Comments on Issue paper

1. Please submit your organizations comments on the current Balanced ETC model:

The current Balanced ETC model is a useful approach for allowing parties with Transmission Ownership Rights (TORs) or Existing Contract Rights (ETCs), including SPTO Subscribers, to obtain a Perfect Hedge against congestion charges for transactions that utilize their rights. As CAISO noted in the Issue Paper, however, utilizing a Contract Reference Number (CRN) for these transactions can be cumbersome. It also can lead to market inefficiencies, because the rights holders that wish to obtain the Perfect Hedge must submit balanced Self-Schedules and are unable to economically bid their resources. Developing reasonable alternatives to the Balanced ETC model could benefit both the rights holders and the overall market.

BAMx is concerned, however, that the Subscriber use of Subscriber Rights and the Non-Subscriber Usage described in the Subscriber Participating Transmission Ownership Model Business Requirements Specification dated 7/25/2024 (SPTO BRS) are not clearly described and could lead to shifting of costs from the Subscribers and Non-Subscribers that actually use the SPTO transmission to parties that pay the CAISO Transmission Access Charge. To better understand the impacts of the proposed options set out by CAISO, BAMx would like to clarify our understanding of the current Balanced ETC model. To this end, BAMx includes relevant CAISO Tariff definitions and requests responses to the questions that follow (please use examples to illustrate the responses where possible).

Subscriber - An entity, or its designee, that has a Subscriber Encumbrance used to provide Subscriber Rights pursuant to a Subscription Agreement.

Subscriber Encumbrance - A legal restriction or covenant binding on a Subscriber Participating TO that affects the operation of transmission assets or Entitlements of the Subscriber Participating TO used to provide Subscriber Rights and that the CAISO needs to take into account in exercising Operational Control over such transmission assets or Entitlements. Any reference to contracts granting Subscriber Rights shall be considered as a Subscription Agreement. Any reference in the CAISO Tariff to an Encumbrance shall be read as also a reference to a Subscriber Encumbrance.

Subscriber Participating TO - A Participating TO whose transmission assets and Entitlements were constructed, and for which the associated transmission capacity is subject to long-term contractual obligations, to deliver energy, capacity, and associated attributes to satisfy state, municipal, county, or federal policy requirements or directives. Any reference in the CAISO Tariff to a Participating TO shall be read as also a reference to a Subscriber Participating TO.

Subscriber Rights - The transmission service rights and obligations of a Subscriber Participating TO to transmission customers with contracts entered into under the Subscriber Participating TO Tariff, as that tariff may change from time to time. Any reference in the CAISO Tariff to Existing Rights shall be read as also a reference to Subscriber Rights.

Subscription Agreement - A contract or other legal arrangement between one or more Subscribers and a Subscriber Participating TO that includes the provision of a Subscriber Encumbrance to the Subscriber.

Non-Subscriber - An entity, or its designee, that schedules as a Market Participant on transmission assets or Entitlements of a Subscriber Participating TO not being used by a Subscriber exercising Subscriber Rights, including Subscribers that schedule beyond their Subscriber Rights.

Non-Subscriber Usage Payment Amount - An amount paid by a Non-Subscriber and provided by the CAISO to a Subscriber Participating TO for the Non-Subscriber’s use of the Subscriber Participating TO’s transmission assets and Entitlements and Subscriber Encumbrances used to provide Subscriber Rights.

1. How is a specific Subscriber’s usage of the SPTO transmission assets and entitlements determined?
   1. For exports from the SPTO transmission assets and entitlements
   2. For imports to the SPTO transmission assets and entitlements
   3. For EDAM/EIM transfer exports from SPTO transmission assets and entitlements
   4. For EDAM/EIM transfer imports to SPTO transmission assets and entitlements
   5. For unscheduled flow out of SPTO transmission assets and entitlements
   6. For unscheduled flow into SPTO transmission assets and entitlements

2. In instances where the SPTO transmission has been fully Subscribed in a given direction by one or more Subscribers, please describe if and how the Subscribers can schedule beyond their Subscriber Rights and thus become a Non-Subscriber.

