Comments on Discretionary policy initiatives catalog submission

1. Submission Title

First entry provide responses to questions 1-7.

Routinely Reevaluating the Need for All Previously-Approved Transmission Projects

2. Has this issue been previously submitted?

 No.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The Bay Area Municipal Transmission group (BAMx)^[1] appreciates the opportunity to comment on the CAISO’s discretionary policy initiatives catalog submission.

The primary issue that the proposed initiative will address is as follows. The current CAISO transmission planning process (TPP) requires the CAISO to select mitigation projects for identified reliability criteria violations or to meet policy objectives with only rudimentary studies of the cost and environmental impact of those proposed projects. Since proposed transmission projects take a long time to permit and construct, there is a high chance that changed circumstances will affect the timing and selection of the most effective project to meet the reliability needs of policy objectives.

There are nearly thirty (30) projects that were approved by the CAISO under its annual TPP more than ten years ago (as early as in 2007) and have not begun their construction yet.[2] Certain Participating Transmission Owners (PTOs) appear to have put these projects on lower priority. In some cases, the PTO decision to delay the projects may be driven by financial constraints that the CAISO has no control over. Therefore, the question becomes, have the circumstances changed since the CAISO’s original approval of those projects more than a decade ago? Similarly, are the PTOs aware of different information that would affect the timing and need for certain CAISO-approved projects?

Although there is no systematic mechanism for project re-assessment, there are a couple of circumstances where this was accomplished. A good example of changing planning conditions is the CAISO reevaluation of the need for certain previously approved projects in the 2015-2016 and 2016-2017 Transmission Plan that resulted in cancellation and scope change for several major and small-scale transmission projects.^[3] At that time, consistently declining load forecasts across the entire forecast period – especially for the 1-in-10 peak load forecasts - as well as higher than anticipated development of behind-the-meter solar photovoltaic generation meant many load-driven transmission projects were no longer needed.

Another example is the Trout Canyon-Lugo 500 kV Line with an estimated capital cost of $2 billion that CAISO recommended for approval in the Draft 2022-2023 Transmission Plan.[4] However, its approval was held back in the Final Transmission Plan due to a letter from Lotus Infrastructure Partners on April 25, 2023,[5] which identified an alternative solution, causing the CAISO additional time to assess.[6] If this alternative had not been proposed at the end of the 2022-2023 TPP cycle, the CAISO likely would have approved the Trout Canyon-Lugo 500 kV line as one of the policy-driven transmission projects in the Final Transmission Plan. It is the CAISO’s standard practice to model all the previously-approved projects in the starting power flow cases that are used in a given transmission planning cycle.[7] So, had the CAISO approved the Trout Canyon-Lugo 500 kV line in the 2022-2023 Transmission Plan, it would have been modeled in the 2023-2024 TPP cases as given. Therefore, the continued need for the Trout Canyon-Lugo 500 kV line would not have been evaluated in the 2023-2024 TPP. Since the Trout Canyon-Lugo 500 kV line was not approved in the 2022-2023 TPP, the CAISO is evaluating whether that project is the most effective mitigation solution in the 2023-2024 TPP. The preliminary policy findings for the East of Pisgah Interconnection area do not identify the need for the Trout Canyon-Lugo 500 kV project.[8] BAMx believes this is an example of the need to reexamine the appropriateness of projects, even if they have been previously approved.

CAISO, as part of its annual TPP, sometimes tests and confirms the need for some, but not all, of the previously approved projects.[9] But, there needs to be a systematic process to select projects for re-evaluation and to re-evaluate all of the projects that are selected as part of each CAISO TPP.

[1] BAMx consists of City of Palo Alto Utilities and City of Santa Clara, Silicon Valley Power.

[2] List of Approved Projects Transmission Planning Process, provided as part of Transmission Development Forum, January 2024.

[3] CAISO 2016-2017 Transmission Plan, p.1.

[4] CAISO Draft 2022-2023 Transmission Plan, p. 6 & 133, April 3, 2023.

[5] http://www.caiso.com/InitiativeDocuments/Letter-Alternative-to-Trout-Canyon-Lugo-500-kV-line-Apr242023.pdf

[6] CAISO Final 2022-2023 Transmission Plan, p. 82, May 10, 2023.

[7] CAISO 2023-2024 Transmission Study Plan, p.14.

[8]

[9] For example, the Fresno Area Preliminary Reliability Assessment Results identified the continued need for the following twenty-four (24) previously-approved projects. Source: CAISO 2023-2024 TPP Stakeholder meeting on September 26-27, 2023.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

BAMx requests the CAISO develop a stakeholder process to define a set of circumstances when such reevaluation would occur. We understand that there would be limitations to such a reevaluation process. Project cost could be one such criterion. Of course, regulatory issues like PTO recovery of costs for an abandoned project would need to be considered. But ratepayer costs to reimburse for early feasibility work would, for most examples, probably be more than offset by not having to build a project or selecting a better alternative with the latest information on the need for projects. One good option to consider would be to apply the proposed initiative as part of the existing annual transmission process. Under this option, the CAISO would delineate a detailed process to reevaluate the need for the previously approved transmission projects as part of the Transmission Study Plan at the beginning of each transmission planning cycle, in particular, at the February public stakeholder meeting #1  [Phase 1 of TPP]. The stakeholders would have the opportunity to provide feedback on the CAISO’s proposed plan as part of their comments on the Study Plan. The CAISO would provide a separate analysis of the continued need for the previously approved reliability-driven projects in its September public stakeholder meeting #2 to discuss the reliability study results and PTO’s reliability projects [Phase 2 of TPP]. A similar analysis would be provided for the previously-approved policy and economic-driven projects in its November public stakeholder meeting #3 to discuss the reliability study results and PTO’s reliability projects.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

