitted, define clear deadlines for submitting the data, and design penalties for deterring any further non-compliance.

DMM recommends the ISO strengthen penalties for late submission of resource outages.

DMM has also witnessed the failure of the current rules of conduct to appropriately incentivize resources to submit outages on time.  On many occasions, DMM has witnessed resources only submitting outages to the CAISO balancing area operators after the resources received instructions to start or transition to a different configuration.  Conversations with many of these resources revealed that the resource operator had knowledge that the resource may not be able to perform if called on.  While there is some potential for FERC enforcement related to provision of false information, the consequences for not reporting the outage on time may often only be a warning letter.  This does not seem to be appropriately incentivizing timely reporting of resource outages.

DMM’s understanding is that timely reporting of resource outages is important for not only the appropriate levying of resource availability penalties, but it is also very important for the reliable operation of the grid.  Therefore, DMM recommends that in this initiative, the ISO consider significantly redesigning the penalty structure to create much larger automated incentives for resources to report outages as soon as anyone at the plant becomes aware of an issue.

[1] Rules of Conduct Enhancements – Stakeholder Workshop, California ISO, June 7, 2023: http://www.caiso.com/InitiativeDocuments/Presentation-Rules-of-Conduct-Enhancements-June-07-2023.pdf

2. Provide your organization’s comments on the initial ROCE topics and potential changes

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

5. Please provide any additional comments on the workshop not mentioned above

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

The City of Corona supports CAISO’s Rules of Conduct Enhancements Initiative for changes to Section 37 of the CAISO Tariff.  Corona would like to specifically comment on the following section changes:

1. Meter Data Penalties: Section 37.11.1
   1. Corona supports the update of penalties to the lower of 30% of the value of the error or $1,000/trading day.
   2. Corona recommends that that CAISO reconsider allowing waivers in the following specific circumstances:
      1. The entity has self-reported, and this is their first offense.
         1. By providing waivers for a self-reported first offense, the CAISO encourage entities to self-report.  When entities self-report and voluntarily correct errors, the market functions at a higher level and the data provided is more accurate.
      2. The error is minor, and this is their first offense.
         1. An entity who has never had an offense and makes a minor error should not be penalized. The entity is unlikely to be a “bad actor” and should be given grace for a one-time offense.  “Minor error” could be specifically defined to demonstrate to FERC that CAISO is not subjective in their decision-making. 
2. Annual Penalty Distribution Filings: Section 37.9.4
   1. Corona supports replacing the requirement to obtain FERC approval with an informational report to FERC. 
3. Demand Response Baseline Penalties: Section 11.6.1 & Section 37.6.1
   1. Corona supports applying penalties on a “per-scheduling coordinator basis” rather than a “per-resource basis”.
4. Penalty Distribution: Section 37.9.4
   1. Corona supports clarifying the rule to ensure that entities who are exempt from penalties or entities who have been granted an appeal by FERC for a violation are deemed ineligible for the annual penalty distribution.
5. Application of Market Adjustment Provision for EIM Entities: Section 37.5.2.3 and Section 37.11.1
   1. Corona supports CAISO applying funds to their escrow account in the event that the EIM entity has opted out of UFE or are the only entity paying UFE in the area.
6. Rules of Conduct Investigative Process: Section 37.8.3 – Section 37.8.7
   1. Corona supports the streamlining of the investigative process and/or shifting the process to the settlement dispute process.
7. Information Submission Requirements Subject to Penalty: Section 37.6.1.1
   1. Corona supports identifying specific provisions that require a penalty for late submission, rather than applying the penalty across the board.
      1. Ex: If the entity provides timely notification to the CAISO of the potential late submission, and it is determined that the late submission will not negatively affect the market, the penalty shall not be applied.
8. Penalty Tolling Eligibility: Section 37.8.10
   1. Corona supports the penalty not being initially added to the settlement statement when the tolling provision has been enacted.
9. Late Forced Outage Reports: Section 37.4.1.2
   1. Corona supports making a change to the violation process.  If the late forced outage reporting causes significant issues for the CAISO, Corona recommends removing the “free pass” stage, and beginning with a warning letter.  This provides the entity one warning before penalties apply, rather than two.  However, if the late forced outage reporting does not have a significant impact on the CAISO, Corona supports eliminating the penalties altogether.