3. How is a specific Non-Subscriber’s usage of the SPTO transmission assets and entitlements determined and charged to the specific Non-Subscriber (including Subscribers that schedule beyond their Subscriber Rights)?
   1. For exports from the SPTO transmission assets and entitlements
   2. For imports to the SPTO transmission assets and entitlements
   3. For EDAM/EIM transfer exports from SPTO transmission assets and entitlements
   4. For EDAM/EIM transfer imports to SPTO transmission assets and entitlements
   5. For unscheduled flow out of SPTO transmission assets and entitlements
   6. For unscheduled flow into SPTO transmission assets and entitlements

4. If a specific Non-Subscriber is not charged for its usage of the SPTO transmission assets and entitlements, please describe if, and how, other parties could be charged for such usage.

5. Is Non-Subscriber Usage, and are Non-Subscriber Usage Payment Amounts, determined separately for each of the Day-Ahead Market (DAM), Fifteen Minute Market (RTPD), Five Minute Market (RTD), and/or imbalances associated with metered SPTO generation and loads and metered flows at the SPTO Scheduling Points? That is, does CAISO collect from Non-Subscribers in each market (including imbalance transactions) or only for a subset of the markets or for incremental amounts in each market?

6. For Scheduling Points other than SPTO Scheduling Points, does CAISO collect WAC charges for scheduled exports in each of the DAM, RTPD, RTD and imbalance transactions or only for a subset of the markets or for incremental amounts in each market?

7. Does CAISO collect access charges from CAISO load based on metered loads, and not separately for each CAISO market? If so, could CAISO face underfunding of Non-Subscriber Usage Payments if specific Non-Subscribers are not directly charged for their usage of the SPTO transmission?

8. In instances where the Subscriber generation is dispatched but not using CRNs, would this be treated as Subscriber or Non-Subscriber Usage?

9. Would the SPTO be compensated for the deemed non-subscriber usage, even though underlying generation supporting the export/transfer was Subscriber generation?

10. In an instance where a Subscriber or a non-subscriber schedules an export at an SPTO Scheduling Point that is supported not by Subscriber generation, but by imports to the SPTO transmission (e.g., at Pinal Central[1]), how would the SPTO be compensated, and by what parties?

[1] Note that the Pattern Subscriber rights to the SRP/TEP/WAPA transmission between Pinal Central and Palo Verde are not bidirectional, so there should be no import non-subscriber usage between Palo Verde and Pinal Central.

2. Please submit your organization's comments on the Merchant CRR Option:

 BAMx believes that the Merchant CRR Option could be a good approach for efficiently using SPTO transmission and generation but seeks clarity on how this option might affect the determination of the amount of non-subscriber usage as compared to the current Balanced ETC model. Under the Merchant CRR option, the Subscriber exchanges its scheduling priority and Perfect Hedge for option CRRs. Those CRRs pay out when there is Day-Ahead Market congestion in either direction on the Subscriber’s Rights (if the Subscriber Rights are bidirectional). Please respond to the following questions to clarify how the Merchant CRR Option will differ from the Balanced ETC model (please use examples to illustrate the responses where possible).

1. If the Subscriber rights are not bidirectional, would the option CRRs be provided only in the contracted direction?

2. For Sunzia, would there be Merchant CRRs available on both the Pete Heinrichs to Pinal Central portion and the Pinal Central to Palo Verde portion of the SPTO facilities, and would the available quantities be linked to the specific Subscriber Rights on the different segments?

3. Would the Subscriber continue to be entitled to use the SPTO transmission without paying access charges? If so, how would such Subscriber usage be determined and how would Non-Subscriber Usage be determined (including usage from Subscribers that schedule beyond their Subscriber Rights)?

4. If the Non-Subscriber Usage is based on schedules that use a CRN, could the amount of deemed Non-Subscriber Usage increase vs. the Balanced ETC model if the Subscriber elects to use the Merchant CRR Option and no longer schedules using a CRN?