If the CAISO assessment finds a continued need for the previously-approved project, especially in the near term, then it can urge the PTOs to prioritize those projects. On the other hand, if the CAISO finds those projects are either unnecessary, or their scope needs to be altered in response to changed circumstances, they can either be canceled or rescoped. In the latter case, the PTOs can then prioritize the other transmission projects needed for reliability or policy needs to interconnect renewables. In either case, the proposed discretionary initiative will support one of CAISO’s strategic objectives of reliably and efficiently integrating new resources by proactively upgrading operational capabilities. It is also consistent with CAISO’s other strategic objective of providing highly responsive and inclusive stakeholder engagement. Without a systematic approach to reevaluate the need for all previously-approved projects, some transmission projects will be built even if they are not needed, and delay the construction of those transmission projects that are truly needed to meet the reliability and state policy goals.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

See response to Q.3 above.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Yes. See response to Q.4 above.

8. Submission Title

Second entry provide responses to questions 8-14.

Providing Local Regulatory Authorities with Better Guidelines to Develop Resource Portfolios in Close Proximity to the Existing Transmission Network 

9. Has this issue been previously submitted?

 No.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Currently, the CAISO provides input into the CPUC Integrated Resource Planning (IRP) capacity expansion process transmission capability information. For this purpose, the CAISO develops Full Capacity Deliverability Status (FCDS) and Energy-Only Deliverability Status (EODS) transmission capability estimates that limit the amount and deliverability status of candidate resources that can be selected or mapped in transmission-constrained areas. The information includes previously identified conceptual transmission upgrades along with an estimate of the associated incremental increase in transmission capability. The CAISO primarily relies on its prior TPP and generation interconnection studies to develop this data. However, this data does not go far enough in identifying how many more FCDS and EODS resources can be accommodated by adopting grid-enhancing technologies (GET), reconductoring the transmission facilities with advanced composite-core conductors, etc, on the existing transmission corridors. For example, one of the recent studies finds that large-scale reconductoring with advanced composite-core conductors can cost-effectively double transmission capacity within existing right-of-way (ROW) with limited additional permitting.[1] BAMx agrees with the study authors, on the rationale of using the high-temperature low sag (HTLS) conductors over opting for new corridors, i.e., their significantly faster realization, bypassing permitting delays and difficulties to secure new ROWs due to high population density, as well as significantly lower capex[2].

Currently, the determination of the transmission need in the CAISO TPP is driven by the resource portfolios provided by the CPUC for a given transmission planning cycle. So, if in any resource area or zone, there are no reliability planning or deliverability criteria violations, the CAISO does not identify the potential GETs or reconductoring projects that could allow for accommodating additional resources in those areas.  Under the proposed initiative, the CAISO will perform analysis to expand upon their database to explore the existing ROWs' transmission capability fully. This appended transmission capability information can then be fed into the CPUC IRP, where CPUC will have the option to select resources in areas that may not necessarily be cost-effective from the resource cost standpoint but could be built more timely with relatively little transmission infrastructure delay and cost.

To better understand BAMx’s ask under the proposed initiative, we provide an example summarized in the table below.

For Zone A, the past TPP resource portfolios and resource interconnections in the past generation interconnection (Cluster) studies have been accommodated on the existing transmission with a capability of 1,000MW. So, the CAISO has not performed any analysis to determine the additional FCDS or EODS resources that can be accommodated with GETs and/or the reconductoring of certain facilities can add to Zone A’s capability.

In the case of Zone B, the past resource portfolios (or interconnections in the generation interconnection studies) have exceeded the existing transmission capability of 1,500MW, and the CAISO has considered the additional capacity that GETs/reconductoring  (and therefore identified the incremental MWs associated with it, i.e., 2,200MW). However, in the subsequent planning cycles, the level of resource portfolios became so high in Zone B that the CAISO also identified new network upgrades with an incremental capability of 3,000MW to accommodate those resources. So, in the case of Zone B, we have all the data that we need.

In the case of Zone C, given the high level of resource portfolio studied in the past TPP/Cluster studies, the CAISO never studied an intermediate level of resources that can be accommodated with GETs/reconductoring and only identified a major new transmission upgrade with an incremental capability of 3,000MW.

In a nutshell, BAMx’s proposed initiative will help identify the missing data/ information that the CPUC/LRA portfolios can use to select resources in Zone A and Zone C (highlighted in yellow cells in the above table).

[1] Chojkiewicz, Emilia, Umed Paliwal, Nikit Abhyankar, Casey Baker, Ric O’Connell, Duncan Callaway, Amol Phadke (February 14, 2024). “Accelerating transmission expansion by using advanced conductors in existing right-of-way”, Working Paper, Energy Institute at Haas, University of California, Berkeley.

[2] Reconductoring projects take less than half the time and are less than half the cost of new-build projects. Source: Ibid.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative will operate in parallel to the existing annual transmission planning process, where the CAISO will develop a database that will identify the incremental FCDS and EODS resources that can be accommodated on each of the major existing transmission ROWs, assuming the deployment of GETs and reconductoring of transmission facilities. Some of the data is already available from the prior TPP cycles and generation interconnection studies. Additional data needs to be developed as part of the proposed initiative in coordination with the stakeholders. BAMx suggests a series of stakeholder workshops as the most suitable vehicle to start this initiative.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

 This initiative will directly meet CAISO’s following objectives.