2. Provide your organization’s comments on the initial ROCE topics and potential changes

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

5. Please provide any additional comments on the workshop not mentioned above

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

Idaho Power supports CAISO’s ROCE initiative.  The penalties associated with violations of the sections of CAISO’s tariff discussed below are disproportionate to the impact of the inaccurate meter data.  Idaho Power understands that the intent and reasoning behind the penalties is to promote accurate meter reporting but due to the disproportionate nature of the penalties, the penalties are misaligned with the severity of the violations and are overly punitive.  CAISO’s original penalty structure was designed prior to its applicability to WEIM market participants and Idaho Power encourages this effort by CAISO to ensure that the penalty structure of CAISO’s tariff with respect to meter data is appropriately applied to the WEIM market participants.

2. Provide your organization’s comments on the initial ROCE topics and potential changes

Meter Data Penalties: Section 37.11.1: Idaho Power requests clarification as to how the lower of: (a) 30% of the value of the error; or (b) $1,000 per trading day will be calculated.  Idaho Power suggests that CAISO consider the following in determining the appropriate penalty amount:  if applicable, netting out the generator error to the offsetting ELAP resource load error; the percentage of error; and whether the error impacts all market participants or the individual BAA. In addition, Idaho Power requests that CAISO also consider applying the 30% of error threshold to the $3,000 failure to submit meter data sanction also included in Section 37.11.1.

Eliminate Annual Penalty Distribution Filing: Section 37.9.4:  Idaho Power is supportive of the change to this section suggested by CAISO.

Streamline rules of conduct investigate process: Section 37.8.3-37.8.7:  Idaho Power is supportive of this suggested change and the recommendation that change be addressed in track 2.

Clarify Eligibility for Penalty Distribution: Section 37.9.4:  Idaho Power is supportive of this potential change and this change occurring during track 1.

Define Information Submission Requirements Subject to Penalty with Specificity: Section 37.6.1.1:  Idaho Power supports this change and the recommendation that it occur during track 2.

Update Penalty Tolling Eligibility to Create Clear Pathway for SC to Invoke Provision: Section 37.8.10:  Idaho Power agrees that the ability to invoke the tolling provision should occur without the penalty accruing on a settlement statement. Idaho Power recommends this change occur during track 1.

Clarify Application of Market Adjustment Provision in Context of WEIM Entities: Section 37.5.2.3 & 37.11.1:  Idaho Power believes the intent is to reference Section 37.11.2 here rather Section 37.11.1.  Idaho Power agrees that clarification is needed on this section regarding UFE now that entities can opt in/out of the settlement of UFE.

Late Forced Outage Reporting: Section 37.4.1.2:  Idaho Power suggests that this section only be applicable to resources in the CAISO BAA and should not apply to non-CAISO BAA resources.  The applicability of this section to non-CAISO BAA resources should be clarified.  Idaho Power supports this being considered during track 2.

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

Idaho Power would respectfully request the following additional scope items to be included in the ROCE:

1. Meter data submission timelines
   1. Idaho Power requests that CAISO include a review of the current meter submission timelines for WEIM entities as part of the ROCE scope. Currently meter data is required to be submitted by T+52B in order to not be subject to rules of conduct penalties. We believe that this timeline should be reviewed for the following reasons:
      1. Currently, even though settlement statements after T+70B are “optional” (T+11M, T+21M and T+24M), WEIM entities are seeing these settlement statements every trade date. It does not appear that a later meter submission cutoff closer to the T+11M statement would greatly impact CAISO staff.
      2. There are some data resubmissions allowed that are not subject to ROC penalties that may be more impactful to all market participants than meter resubmissions.