5. With the Merchant CRR Option, would the SPTO be paid by the Subscriber (upfront) for the transmission, and also by CAISO load for any flows over the same transmission being used to deliver Subscriber energy for which the Subscriber had exchanged their rights for Merchant CRRs?

6. Is it possible for CAISO to ensure that the SPTOs do not receive access charge payments for Subscriber Usage of the underlying transmission supporting the Subscriber Rights that are exchanged for Merchant CRRs (by virtue of such usage being treated as Non-Subscriber Usage)?

3. Please submit your organization's comments on the Unbalanced ETC Option:

BAMx believes that the Unbalanced ETC Option could be a good approach to make it easier for parties to schedule their use of the SPTO transmission but seeks clarity on how this option might change how Non-Subscriber Usage is determined and charged to Non-Subscribers vs. the Balanced ETC Model. Please respond to the following questions to clarify how the Merchant CRR Option will differ from the Balanced ETC model (please use examples to illustrate the responses where possible).

1. In this option, would the Subscriber receive the Perfect Hedge and be entitled to use the SPTO transmission without paying access charges for both the balanced and unbalanced portions of their schedule?

2. To receive these benefits, would the Subscriber still need to Self-Schedule using the CRN associated with their Subscriber Rights?

3. If the Non-Subscriber Usage is assumed to be the unbalanced portion of the Self-Schedule, would flows from Subscriber generation that are not scheduled using the CRN be paid for by CAISO load?

Please explore the implications of these questions on the need for potential changes to the SPTO BRS to ensure that neither the balanced nor the unbalanced portions of the Subscriber Usage of the underlying transmission supporting the Subscriber Rights receive access charge payments (by virtue of being treated as Non-Subscriber Usage).

4. Please submit your organization's comments on the Nov 20 meeting discussion:

See above questions.

5. Please submit any additional feedback:

No comments at this time.

1. Please submit your organizations comments on the current Balanced ETC model:

PG&E appreciates the CAISOs effort to address scheduling options for the SPTO model including the benefits and limitations of the balanced ETC option and the Merchant CRR option. Quite a few questions remain, which make it difficult to assess and comment on the future changes at this time.

For example, one aspect that remains unclear is the calculation of non-subscriber imports and exports. PG&E is trying to understand how the calculations will work in the current model so we can understand the implications of any changes.

Here are a few additional questions:

• In each model, what options are available for the SPTO to schedule their flow; e.g., in the current model, can the SPTO choose to bid in the subscribers’ power instead of utilizing the ETC?
• How, if ever, would counterflows be scheduled on an SPTO line? How would the counterflows be counted in the non-subscriber usage?
• How the non-subscriber usage (MWh) is determined (as there is some ambiguity between the tariff, the business requirements specifications document, and our understanding).
  • The BRS says the non-subscribe usage is defined as “imports at Subscriber PTO Scheduling Points without ETCs plus generation not associated with Subscribed Capacity.”
  • The tariff (Section 15 of Schedule 3 of Appendix F) says the non-subscriber volume is the sum of the absolute value of the MWh flow of a Non-Subscriber’s imports at the applicable Scheduling Point plus the sum of the absolute value of the MWh flow of a Non-Subscriber’s exports at the applicable Scheduling Point.
• Under any of the models (balanced ETC, merchant CRRs, unbalanced ETCs), could the non-subscriber flow support LPT exports, EDAM transfers, or WEIM transfers out of the CAISO?
  • Who would pay the non-subscriber usage?
  • From a reliability standpoint, is a non-subscriber import of the same quality (or better) as an LPT export?