1. Reliably and efficiently integrate new resources by proactively upgrading operational capabilities;
2. Strengthen resource adequacy and meet California’s SB 100 goals through long-term transmission planning and effective coordination with state agencies; and
3. Provide highly responsive and inclusive stakeholder engagement and customer service.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The State is facing major challenges in meeting the ambitious regulatory and legislative policy goals in a timely manner. As described in response to Q.10 above, any new greenfield transmission solutions to accommodate renewable resources are bound to face major feasibility and permitting challenges relative to those that use and/or repurpose the existing transmission corridors. The sooner we plan and build the transmission infrastructure that we need to accommodate new resources, the higher the likelihood of meeting the state policy goals in a timely manner.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

See responses to Q.10 and Q.11 above.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Non-Generating Resources (NGR) bid cap under 831 conditions. (related to Price Formation but not currently in scope for PFE)

2. Has this issue been previously submitted?

This issue has been brought up in the Price Formation Enhancements initiative. We are not aware that it has been introduced as a new initiative previously.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

NGRs are currently limited to the $1000/MWh cap under 831 conditions (where the cap is allowed to move up to $2000).  When exposed to $1000 hard price cap, NRGs are unable to control INC/DEC dispatch and help bring price stability to the market and reliability to the grid.  For example, a hard $1000 INC cap could render BPA useless during the morning or evening peak to balance the grid (reliability) or provide price stability under extreme price scenarios.  This leaves NRGs no choice but to exit the market when their limited charge/discharge capabilities are exhausted due to overly restrictive hard price cap.  

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Yes, this supports Initiative 3. The parties potentially impacted by the proposed initiative would include WEIM entities and participating resources. It specifically impacts storage resources. This initiative would consider whether the NGR bid cap is appropriate and/or if it leads to adverse price formation impacts on market participants. It may include analysis of impacts of the NGR bid cap on market outcomes.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Yes, this supports Initiative 3. The parties potentially impacted by the proposed initiative would include WEIM entities and participating resources. It specifically impacts storage resources.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are not regulatory requirements for implementation dates. The urgency would be to improve market outcomes and resource availability for future times when 831 conditions occur and increase the incentives for NGR resources to remain in the market during these events.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Data regarding the impact of the current policy of limiting NGR bids in 831 conditions may support analysis of the issue.

8. Submission Title

Second entry provide responses to questions 8-14.

Operational enhancements in the WEIM.

9. Has this issue been previously submitted?

The issues addressed by this initiative have been previously submitted as CIDI tickets.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

This initiative is intended to address the following two operational issues:

1) Dual submittals of base schedules (multiple data sources for resilience). For base ETSRs between one entity and another, currently only one entity can submit. Enhancement would be to allow both entities to submit. (CIDI263858)

2) Allow for an EIM entity to set default limits for dynamic and static ETSRs. Currently, if an entity does submit a limit for an ETSR, it becomes 9999. (CIDI 248622)

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The proposed initiative would address the two issues described above: 1) Whether dual submittals of base schedules can be permitted, including addressing any issues or concerns with the change. And 2) whether an EIM entity can set default limits for dynamic and static ETSRs.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Yes, this supports Initiative 3. The parties potentially impacted by the proposed initiative would include WEIM entities.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are not regulatory requirements for implementation dates. The consequences to not addressing this issue is continued errors or inefficiencies in the market which may need to be corrected after-the-fact due to one entity’s challenges in submitting base schedules or ETSR limits.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

Settlements enhancements in the EIM.

16. Has this issue been previously submitted?

No

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

 This initiative is intended to address two settlements-related issues in the EIM:

1. Assess CAISO practices regarding resolving settlements issue or disputes. Consider allowing price adjustments more than 5 days after operating day.
2. Review policies and practices regarding resolution of inappropriate outcomes in the market and settlement-related resolution of the financial outcomes. i.e. If an entity submitted an incorrect base ETSR that resulted in a charge and credit, but both entities agree that the ETSR submitted was wrong. CAISO could develop practices to move that money around as a settlement adjustment between the BAs without rerunning the market.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The proposed initiative would address the two issues described above to improve market practices with regards to settlements.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Yes, this supports Initiative 3. The parties potentially impacted by the proposed initiative would include WEIM entities.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are not regulatory requirements for implementation dates. The consequences to not addressing this issue is continued errors or inefficiencies in the market settlement process.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

Exploration of congestion revenue allocation alternatives and impacts and a potential initiative.

23. Has this issue been previously submitted?

Unknown

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

This proposal is to conduct data analysis and then consider a stakeholder initiative based on the results of the data analysis. The initial request is to conduct a report from winter 2023/24 to better understand the congestion revenue allocation during the cold snap and winter period. Depending on the data, consider a stakeholder initiative regarding how congestion rent flows to non-CAISO entities in the day ahead market and EIM to inform EDAM and DAME congestion revenue allocation.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Question 24 describes the scope of the initiative. It would address congestion revenue allocation in the EIM, current day ahead market, EDAM and DAME.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Yes, this supports Initiative 3. The parties potentially impacted by the proposed initiative would include WEIM entities, participants in CAISO’s day ahead market, and future participants in EDAM and DAME.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are not regulatory requirements for implementation dates.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

A report from winter 2023/24 to better understand the congestion revenue allocation during the cold snap and winter period.

29. Submission Title

Fifth entry provide responses to questions 29-35.

Automated approval of outage changes in the EIM.

30. Has this issue been previously submitted?

No, although it has been brought up in meetings with the CAISO. 