2. Review appropriateness of meter penalty structure
   1. Idaho Power requests that CAISO include a review of the appropriateness of assessing meter penalties under WEIM and EDAM. There are current processes in place to determine accurate meter data through the SQMD process that may have been developed after the ROC penalties were designed. Many of these controls help prevent and identify inaccurate or missing meter data prior to the T+24M statement (meter testing requirements, annual affirmation, and bi-annual self-audit attestation). CAISO should include in the ROCE scope, a review of the current processes in place to ensure meter data is accurate and whether those processes provide assurance that scheduling coordinators will report accurate meter data and whether an additional penalty structure is still appropriate.
   2. Idaho Power also asks that CAISO perform an analysis to determine whether the current meter penalty structure is appropriate for scheduling coordinators who submit meter data for resources that are outside the CAISO footprint. A review should be performed to determine if the impact to market participants aligns with the current proposed penalty structure.
   3. Idaho Power also requests that CAISO consider alternatives to the lower of 30% of error threshold such as using a percentage of the error to determine if a penalty in accordance with Section 37.11.1 is appropriate. One suggestion could be that if the percentage of error is lower than a specific threshold amount and/or includes resources outside the CAISO footprint, no penalty would be assessed as long as accurate meter data is re-submitted. In contrast, if the percentage of error is over a certain threshold percentage, and/or the resources are inside the CAISO BAA, the penalty amounts described in Section 37.11.1 would apply.

3. Review and update meter BPM requirements
   1. Idaho Power requests that CAISO review current metering BPM requirements and determine if the requirements included should be different for those resources that do not sit in the CAISO BAA footprint (WEIM entities and eventually EDAM).
   2. If those requirements are different, Idaho Power asks that CAISO separate those requirements into a separate metering BPM for clarity. The current metering BPMs do not make clear distinctions on requirements for resources that sit inside the CAISO BAA and those that do not which causes confusion to scheduling coordinators trying to ensure resources properly comply with CAISO meter requirements.
   3. CAISO should review requirements specifically related to station use, line losses, etc. and clearly define those requirements for various resource types. If these guidelines were clearly defined, they could help prevent meter penalties due to a misunderstanding of the CAISO requirements laid out in the metering BPM.

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

 Idaho Power agrees with CAISO’s categorization of the various topics into their respective tracks with one exception:  Idaho Power suggests that the tolling provision (Section 37.8.10) be moved to track 1.

5. Please provide any additional comments on the workshop not mentioned above

 Idaho Power appreciates CAISO’s efforts in reviewing its Rules of Conduct, in particular its meter data penalties, and the ability to provide comments on the ROCE workshop.  Idaho Power looks forward to working together with CAISO during this initiative. 

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

NV Energy supports the CAISO’s proposed Rules of Conduct Initiative. In particular, NV Energy supports the proposed tariff change to reform Section 37.11.1 regarding meter data penalties.

2. Provide your organization’s comments on the initial ROCE topics and potential changes

Before October 1, 2011, the CAISO’s meter data penalties were based on a percentage of the error. The penalty was 30 percent of the value of the energy in error if the scheduling coordinator identified the error and 75 percent if the CAISO discovered the error. CAISO changed to a $1,000/day penalty out of a concern that the percentage-based fine was excessive where there was a large meter data error that was quickly discovered and remedied. As explained in the waiver request submitted in Docket No. ER21-395; however, CAISO did not consider the opposite scenario — the case where a per-day penalty was disproportionate if there were a persistently small meter data error. FERC’s April 15, 2021, order in that proceeding noted this issue and determined,

that CAISO’s current Tariff may lead to disproportionate penalties and improper allocation of market adjustment funds in certain circumstances. Accordingly, we encourage CAISO to consider proposing modifications to its Tariff to better align its penalty and market adjustment allocation provisions with its stated intent to incentivize compliance while avoiding disproportionately high penalties. Such revisions could help CAISO avoid similar outcomes and the need to request waiver of its Tariff in the future.

CAISO’s proposed change to Section 37.11.1 to set the penalty value at the lower of (1) 30% of the value of the error or (2) $1,000/trading day is a reasonable place to start the stakeholder process. The goal is to encourage compliance while at the same time recognizing that it would be inappropriate to assess excess penalties for either large but quickly resolved errors or smaller but long-term inaccuracies.