For the next meeting, PG&E encourages CAISO to provide several scenarios focusing on how CAISO intends to calculate non-subscriber usage, who will get charged what amounts, and how these might change with the merchant CRR or unbalanced ETC approaches. Specifically, PG&E would like to understand the details of the following scenarios:

1. 100% of flow is subscriber, sinking in CAISO
2. 80% of the flow is subscriber, 20% non-subscriber. All sinking in CAISO
3. 0% subscriber; 100% non-subscriber. All sinking in CAISO
4. 0% subscriber; 100% non-subscriber exporting (like at Pinal Central on the Sunzia line).
5. Suppose 3,000 MWs of supply at Pete Heinrich, 100% subscriber, but only 2,000 MWs can flow across the contract path from Pinal to Palo Verde.
6. What, if any, are the way(s) that CAISO may have to pay non-subscriber usage where the total usage is below the amount of capacity subscribed on the SPTO line?
7. Are there ways this can happen in both the import and export direction, or is it only one of the two? If both, how?
8. How does this work if the market is counterflowing on the line?

The details of these scenarios should, at minimum, include:

• Who and how the subscriber / non-subscriber flows are scheduled
• What WAC/TAC revenue / fees will be charged and to whom
• Complications or limitations of each model

2. Please submit your organization's comments on the Merchant CRR Option:

PG&E understands the issue with the current balanced ETC approach.  We are still trying to understand the implications of each model and do not yet have opinions on the merchant CRR or the unbalanced ETC approaches.

3. Please submit your organization's comments on the Unbalanced ETC Option:

PG&E understands the issue with the current balanced ETC approach.  We are still trying to understand the implications of each model and do not yet have opinions on the merchant CRR or the unbalanced ETC approaches.

4. Please submit your organization's comments on the Nov 20 meeting discussion:

No comment.

5. Please submit any additional feedback:

No comment.

1. Please submit your organizations comments on the current Balanced ETC model:

For the reasons CAISO outlines in the Issue Paper, the status quo Balanced ETC model is cumbersome to implement.  Furthermore, the inability for Subscribers of SPTO assets to economically bid into the CAISO markets without incurring Access Charges and/or being subjected to congestion costs is a disincentive for the integration of SPTO assets.  There is no reason, as far as we’re aware, why Subscribers should be required to self-schedule their energy across SPTO assets however we do believe having the option (but not the obligation) to do so is important.  With this said, the Issue Paper describes the Unbalanced ETC model and the Merchant CRR Option as “two options” as opposed to “two enhancements”.  Pattern requests that CAISO make clear that these “options” are, in fact, both beneficial and are not being considered as alternatives but rather are separate items being considered within the same stakeholder initiative. 

2. Please submit your organization's comments on the Merchant CRR Option:

The Merchant CRR Option is an appropriate additional option (in addition to self-scheduling) for Subscribers of SPTO assets to be able to economically bid while maintaining a congestion hedge for the rights that they are paying for.  It is also important, however, that those Subscribers, whom opt to economically bid into CAISO markets using SPTO assets to deliver their products, to not be exposed to additional Access Charges for participating in CAISO markets beyond the fees they pay to the host SPTO (i.e., transmission service costs) for access to those SPTO assets.  Pattern requests that CAISO make it clear: 1) make clear that the Merchant CRR Option (which, in the context of this stakeholder initiative, is tied to economic bidding by Subscribers) is not expected to result in the application of additional Access Charges to Subscribers of SPTO assets, and 2) make clear the method CAISO intends to deploy to ensure this is the case given that avoidance of Access Charges today is typically accommodated via Contract Reference Numbers (CRNs) which are tied to ETC/TORs and not economic bids.  Pattern understands this to be an “implementation detail” but time is of the essence and therefore the approach for implementing this in the market systems is of import.    

In Section 3.1 of the Issue Paper, CAISO describes how Subscribers that receive Merchant CRRs would “release their transmission rights in the annual or monthly CRR market in exchange for merchant CRRs”.  Pattern requests that CAISO clarify what is meant by this statement and specifically clarify what “release of transmission rights” in a CRR auction means and the implications of such release in the IFM and RTM.  Additionally, CAISO should confirm that released transmission rights are not allocated or awarded to other Market Participants which would result in underfunding of Merchant CRRs.  With this request Pattern also wishes to avoid confusion as to ownership of the contractual rights to use SPTO assets. 