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

When outage changes are submitted to CAISO during real time, it requires a manual approval from CAISO. The proposal is to explore automated outage data approval to improve this process.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The initiative would explore automating approval of outage changes in the EIM. Currently CAISO’s outage submittal approval process is rather lengthy and manual. CAISO could automate the outage approval to avoid delayed CAISO responses that leads to updated outage data in WebOMS and incorrect Pmax calculations.

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Yes, this supports Initiative 3. The parties potentially impacted by the proposed initiative would include WEIM entities.

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

No known urgency. The consequences are issues with outdated outage data in WebOMS leading to inefficient operations in the WEIM.

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Investigate the increase in Real-time Congestion Offset (RTCO) charges observed in the 2021-2023 period.  Initiate Stakeholder process to discuss how the RTCO settlement could be designed to be a true neutrality charge code.

2. Has this issue been previously submitted?

 No.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The RTCO charges normalized by Load Serving Entities’ (LSE) loads have increased steadily over the years.  However, there was a significant increase, about 50%, in the RTCO charges observed in 2021 (compared with the year 2020) and in the year 2022 (compared with the year 2021 values).  While investigating the causes for such increases, CDWR recommends CAISO initiate a Stakeholder process to discuss what can be done to transform the current RTCO into a true neutrality charge code that reverses to each market participant the respective market participant’s Hour Ahead (HA) and Real Time (RT) congestion rents.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

While investigating the causes for such increases, CDWR recommends that the CAISO initiate a Stakeholder process to discuss what can be done to transform the current RTCO into a true neutrality charge code that reverses to each market participant the respective market participant’s Hour Ahead (HA) and Real Time (RT) congestion rents. 

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

CDWR believes that the main objective of the RTCO settlement mechanism is to reverse the HA and RT congestion rents collected from a market participant.  However, the RTCO charge code does not provide the CAISO stated neutrality and includes additional much larger charges than the reverse of the HA and RT congestion rents collected from the market participants.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

CDWR believes the main objective of the RTCO settlement mechanism is to reverse the HA and RT congestion rents collected from a market participant. Not addressing this issue will further incur higher RTCO charges over time for all LSEs, as observed by CDWR.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Existing data:

•  RTCO data from 2009 – 2023. 

Missing data:

• Reasons for spikes in the RTCO observed in2021 and 2022.
• Granular breakdown of the Charge Code 6774

8. Submission Title

Second entry provide responses to questions 8-14.

Investigate the need to split the On-Peak CRR into two Times Of Use; On-Peak and Super-Peak

9. Has this issue been previously submitted?

 No.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The current CAISO CRR market design defines two time periods for the Time of Use (TOU): the On-Peak and the Off-Peak.  The On-Peak covers the period from HE07 to Hour HE22, with the Off-Peak covering the remaining of the period from HE23 to HE06.  The current CAISO CRR design for the TOU was suitable when the CAISO load demand curve was seen as a “one hump camel shape”.  With the fast implementation of the renewable generation in the CAISO grid, the CAISO load demand curve changed to a “two humps camel shape” and the value of an On-Peak CRR that covers 16 hours from HE07 to HE22 has diminished considerably and become not only be unpredictable but also volatile.  The diminishing of the On-Peak CRR value is most likely the result of big fluctuations that happen in the CAISO load demand curve which resulted in big fluctuations in the LMP (MCC) pricing.  As such, from HE07 to HE16, the LMP (MCC) prices are extremely low, the CAISO Control Area has extra generation, and the direction of the congestion is most likely from the load to the generator.  Starting at HE17 when the solar generation starts diminishing and the CAISO load demand starts increasing, CAISO LMP(MCC) prices become high due to the ramping need in the CAISO system.  At this time the CAISO Control Areas lack generation to match the ramping demand which could be supplied by fast start natural gas power plants or by importing energy from outside California.  This lack of generation and the fact that the fast start natural gas power plants are not necessarily located where the solar generation is could change the congestion direction and thus change the value of an On-Peak CRR.  

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

During past Stakeholder CRR processes, CAISO said the above-described TOU issue could be fixed if the On-Peak TOU could be split in two: the Super-Peak TOU covering the HE17 to HE 21 period, and the New (Regular) On-Peak TOU covering the HE07 to HE16, and HE22. 

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The strategic objective of the CAISO CRR design as stated in the CAISO Tariff is to make the CRR processes feasible and give LSEs a possibility to recoup their Day Ahead congestion rents by participating in the CRR processes.  LSEs’ ability to forecast congestion rents and request performant CRRs relies heavily on the continuity, and equilibrium in the LMP (MCC) pricing.  With the heavy implementation of renewable resources, the values of the On-Peak congestion rents spread over 16 hours of TOU have lost these characteristics.  CDWR believes a split of the current CAISO CRR design of the On-Peak TOU in two as mentioned above in #4 will bring continuity and equilibrium to the CRR market by making the CRR revenues more predictable, transparent, and reduce their volatility. 

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The sooner CAISO explores the possibility of splitting the current CAISO CRR On-Peak TOU in two as mentioned above in #4, the better the LSEs will be able to hedge their DA congestion rents with CRRs.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

 Existing data:

With the existing CRR revenues data CAISO studies should be able to determine what is the best split for the On-Peak period.

Missing data:

15. Submission Title

Third entry provide responses to questions 15-21.

Eliminate the Global Derate Factor (GDF) from the monthly CRR Allocation processes if the intended outcome of GDF application is minimal.