NV Energy agrees the reform of the meter data penalties should be a Track 1 priority issue.

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

CAISO staff has worked diligently to assemble a list based on their experience in operating the market. NV Energy supports this effort.

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

NV Energy supports the proposed track categorization with the caveat that if the initiative proceeds faster than expected, it may be useful to bring forward non-controversial Tract 2 items that would not delay progress on Tract 1 priorities.

5. Please provide any additional comments on the workshop not mentioned above

NV Energy appreciates CAISO staff’s time and effort for undertaking this initiative. While there are many competing stakeholder activities, reform of meter data penalties was recognized by FERC as a matter that should be addressed.

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

Pacific Gas and Electric (PG&E) thanks the CAISO for proposing this initiative and supports clarifying Tariff language.

2. Provide your organization’s comments on the initial ROCE topics and potential changes

• Under the Meter Data Penalties: Section 37.11.1

PG&E recommends defining the specific formula and input factors that would be used to calculate the “30% value of error”. This will allow market participants to independently validate the calculation and avoid uncertainty during the actual sanction review process.

• Streamline rules of conduct investigative process: Section 37.8.3-37.8.7.

PG&E has concerns about using the CAISO Settlement Dispute process for investigations and requests that the CAISO reconsider this potential change.  Under the current three letter process, both the Scheduling Coordinator (SC) and the Generator Owner are notified directly by the CAISO, and both have the ability to take follow-up actions. Under the proposal, it is unclear if the Generator Owner would continue to have the ability to manage investigations independently or if that responsibility would default to the SC.

Additionally, if a Generator Owner changes the SC, it is unclear how this would impact the process under the proposal. PG&E requests the CAISO to please provide more clarity on the ability of both the SC and the Generator Owner to independently manage investigations through the Settlement Dispute process.  

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

PG&E supports the CAISO’s proposed scope.

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

  PG&E supports the CAISO’s proposed track categorization.

5. Please provide any additional comments on the workshop not mentioned above

N/A

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

Powerex submits the following comments on the CAISO’s June 7, 2023 Rules of Conduct Enhancements Workshop. During the workshop, CAISO staff proposed a number of potential enhancements to CAISO’s Rules of Conduct (ROC), including potential changes to the methodology for calculating ROC penalties associated with late and/or inaccurate meter data.  

Powerex supports market rules that encourage market participants to provide timely and accurate meter data for participation in the WEIM. At the same time, Powerex believes penalties applicable to late meter data corrections should be generally commensurate with the magnitude of the underlying inaccuracy, including consideration of whether the inaccurate data could be reasonably expected to result in a material negative consequence for other market participants. 

Currently, CAISO applies a penalty of $1000 per trading day associated with inaccurate meter data. As an EIM participant, Powerex has occasionally identified very small meter inaccuracies that have resulted in significant ROC penalties because the issue persisted over an extended period. Furthermore, Powerex’s load meter is calculated using its generation and interchange meter data, and hence corrections to Powerex’s generation meter data submissions have often also resulted in equal and offsetting hourly adjustments to its EIM load, but with no net impact (in MWh terms) on the rest of the EIM area.  

Powerex is supportive of further developing the CAISO’s proposal to calculate penalties for inaccurate meter data based on the lower of (a) 30% of the value of the error or (b) $1000/trading day. This approach could help to reduce the likelihood of a very small but persistent error attracting large penalties that far outweigh the materiality of the underlying issue. In order to ensure this change is effective, Powerex believes that the methodology to derive the “value of the error” should be carefully defined to address scenarios as described above in which the change to an EIM participant’s generation meter data is offset by corresponding changes to its load meter data. For example, in determining the “value of the error,” CAISO could use an hourly calculation of the net MWh impact of all meter data corrections submitted by the relevant Scheduling Coordinator.  

2. Provide your organization’s comments on the initial ROCE topics and potential changes

See comments above. 

Powerex’s comments are also available at CAISO Rules of Conduct Enhancements Comments.pdf (powerex.com)

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

See comments above. 