Pattern’s general understanding of this concept is that the transmission rights owned by Subscribers would be made available to CAISO for energy market optimization based on economic bids unless/until the Subscriber(s) utilized self-schedules. Such “release” of transmission rights would, therefore, be in exchange for the Merchant CRR and optimization of the transmission rights would occur by CAISO in the IFM and RTM.  If this understanding is flawed, please clarify. 

The first bullet in Section 3.1 states that “load served by Subscriber Participating TO generation would still be subject to the Access Charge.”  Pattern requests CAISO to clarify what is meant by “Subscriber Participating TO generation” given that, at least in the case of the SunZia Transmission SPTO, interconnected generation to the SunZia SPTO assets is not owned by the SPTO.  Is the intent here to indicate that energy transfers that are beyond a physical and/or contractual path that is part of an SPTO’s assets would NOT be subject to an Access Charge but any energy transfers by Subscribers (and non-Subscribers alike) that sink beyond the physical and/or contractual path of the SPTO assets would be subject to Access Charges?  It would be helpful if CAISO would clarify that this Access Charge is the standard charge paid by all loads in CAISO and not an incremental transmission charge.  

Pattern posits that the second bullet in that same section 3.1 is meant to apply only to Subscriber energy transfers.    

Pattern has reviewed Section 33 of the CAISO Tariff regarding Merchant CRRs and “Option CRRs” and would appreciate more information regarding how the release of Subscriber transmission rights in the CRR markets will work for SunZia Transmission’s specific configuration. Specifically, Pattern seeks to understand:  

A) the volume (MW amounts) of CRRs on each transmission segment or source/sink combination within the SunZia Transmission, LLC SPTO asset set as outlined in the Transmission Control Agreement filed at FERC. 

B) would the Merchant CRR holder have a congestion hedge within the CAISO IFM (i.e., Day Ahead Market)?  

C) would the Merchant CRR holder have a congestion hedge within the CAISO Real Time Markets?  If not, why not?  If so, does this apply to all RTMs? 

D) how frequently can Subscribers update their registration between using Merchant CRRs and ETC/TOR self-schedules?  For example, is there an ability for a Subscriber to hold an Merchant CRR but, in a given month, week, day, or hour, decide to self-schedule all or a portion of their energy transfers on SPTO assets using their ETC/TOR?  If not, why not? 

E) The Issue Paper conclusion explains that “CRRs, unbalanced CRNs, or conventional ETCs cannot simultaneously exist over the same transmission path capacity”. The final sentence of that same paragraph, however, seems to clarify that a single transmission path could simultaneously deploy CRRs and unbalanced ETCs as long as there’s no overlap in the transmission capacity on that transmission path between the CRR and Unbalanced ETC.  Please confirm the interpretation that an ETC (conventional or unbalanced) and CRR can both exist on the same transmission path as long as the respective volumes do not exceed the path capacity.  

Pattern seeks the following functionality from the Merchant CRR option: 

A) Congestion hedges in both the day-ahead and real-time market 

B) Continuity in the current SPTO implementation whereby WAC and TAC is not applied to Subscriber-based energy transfers on SPTO assets.  

C) The ability to bid into the CAISO markets utilizing SPTO assets that retains the current merchant functionality for existing internal (i.e., non-SPTO) assets to support a self-schedule component and additionally 10 economic bid segments while retaining a congestion hedge.  

3. Please submit your organization's comments on the Unbalanced ETC Option:

Pattern believes the Unbalanced ETC Option is an important way to reduce administrative burden of having to import/export at scheduling points and seems to be a valuable option for the entire market to implement transmission rights used for self-schedules for rights that are not starting at a generation resource or sinking at a demand location.  As such, we support the CAISO’s advancement of this Option.  

4. Please submit your organization's comments on the Nov 20 meeting discussion:

Pattern values the CAISO stakeholder process and the time commitment of CAISO’s important SMEs as well as the SMEs within the CAISO stakeholder community. We look forward to an efficient conclusion of this process to allow CAISO’s complex market systems and Tariff revision and approval processes to proceed expeditiously to implement the final solutions.  