16. Has this issue been previously submitted?

No.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

CDWR recommends that CAISO perform studies to determine how much the GDF has helped improve the CRR Auction Efficiency.  These studies should cover periods before and after the implementation of the CAISO Track 1B proposal.  If the improvement provided by the GDF is minimal in comparison with the improvement provided by the Track 1B features, then the GDF can be removed from the monthly CRR allocation processes.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The initial scope of introducing the GDF in the CAISO CRR design was to improve the CRR Auction Efficiency by reducing the number of CRRs allocated in the monthly CRR processes.  Currently, the GDF can reduce the Available Transmission Capacity (ATC) for the monthly CRR allocation up to 35%[1] of the CRR Total Transmission Capacity (TTC).

The use of the GDF greatly reduces LSE’s ability to adequately hedge its congestion rents by reducing the amount of CRRs LSEs could request in the monthly CRR allocation process. This issue is exacerbated for LSEs that rely heavily on hydrology or employ other resources that have variable output power forecasts due to the uncertain nature of the environmental effects in the state of California.  For these LSEs, the participation in the annual CRR allocation process is very limited by the difficulty to forecast, more than a year ahead, such as hydrologic conditions, hence, to estimate the amount of congestion rents needed to be hedged with CRRs is difficult.  To some extent, the LSEs whose load relies heavily on hydrologic conditions are bound to request most of their CRR in the monthly CRR allocation processes, when, prior to the startup of the monthly CRR allocation process, these LSEs have a much better estimate of the hydrologic conditions and could estimate more accurately their congestion rents. 

Since the introduction of the GDF in the monthly CRR allocation processes, GDF values ranged between as high as 22.5% of the CRR Total Transmission Capacity (TTC) and as low as 7.5% of the CRR TTC.  On average, the GDF amounted to 17.5%, a value that CAISO has maintained steadily for the past five years of monthly CRR allocation processes, meaning that the ATC for the monthly CRR processes was limited to half of what was mentioned in the initial CAISO CRR design (when the GDF was not yet introduced). 

CDWR’s ability to obtain CRR in the annual CRR allocation process, was further impacted by other CAISO CRR design features which were implemented after the initial CRR design was implemented, with the scope of maintaining the CRR Auction Efficiency by reducing the number of allocated CRRs such as:

4.1. Median Operating Transmission Capacity (MOTC), not used in Year one of the annual CRR allocation process, reduced the amount of CRRs CDWR and other similar entities could request in the annual CRR Allocation processes after the MOTC was implemented.

4.2. The combined effect of existing LT-CRR allocated prior to the MOTC implementation and MOTC implementation resulted in even greater diminishing of the ATC for the annual CRR Allocation processes.

4.3. The implementation of the Track 1B proposal reduced the ATC for the annual CRR allocation from 75% of TTC to 65% of TTC.

For all the reasons explained above, CDWR’s ability to hedge its Day Ahead congestion rents depends heavily on obtaining sufficient CRRs in the monthly CRR allocation processes.  Furthermore, CDWR believes that by reinstating the ATC CRR for the monthly CRR allocation process to the initial CRR design by eliminating the GDF concept, will benefit not just CDWR but all the other LSEs that participate in the CAISO CRR allocation process.

[1] Prior to the implementation of the Track 1B proposal the ATC for the monthly CRR allocation processes was 25% of the TTC.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The strategic objective of the CAISO CRR design as stated in the CAISO Tariff is to make the CRR processes feasible and give LSEs a possibility to recoup their Day Ahed congestion rents by participating in the CRR allocation process.  The LSE’s ability to obtain sufficient CRRs that would provide CRR revenues for an adequate hedge of the LSEs congestion rents is diminished using the GDF concept.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The sooner CAISO eliminates the GDF, the better LSEs will be able to hedge their DA congestion rents with CRRs.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

 Existing data:

• With the existing CRR data CAISO could perform studies to estimate the extent to which GDF benefits towards maintaining CR Auction Efficiency prior and after the implementation of the Track 1B proposal.

Missing data:

22. Submission Title

Fourth entry provide responses to questions 22-28.

Congestion Revenue Rights Counter-Flow CRR

23. Has this issue been previously submitted?

 Yes.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

In the current CAISO CRR design, the Counter-Flow methodology was implemented to maximize the number of direct flow CRRs allocated from the Trading Hubs (THs) to the sink nodes when the market participants to the CRR Allocation processes request such CRRs.  There were numerous cases when CDWR had requested (direct flow) CRRs from the THs to CDWR Sink nodes and had received an excessive amount of CF-CRRs.  CDWR believes this excessive amount of direct flow CRR and CF-CRR could exacerbate the CRR Auction Efficiency, since when settled, the CF-CRR might not be the same value with the direct flow CRR due to the changes in the CAISO grid occurred when the CRR market is settled.

For example, an excessive amount of direct flow and CF-CRR means that, when CDWR had requested x = 100 MW from a TH to one of its sinks, there were allocated as many as y = 100 MW direct flow CRR and z = 99 MW of CF-CRR.  For the benefit of 1 MW of direct flow CRR (y-z), 199 MW of CRR were added to the CAISO CRR Market (y+z).  CDWR believes the introduction of such a big amount of CRR in the CAISO CRR market could have an impact on the CRR Auction Efficiency.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

CDWR supports the CAISO’s exploration of ways to revise the counter-flow CRR methodology used for allocating CRRs sourced at the trading hubs, as the current methodology is insufficient and contributes to revenue imbalance of the CRR balancing account as explained above.  CAISO needs to implement a limit on the ratio of x, y, z that reduces the impact of the excessive amount of direct flow and CF-CRR in the CRR Allocation processes.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The strategic objective of the CAISO CRR design is to make the CRR processes feasible and give LSEs a possibility to recoup their Day Ahead congestion rents by participating in the CRR allocation process.  By allocating too many CRR in the allocation process, the current CRR design could exacerbate the CRR Revenues Insufficiency.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The sooner the CF-CRR issue is fixed, the sooner the chances the CRR Auction Sufficiency is met, if other pending issues that impacts the CRR Auction Efficiency such as Track 1B are fixed.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

 Existing data:

Past data of Market participants requesting CRR from the THs to their sink and the amount of the CF-CRR.  Determine if the excessive amount of direct flow CRR and CF-CRR impacted the CRR Auction Efficiency.