Powerex’s comments are also available at CAISO Rules of Conduct Enhancements Comments.pdf (powerex.com)

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

See comments above. 

Powerex’s comments are also available at CAISO Rules of Conduct Enhancements Comments.pdf (powerex.com)

5. Please provide any additional comments on the workshop not mentioned above

See comments above. 

Powerex’s comments are also available at CAISO Rules of Conduct Enhancements Comments.pdf (powerex.com)

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

The Six Cities generally support, or do not oppose, the CAISO’s approach to the topics assigned to this initiative, as discussed below.  The Six Cities will provide more detailed substantive comments on the CAISO’s various proposal elements when the CAISO’s Straw Proposal is issued.

2. Provide your organization’s comments on the initial ROCE topics and potential changes

The CAISO has identified nine topics for consideration in this initiative.  The Six Cities either support or do not oppose consideration of these topics as part of this stakeholder process, and either support, do not oppose, or take no position at this time on the conceptual approaches discussed by the CAISO during the workshop, as follows:

Track 1:

• Meter data penalties
• Apply DR baseline penalties on a per-SC basis
• Eliminate annual penalty distribution filing
• Clarify eligibility for penalty distribution
• Clarify the treatment of market adjustments due to late or inaccurate meter data for certain WEIM entities

At this time, the Six Cities support the CAISO’s proposal to revise the meter data penalties for inaccurate and/or late meter data submissions so that the revised penalty level is based on the lower of 30% of the value of the error or $1,000 per trading day.

Preliminarily, the Six Cities do not oppose the CAISO’s proposals to (i) apply penalties associated with demand response providers on a “per Scheduling Coordinator” versus a “per resource” basis; (ii) adopt the use of informational filings at FERC to address the distribution of penalty proceeds; and (iii) exempt certain entities, such as federal power marketing agencies or entities that have received authorization for a penalty waiver, from receiving a distribution of penalty proceeds. 

With respect to the application of the market adjustment provision for EIM entities, the Six Cities take no position at this time on the CAISO’s proposed approach for the handling of penalty funds associated with EIM entities that have opted out of unaccounted for energy and would like to review the details for this potential change as a part of the Straw Proposal in this initiative.  The discussion during the workshop and the limited information in the presentation did not provide adequate information to allow stakeholders to fully assess this proposal. 

Track 2:

• Define information submission requirements subject to penalty with more specificity
• Update penalty tolling eligibility to create a clear pathway for SCs to invoke tolling provisions
• Streamline rules of conduct investigative process
• Late forced outage reporting

With respect to the CAISO’s proposed options for addressing late reporting of forced outages, the Six Cities preliminarily support the CAISO’s proposal to consider elimination of the three tiered penalty structure for failure to report forced outages within 60 minutes. 

For the remaining topics assigned to Track 2, the Six Cities do not oppose consideration of these topics and will specify their position on the CAISO’s proposals once a Straw Proposal is issued. 

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

Please refer to the response to question no. 2 above. 

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

The Six Cities have no concerns with how topics in this initiative are assigned to particular tracks. 

5. Please provide any additional comments on the workshop not mentioned above

The Six Cities have no further comments at this time. 

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

SCE appreciates CAISO’s efforts to streamline and improve the Rules of Conduct and to simplify processes where necessary. SCE’s comments are focused on four of the ROCE topics. SCE supports the updates to the meter data penalties and recommends to incorporate a 3-day notification process to notify the Scheduling Coordinator (SC) or resource owner prior to the penalty trigger date.  Without additional details for how CAISO intends to implement a streamlined investigative process, SCE does not support moving the three-letter process to the Settlements dispute process because this would eliminate the opportunity for the Scheduling Coordinator or resource owner to timely correct the issue before penalties are assessed. Additionally, SCE supports the application of Demand Response (DR) penalties for baseline data at the SC level, however with this change, it is integral that the CAISO provide SCs the trade dates and resource IDs for those resources that triggered the DR baseline data penalties. Without this information, additional complexity is created for the SC to determine which DR resource(s) should be allocated the penalties. Finally, SCE seeks clarification in Section 37.9.4 that any Scheduling Coordinator who is also a Market Participant should be treated independently from its Market Participant role and should be eligible to receive its pro-rata share of the Rule of Conduct proceeds for distribution to eligibile Market Participants.