5. Please submit any additional feedback:

1. Please submit your organizations comments on the current Balanced ETC model:

See response to Question 5.

2. Please submit your organization's comments on the Merchant CRR Option:

See response to Question 5.

3. Please submit your organization's comments on the Unbalanced ETC Option:

See response to Question 5.

4. Please submit your organization's comments on the Nov 20 meeting discussion:

See response to Question 5.

5. Please submit any additional feedback:

SDG&E appreciates the opportunity to provide comment on the Subscriber PTO (SPTO) market scheduling options Issue Paper and Stakeholder Meeting. While SDG&E supports the SPTO model as an alternative way to develop new transmission with commercial interest without increasing the transmission access charge (TAC), we believe additional clarifications on the current model are necessary before SDG&E can weigh in on the SPTO market scheduling options as presented.

The Issue Paper and November 20 stakeholder meeting provided some background related to the current approach and potential gaps in its implementation. However, the discussion during the stakeholder meeting highlighted that many questions remain on the more complex details of how the current approach will be implemented. Some of the questions SDG&E is contemplating relate to (i) the impact of subscribers opting out of using ETC; (ii) how non-subscriber usage will be calculated under certain configurations; and (iii) clarification on the cost recovery mechanism for usage by EDAM transfers. More broadly, SDG&E believes it is critical to get further clarifications on what results the balanced ETC model would generate. Only then will it be possible to differentiate the impacts of the proposed enhancements. In that vein, as a starting point, SDG&E supports the development of a detailed matrix that outlines the benefits of each option as compared with the status quo. This could include numerical examples of different scheduling volumes and scenarios that explain how subscriber and non-subscriber usage is calculated, including examples where CRNs are and are not utilized when scheduling.

Finally, when developing this model, SDG&E urges CAISO to keep in mind that the policy developed here will not only apply to SunZia, but also any future projects that elect to use the subscriber PTO model. In so far as these changes will impact the amount of calculated non-subscriber usage, and therefore potentially create additional uplift costs to CAISO customers, it is essential to carefully consider the downstream impacts of these enhancements, especially as the SPTO’s proposed non-subscriber usage rate is significantly higher than the CAISO TAC/WAC.

SDG&E thanks CAISO for its consideration of these comments and looks forward to further participation in this initiative.

1. Please submit your organizations comments on the current Balanced ETC model:

CCSF is a Non-Participating Transmission Owner that operates 230 kV and 115 kV transmission facilities within the CAISO Balancing Authority Area (BAA). The CAISO Tariff addresses the rights and obligations of these Transmission Ownership Rights (TORs), and CCSF uses these rights to deliver power from its Hetch Hetchy Water and Power generation resources to loads directly connected to the CCSF transmission and to loads within the CAISO controlled grid.

CCSF believes that the current Balanced ETC model is a useful approach for allowing parties with TORs or Existing Contract Rights (ETCs), including SPTO Subscribers, to obtain a Perfect Hedge against congestion charges for transactions that utilize their rights. As CAISO noted in the Issue Paper, however, utilizing a Contract Reference Number (CRN) for these transactions can be cumbersome. It also can lead to market inefficiencies, because the rights holders that wish to obtain the Perfect Hedge must submit balanced Self-Schedules and are unable to economically bid their resources. CCSF has experienced these issues in utilizing its TORs and believes that developing reasonable alternatives to the Balanced ETC model could benefit both the rights holders and the overall market.

2. Please submit your organization's comments on the Merchant CRR Option:

CCSF believes that the Merchant CRR Option could be a good approach for efficiently using SPTO,  TOR and ETC transmission and generation. CCSF therefore encourages CAISO to explore in this initiative how the Merchant CRR Option can be applied not just to SPTO transmission, but also to TOR and ETC transmission. The TOR and ETC rights holders face similar scheduling issues as the SPTO rights holders, and the mechanisms that could be applied to address these issues for SPTOs also could be applied to TORs and ETCs.