Missing data:

CAISO needs to implement a limit on the ratio of x, y, z that reduces the impact of the excessive amount of direct flow and CF-CRR in the CRR Allocation processes. 

29. Submission Title

Fifth entry provide responses to questions 29-35.

 Real-Time Load Bidding

30. Has this issue been previously submitted?

 Yes: in Policy Initiatives Catalogs 2013 – 2023 under “Aggregated Pumps and Pump Storage.”

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Participating Load Resources currently do not have the ability to bid demand in the real-time market. The proposed initiative is to seek a solution to allow load resources to be bid in real-time to increase or decrease energy consumption. The ability to bid demand in the real-time market would greatly reduce the current barriers to Participating Load’s participation in the wholesale demand response and could help with system reliability during abnormal grid conditions or overgeneration periods.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The initiative scope would be to explore current CAISO models that could potentially be used to allow for Participating Load Resources to bid in demand in the real-time market, explore modification of existing CAISO models that can be utilized for Participating Load Resources to bid in demand in real-time or potentially explore new models that would allow for this functionality.

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Strategic Objective 3: Build on the Foundation of the Western Energy Imbalance Market to Further Expand Western Market Opportunities

Strategic Objective 3B: Effectively prioritize and sequence market design enhancements.

Strategic Objective 3C: Enable new technologies through efficient market rules and interfaces.

Strategic Objective 1: Reliably and Efficiently Integrate New Resources by Proactively Upgrading Operational Capability

Strategic Objective 1A: Modernize tools that support control center operations.

The proposed initiative for real-time load bidding could possibly improve system reliability during grid conditions such as overgeneration periods. With real-time load bidding, Participating Load Resources could better respond to ramping needs by shifting demand during critical ramping periods when water conditions permit. Real-time load bidding would provide ISO more visibility on how much flexibility each participating load resources may have during real time conditions. This can assist with load forecasting to improve grid reliability.

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

No

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

N/A

1. Submission Title

First entry provide responses to questions 1-7.

The text of DMM's full set of comments is pasted into this response to question 1. A fully formatted version of the same comments is included as a pdf attachment below the final question.

Comments on Policy Initiatives Catalog and Roadmap Process 2024

Department of Market Monitoring

February 29, 2024

Summary

DMM appreciates the opportunity to comment on the ISO’s Policy Initiatives Catalog and Roadmap Process 2024[1].  DMM recommends the ISO consider adding policy initiatives aimed at (1) improving ability for non-gas resources to submit reference level change requests, (2) more accurately reflecting intraday opportunity costs in the default energy bids of storage resources, and (3) changing the congestion revenue rights (CRR) auction to a market based on willing sellers. The policy suggestions to improve the reference level change request process, and to improve default energy bids for storage resources, could be included in the current price formation enhancements initiative.  DMM also continues to recommend that the ISO develop revisions to bid cost recovery rules for battery storage resources.  DMM understands that the ISO is assessing this issue internally, and will be considering potential market design changes as part of an upcoming initiative.

Improving reference level change request process for non-gas resources

When the $2,000/MWh bid cap is in effect, internal resources must submit a reference level change request in order to submit energy bids over the $1,000/MWh soft bid cap. The policy initiative that led to the implementation of the reference level change request process was primarily focused on gas resources being able to accurately reflect higher gas prices in their reference level costs.[2] While non-gas resources can also submit reference level change requests, there is less guidance for these types of resources. Therefore, there may be shortcomings in the current implementation that prevent non-gas resources from being able to successfully submit these requests, and thereby accurately reflect their costs in energy bids and default energy bids. DMM recommends the ISO open a policy initiative to consider improvements to the reference level change request process to ensure non-gas resources are able to submit requests to accurately reflect costs in default energy bids when the $2,000/MWh bid cap is in effect.

This issue is particularly prevalent for non-gas resources that face intraday opportunity costs, which may exceed $1,000/MWh on days when the $2,000/MWh bid cap is in place. While this is an issue for battery resources, it may affect other types of resources as well – particularly some hydro resources with certain daily limitations. According to the CAISO tariff, hydro resources are unable to submit automated reference level change requests. [3]  DMM’s understanding is that they could submit a manual reference level change request, but there may not be clear guidance on what documentation is needed, or how the ISO would validate these requests.

Default energy bids for storage resources that reflect intraday opportunity costs

During the price formation enhancements working group meeting on January 24, 2024, the ISO highlighted the current inability of energy storage resources to submit reference level change requests.[4] As noted in the previous recommendation, DMM believes that non-gas resources should be able to submit reference level change requests that reflect higher intraday opportunity costs on days when the $2000/MWh bid cap is in effect.  Intraday opportunity costs faced by storage resources can vary by hour, depending upon state of charge and future charging and discharging opportunities.  Therefore, DMM also recommends the ISO consider a policy enhancement to allow storage default energy bids (DEBs) to vary by hour.  This would allow the DEBs to accurately reflect hourly changing intraday opportunity costs, while continuing to mitigate local market power in hours of lower opportunity cost.