2. Provide your organization’s comments on the initial ROCE topics and potential changes

Topic 1 - Meter Data Penalties: Section 37.11.1 (Track 1) SCE agrees that late and inaccurate meter data penalties should be modified to the lesser of 30% of the value of the error of $1,000 per trading day. Additionally, SCE recommends the CAISO implement an email notification process to notify the SC and/or resource owner 3 days prior to the penalty trigger date to allow the resource time to resolve any metering issues prior to the assessment of penalties.  These changes will allow both the CAISO and market participants to timely resolve metering data issues and streamline the penalty assessment process wh

Topic 2 - Eliminate annual penalty distribution filing: Section 37.9.4

SCE does not have any comments regarding Section 37.9.4 at this time.

Topic 3 - Streamline rules of conduct investigative process: Section 37.8.3-37.8.7 (Track 2) 

SCE does not support CAISO’s proposal to streamline the investigative process and shift the 3-letter process to the Settlement dispute process. The current 3-letter process is necessary to provide an opportunity for SCs and resource owners to timely implement corrective actions to mitigate potential penalties related to Rules of Conduct violations. The current process allows CAISO to notify the SC and/or resource owner about existing metering or telemetry issues that violate the Rules of Conduct prior to assessment of penalties. While there may be considerable communication between CAISO and the SC or resource owner during the 3-letter process, CAISO should aim to provide meaningful and detailed information regarding the specific issue triggering the violation. Providing comprehensive information early on in the 3-letter process enables the SC or resource owner to take appropriate, timely corrective action to remedy the issue and minimize the communication needed between CAISO and the SC or resource owner streamlining the 3-letter process.

Additional information on how CAISO expects to implement such change to the investigative process should be provided for further discussion in Phase 2. Shifting the 3-letter process to the settlement dispute process creates more complexity because information on which resource(s) triggered the penalty and information on the nature of the violation is not available in the settlement statement.  Moreover, delaying the investigative process would allow for the violation to persist longer and create additional complexity for the SC or resource owner to track down and resolve the issue triggering the violation.  SCE does not support the CAISO’s proposal to streamline the investigative process at this time without additional details on the proposed process and implementation.

Topic 4 - Apply DR baseline penalties on a per-SC basis: Sections 11.6.1 & 37.6.1 (Track 1)

SCE agrees that Demand Response (DR) provider penalties for baseline data can be applied at the Scheduling Coordinator level.to increase efficiency for the CAISO.  However, to avoid creating additional complications and inefficiencies for the SC, CAISO should also provide the SC the trade dates and resource IDs for those resources that triggered the DR baseline data penalties. This information will allow the SC to efficiently identify and pass the appropriate penalty to the applicable resource.  

Topic 5 - Clarify eligibility for penalty distribution: Section 37.9.4 (Track 1)

SCE supports CAISO’s proposal to remove the requirement to request FERC approval prior to distribution of Rules of Conduct proceeds. This allows for timely distribution of proceeds to all Scheduling Coordinators and their qualified Market Participants who were not assessed penalties during the applicable calendar year. In addition, SCE requests CAISO to clarify that if a Market Participant who was assessed penalties for the calendar year, but also serves as a Scheduling Coordinator(s), the CAISO should not view the Scheduling Coordinator(s) as ineligible to receive its distribution of its pro-rata share of the Rule of Conduct proceeds to distribute to its eligible Market Participants. In this scenario, the entity is providing market services and scheduling resources for other Market Participants and should not be viewed as a Market Participant but as a Scheduling Coordinator and eligible for its share of distribution proceeds. Moreover, SCE agrees that an informal filing to the FERC should include its determination of eligible Market Participants, Scheduling Coordinators and their respective shares of the trust account proceeds would be a more efficient process allowing escrow penalties to be distributed timely to Scheduling Coordinators and their eligible Market Participants

Topic 6 - Define information submission requirements subject to penalty with specificity: Section 37.6.1.1

SCE does not have any comments regarding Section 37.6.1.1 at this time.