3. Please submit your organization's comments on the Unbalanced ETC Option:

CCSF believes that the Unbalanced ETC Option could be a good approach to make it easier for parties to schedule their use of their SPTO, TOR and ETC transmission. CCSF therefore encourages CAISO to explore in this initiative how the Unbalanced ETC Option can be applied not just to SPTO transmission, but also to TOR and ETC transmission. The TOR and ETC rights holders face similar scheduling issues as the SPTO rights holders, and the mechanisms that could be applied to address these issues for SPTOs also could be applied to TORs and ETCs

4. Please submit your organization's comments on the Nov 20 meeting discussion:

See above comments.

5. Please submit any additional feedback:

No comments at this time.

1. Please submit your organizations comments on the current Balanced ETC model:

The Balanced Existing Transmission Contract (“ETC”) model approach does not appear to be unworkable, and it does enable subscribers (or parties that are offtakers from Subscriber Participating Transmission Owner (“SPTO”) projects) to receive the benefit of a higher scheduling priority and congestion hedge associated with their subscriber rights.  At the same time, the Six Cities acknowledge the CAISO’s identified implementation complexities, including the need for subscribers to export generation using their rights (via self-scheduling) and then import it at the same scheduling point for market optimization purposes.  For this reason, the Six Cities do not oppose the options that are provided below, but seek more information on how each of these will work.  The Six Cities would also like to understand more about the implementation requirements associated with each option; to the extent that either option is viable and does not involve a significant implementation burden, would it be possible to adopt both enhancements?  If scheduling coordinators have the option of using the current approach versus one or either of the alternatives, is there a process and timeline for designating the selected option?  (I.e., could an entity opt for the Balanced ETC model in one month (or other interval) and elect the Merchant CRR Option for another interval?)

Additionally, the CAISO has identified a concern with use of the ETC approach under the Extended Day Ahead Market (“EDAM”), if the interconnection point becomes an internal intertie or an EDAM transfer point, which the CAISO states will remove the ability to schedule an import and export in the market.  It would be helpful for the CAISO to discuss how its other two options would or would not address this issue, and whether the current approach or either of the alternative options would raise any other concerns under the EDAM implementation rules. 

2. Please submit your organization's comments on the Merchant CRR Option:

As noted, this option appears to provide a viable alternative to the current approach.  The Six Cities would like to understand how this option compares and whether there are any downsides relative to the current approach. 

3. Please submit your organization's comments on the Unbalanced ETC Option:

This option likewise seems to offer a viable approach, and as with the Merchant CRR Option, the Six Cities would like to understand how this option compares and whether there are any downsides relative to the current approach. 

4. Please submit your organization's comments on the Nov 20 meeting discussion:

The November 20^th discussion leads the Six Cities to conclude that stakeholders would benefit from additional examples of the Balanced ETC model and the two additional options for SPTO subscriber scheduling that are discussed in the Issue Paper.  The Six Cities encourage the CAISO to provide further examples of how its proposals will work—for both parties that are offtakers of SPTO projects and non-subscribers—during the next stakeholder meeting.

5. Please submit any additional feedback:

The Issue Paper and discussion during the stakeholder meeting on November 20^th refers to “subscribers.”  To confirm, does this reference mean each of the parties that is an offtaker from an SPTO project?  The Six Cities note that the term “Subscriber” is defined in the CAISO tariff. 

1. Please submit your organizations comments on the current Balanced ETC model:

SCE supports the general framework of the S-PTO model.  However, the current treatment of the Non-subscriber Usage Rate is unworkable and untenable. The first attempted application of the design has already led to a joint protest by SCE, PG&E, and SDG&E with Six Cities supporting the protest.  The Non-Subscriber Usage Rate promises to create protracted regulatory disputes for every new attempted application, and for any future revisions to proposed rates. The CAISO should recognize the problems with rate design for the Non-Subscriber Usage Rate and use this process to reform it before it creates more unnecessary regulatory burdens, costs, unreasonable results, and uncertainty.