Allowing reference level change requests for storage resources to account for intraday opportunity costs would require careful policy development. However, pairing this policy change with a DEB that varies hourly would support more efficient dispatch of storage resources.  This policy change may be especially beneficial on the highest load days, when peak demand hour prices may be the highest. It would also improve reliability by decreasing the probability of early dispatch of storage resource before hours of highest need, as well as improve price formation by allowing storage resources to set prices that appropriately reflect their opportunity costs. While an hourly DEB that reflects intraday opportunity costs may be most relevant for battery resources, this hourly design could potentially benefit other resources in some circumstances.

Changing congestion revenue rights auction to a market based on willing sellers

Transmission ratepayers continue to lose money under the current congestion revenue right (CRR) auction design.  In the five years since the ISO implemented CRR reforms aimed at reducing these losses in 2019, ratepayers have lost $312 million (or an average of $62 million per year) and have received only 67 cents in auction revenues per dollar paid out.[5]  In 2023, transmission ratepayers lost about $58 million from CRRs auctioned off by the ISO, receiving 76 cents in auction revenue per dollar paid out.

Under the current CRR market design,  the ISO uses and transmission model that creates large amounts of price taking CRR supply which transmission ratepayers are obligated to back. DMM continues to recommend that the ISO stop offering CRR positions on behalf of transmission ratepayers at $0 offer prices. DMM recommends that the ISO open a policy initiative to alter the CRR auction design so that trades only take place between willing sellers bidding into a market for these financial contracts.[6]

Bid Cost Recovery for Battery Storage

As noted in DMM’s 2022 Annual Report, DMM continues to recommend that the ISO develop revisions to bid cost recovery rules for battery storage resources.[7] These new BCR rules are needed to mitigate potential gaming opportunities, and improve the efficiency of market dispatch when day-ahead state of charge values deviate significantly from actual state of charge values in real-time. DMM understands that the ISO is assessing this issue internally, and will be considering potential market design changes as part of an upcoming initiative.

[1] https://stakeholdercenter.caiso.com/RecurringStakeholderProcesses/Annual-policy-initiatives-roadmap-process-2024

[2] https://stakeholdercenter.caiso.com/StakeholderInitiatives/Commitment-costs-and-default-energy-bid-enhancements

[3] Tariff Section 30.11.3.1.

[4] Price Formation Enhancements Working Group Session #13: https://www.caiso.com/InitiativeDocuments/Presentation-Price-Formation-Enhancements-Jan24-2024.pdf

[5] See 2022 Annual Report on Market Issues and Performance, July 11, 2023. pp. 18, 183-190.   https://www.caiso.com/Documents/2022-Annual-Report-on-Market-Issues-and-Performance-Jul-11-2023.pdf

[6] Ibid, p. 190.

[7] Ibid, p. 26.

2. Has this issue been previously submitted?

Please see question 1 or attached PDF.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see question 1 or attached PDF.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see question 1 or attached PDF.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see question 1 or attached PDF.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see question 1 or attached PDF.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see question 1 or attached PDF.

8. Submission Title

Second entry provide responses to questions 8-14.

Please see question 1 or attached PDF.

9. Has this issue been previously submitted?

Please see question 1 or attached PDF.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see question 1 or attached PDF.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see question 1 or attached PDF.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see question 1 or attached PDF.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see question 1 or attached PDF.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see question 1 or attached PDF.

15. Submission Title

Third entry provide responses to questions 15-21.

Please see question 1 or attached PDF.

16. Has this issue been previously submitted?

Please see question 1 or attached PDF.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see question 1 or attached PDF.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see question 1 or attached PDF.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see question 1 or attached PDF.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see question 1 or attached PDF.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see question 1 or attached PDF.

22. Submission Title

Fourth entry provide responses to questions 22-28.

Please see question 1 or attached PDF.

23. Has this issue been previously submitted?

Please see question 1 or attached PDF.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see question 1 or attached PDF.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see question 1 or attached PDF.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see question 1 or attached PDF.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see question 1 or attached PDF.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see question 1 or attached PDF.

29. Submission Title

Fifth entry provide responses to questions 29-35.

Please see question 1 or attached PDF.

30. Has this issue been previously submitted?

Please see question 1 or attached PDF.

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see question 1 or attached PDF.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see question 1 or attached PDF.

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see question 1 or attached PDF.

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see question 1 or attached PDF.

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see question 1 or attached PDF.

1. Submission Title

First entry provide responses to questions 1-7.

Correction of the hourly shaping factors used in the maximum import bid price.

2. Has this issue been previously submitted?

Please see attachment "24-04-02 - Annual Policy Initiative Proposal - Shaping Factor - CPUC Energy Division"

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see attachment.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see attachment.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see attachment.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see attachment.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see attachment

8. Submission Title

Second entry provide responses to questions 8-14.

Revisions to the Resource Adequacy Availability Incentive Mechanism (RAAIM).

9. Has this issue been previously submitted?

Please see attachment "24-04-02 - Annual Policy Initiative Proposal - RAAIM - CPUC Energy Division." 

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see attachment.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see attachment.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see attachment.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see attachment.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see attachment.

15. Submission Title

Third entry provide responses to questions 15-21.

Liquidity of bilateral indices used in FERC Order 831 implementation

16. Has this issue been previously submitted?

Please see attachment "24-04-02 - Annual Policy Initiative Proposal - Liquidity of bilateral indices - CPUC Energy Division." 