Topic 7 - Update penalty tolling eligibility to create a clear pathway for SC to invoke the provision: Section 37.8.10

SCE does not have any comments regarding Section 37.8.10 at this time.

Topic 8 - Clarify application of market adjustment provision in context of WEIM entities: Sections 37.5.2.3 & 37.11.1

SCE does not have any comments regarding Sections 37.5.2.3 and 37.11.1 at this time.

Topic 9 - Late forced outage reporting: Section 37.4.1.2

SCE does not have any comments regarding Section 37.4.1.2 at this time.

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

SCE does not have any comments regarding ROCE scope at this time.

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

SCE does not have any comments regarding topic track categorization at this time.

5. Please provide any additional comments on the workshop not mentioned above

SCE does not have any additional comments on the workshop at this time.

1. Please provide a summary of your organization’s general comments on the rules of conduct enhancements (ROCE) workshop

Thank you for creating the opportunity to discuss changes to the Rules of Conduct.  Specifically, for the Tariff Section 37.11.1 containing meter data penalties that are excessive and not representative of the conditions that are causing the meter data non-compliance.   As discussed in the workshop, the ROC was implemented in 2004.  The meter data penalties for Late or Inaccurate SQMD was created, to prevent possible market manipulation.  However, if a complete review of the meter data non-compliance issues since 2004, I believe one would find that there are no patterns or practices that would be identified indicating that the SCs were trying to manipulating the market.  In most cases these errors were SCs missing the payment calendar SQMD due date, or some system issue in the meter data processing system (either with the MDAM, customer's records, etc.).   In these cases the SC eventually submitted the SQMD and the data was used for a later market settlement runs.  Clearly, not an effort to manipulate the market.  And the SCs were eventually whole with their market settlement as the revised meter data was corrected.  

Note, a meter data processing error for a SCME, requiring SQMD to be changed for a future market settlement statement, receives a "traffic ticket". However, if an error is in the meter processing system and goes unidentified for a period of time, the traffic ticket can results in a large penalty. The present penalty calculation does not result in the intent of a traffic ticket. 

With changes due to the WEIM and the changes implemented in 2017 allowing for more entities to be SCMEs, an SQMD Plan is now required by SCs submitting SQMD.  This provides the CAISO an opportunity to review and approve the plan.  Additionally, the Tariff requires SQMD Plan audits and reviews on an annual bases to Attest and or Affirm the implementation of the SQMD Plan.  Although SQMD Plans were not required for SCMEs prior to 2017, all SCMEs are still required, as a minimum, to perform a self-audit of their meter data processes every two years.  These controls are far better today, then the early days of the CAISO, prior to 2004. 

I believe that if a thorough examination of the proportion of the total Load and Generation data, perhaps annually, which can be attributed to instances of Late or Inaccurate Meter data non-compliance, we would discover that the value in accurate meter data is de minimis level. 

I recommend revising section 37.11 of the CAISO Tariff to remove the penalty associated with "traffic ticket" violations for Late and Inaccurate SQMD. However, if the complete elimination of the penalty is deemed too drastic, I suggest a temporary suspension of the penalty. This suspension would allow for further monitoring to assess its impact on the number of confirmed violations and the identification of any patterns of market manipulation. Based on the findings, a decision can be made regarding the reinstatement of the penalty or the appropriateness to remove the penalty.  

2. Provide your organization’s comments on the initial ROCE topics and potential changes

Topics are appropriate. The potential change for Tariff Section 37.11.1 does not go far enough to reduce the burden of this penalty.  I suggest the total elimination or a suspension of the penalty until further review can be completed by the CAISO and the Department of Market Monitoring on the overall value of the penalty.  

3. Provide your organization’s comments on the stakeholder discussion: ROCE scope

Scope is good.  

4. Provide your organization’s comments on stakeholder discussion: topic track categorization

No issues with dealting with the potential changes based on the 2 track system.  

5. Please provide any additional comments on the workshop not mentioned above