In this stakeholder process, the CAISO introduces the idea of “Merchant CRRs” as an administrative tool for scheduling implementation.   Instead, the CAISO should use this process and opportunity to replace the current Non-Subscriber Usage Rate approach with the allocation of Merchant CRRs (likely in conjunction with a “perfect hedge” to ensure that Subscribers are completely immune from congestion costs irrespective of the when they use their rights).  Under this approach, Subscribers will have full access to the use of their line without facing congestion costs, and in instances when Subscribers are not using the line, the S-PTO will collect any congestion rents that accrue to the Merchant CRRs created by their line.  This greatly simplifies the administration of the S-PTO process, eliminates the need for costly and timely regulatory litigation, prevents unjustified cost shifts from the PTO customers to the S-PTO, and ensures the S-PTO receives additional value if third party use of the S-PTO line results in congestion costs.

SCE urges the CAISO to use this opportunity to repair the current S-PTO process and to ensure the proposal is durable, administratively workable, fair and well understood by all parties.

With respect to the current Balanced ETC model, SCE believes this approach should work for the majority of situations.  SCE understands that it provides an ETC with the “perfect hedge” to the point of the interconnection with the original CAISO BAA boundary, but that absent additional transmission rights (e.g., ETCs or CRRs internal to the ISO BAA sinking at a DLAP or CLAP), there is no further congestion hedge.  This is appropriate, as the S-PTO facility is external to the original CAISO BAA and is conceptually the same as any import for market optimization.

The CAISO states that they believe “the current implementation model is effective and will work for subscribers”.  To the extent that there are “implementation complexities” associated with the Balanced ETC model, and in particular complexities that may be more significant once EDAM is in place, SCE believes that solutions that allow the Balanced ETC model to continue to be used should be a priority.  The two new approaches proposed should be options to the primary Balanced ETC model.

2. Please submit your organization's comments on the Merchant CRR Option:

Under the Merchant CRR Option model, the subscriber would participate in the market using economic bids or self schedules but without the CRN feature of the Balanced ETC model.  Instead, the subscriber would be provided “Merchant CRRs”.  SCE agrees that the Merchant CRR option would be a workable enhancement to the primary Balanced ETC model.  However, SCE has concerns regarding the use of this model in conjunction with Non-Subscriber use of the line.  Specifically, there should be no instances where the Subscriber PTO receives both Non-Subscriber Usage Charge revenues and CRR revenues associated with the Non-Subscriber use.  The NSUC Amount will be designed to provide the subscriber PTO an appropriate cost of service based payment for use of the line, and so any amount above the NSUCA would be, on its face, unjust and unreasonable.  Therefore, any Merchant CRRs provided to the Subscriber PTO should be returned in some fashion to the CAISO for unused line capacity used by Non-Subscribers.

As noted in Section 1, the CAISO should instead eliminate the current Non-Subscriber Usage Rate completely and rely on the allocation of Merchant CRRs to the S-PTO.

3. Please submit your organization's comments on the Unbalanced ETC Option:

SCE believes the Unbalanced ETC Option can provide a workable solution to the issues identified with the Balanced ETC model.  The CAISO should clarify that under this model the subscriber entity will not be paying any Transmission Access Charges incremental to the amount already paid by the load being served at the sink for use of the CAISO grid not associated with the subscriber rights.  In keeping with the CAISO Wheeling Access Charge design, imports do not pay the WAC.  Specifically, there will not be any WAC assessed to the subscriber entity, and there will not be any Transmission Access Charge assessed to the subscriber entity, as the load being served by the subscriber imports already pays the TAC, usually through retail transmission rates of the PTO.  The only situation for which an assessment of the WAC would be appropriate is when the subscriber power is used to serve an entity within the CAISO grid that does not pay the TAC (at a “Take Out Point” internal to the CAISO grid).

4. Please submit your organization's comments on the Nov 20 meeting discussion:

SCE found the November 20 discussion to be very helpful in understanding these issues and proposed solutions.

5. Please submit any additional feedback:

SCE has no additional comments.