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see attachment. 

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see attachment. 

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see attachment. 

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see attachment. 

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see attachment. 

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Allow Competitive Bidding on Regional Projects Above 100 kV

2. Has this issue been previously submitted?

To Cal Advocates’ knowledge, this specific proposal has not been previously submitted

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

          FERC Order 1000 (Order 1000) removed incumbent utilities’ “right of first refusal” (ROFR) from FERC-jurisdictional tariffs, with exceptions for local transmission facilities and transmission facility upgrades (i.e., local projects).  Paragraph 63 of Order 1000 defines a “local transmission facility” as a “facility located solely within a public utility transmission provider’s retail distribution service territory or footprint that is not selected in the regional transmission plan for purposes of cost allocation.”  In contrast, CAISO’s Tariff (effective August 2, 2023) defines a “local transmission facility” as a facility that is “(1) under the CAISO Operational Control, (2) is owned by a Participating TO [Transmission Owner] or to which a Participating TO has an Entitlement that is represented by a Converted Right, (3) operates at a voltage below 200 kilovolts, and (4) only in the case of a transmission facility approved in the final 2013/2014 comprehensive Transmission Plan and thereafter, is located entirely within a [Participating Transmission Owner’s (PTO)] footprint or PTO Service Territory.”

            The CAISO stated the reason it separates regional and local projects at 200 kV is that it aligns with many regional and local benefits.[1]  However, this strict division is arbitrary based on what benefits are considered.  Further, CAISO admits that certain relatively low-voltage transmission projects blur the line between providing regional and local benefits.[2]  There are certain transmission facilities, under 200 kV, which could still be providing reliability benefits, but not bulk power flow benefits.  Additionally, in its FERC Order 1000 Compliance Filing, CAISO states “[a]lthough there could be instances in which a low voltage transmission facility provides some regional benefits, the ISO does not view this as anything more than a rare occurrence in light of the configuration and operation of the ISO grid.”[3]  But it is important to note, some high-voltage facilities provide benefits to low-voltage facilities, beyond bulk power flow, such as absorbing unexpected frequency changes.[4]  This could be considered a regional facility that is providing reliability benefits to a low-voltage system with unstable voltage.  In addition, certain projects that are above 100 kV could have clear regional benefits, depending on how they are being used in relation to the transmission grid.

            By failing to competitively bid these projects, CAISO is potentially missing out on the opportunity for more cost-effective projects to be built to the detriment of ratepayers.  California ratepayers, in particular, pay approximately 45 percent to 80 percent higher electrical costs than the national average.[5]  Competitive bidding can reduce project costs by 20-30%, and by extension, benefit ratepayers with cost efficient spending.[6]  Continuing to place strict arbitrary limitations on which projects can be competitively bid burdens ratepayers with imprudent spending and unnecessarily increased rates.

References

[1] Reply Comments of the California Independent System Operator Corporation, NOPR Docket No. RM21-17-000, September 19, 2022, Section G.1.a at p. 65.

[2] California Independent System Operator Corporation, Order 1000 Compliance Filing, Exhibit ISO-1, Attachment D - Prepared Direct Testimony of Neil A. Millar, October 11, 2012, at 5, states: “existing facilities less than 200 kV generally support local service, and in instances where they remain parallel to high voltage facilities, they remain so only because the transition to higher voltage facilities is occurring gradually, only when increased flow patterns necessitate capital expenditures.”

[3] California Independent System Operator Corporation, Order 1000 Compliance Filing, Exhibit ISO-1, October 11, 2012, p. 29.

[4] California Independent System Operator Corporation, Order 1000 Compliance Filing, Exhibit ISO-1, Attachment D - Prepared Direct Testimony of Neil A. Millar, October 11, 2012, at 7, states: “High voltage transmission facilities enable the ISO to absorb unexpected changes in frequency that occur from time to time and support adequate voltage levels throughout the system, thereby reducing the risk of voltage collapse and thermal overloads throughout the region.”

[5] Borenstein, S., Fowlie, M., & Sallee, J., “Designing Electricity Rates for An Equitable Energy Transition.” Energy Institute at UC Berkeley’s Haas School of Business and NEXT 10. February 23, 2021, at 4 (“In the least expensive territory, Southern California Edison (SCE), residential prices per kilowatt hour are about 45 percent higher than the national average. Prices for Pacific Gas & Electric (PG&E) are about 80 percent higher, and prices in San Diego Gas & Electric (SDG&E) are roughly double the national average.”) https://www.next10.org/sites/default/files/2021-02/Next10-electricity-rates-v2.pdf. 

[6] Cost Savings Offered by Competition in Electric Transmission, Brattle Group Report, April 2019, at 1. Brattle figures are for all of the US.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

           Cal Advocates proposes to increase the scope of projects eligible for competitive bidding to benefit ratepayers.  CAISO should maintain the automatic 200 kV and above split that puts regional projects up for competitive bidding, since there are many regional benefits gained from projects at that high voltage.  However, for projects that are between 100 kV and 200 kV, if CAISO, a stakeholder, or a developer identifies a clear regional benefit for a project in Phase 2 of the Transmission Planning Process (TPP), then the project should be eligible for competitive bidding.

            The CAISO could determine, with stakeholder input, which measurable regional benefits a project must provide in order to qualify for competitive bidding.  Cal Advocates recommends that regional benefits include moderate power flow between areas, congestion reduction, or voltage stability.  An example of such a project is the Redwood City Area 115 kV system reinforcement project, which was approved in the CAISO’s 2022-2023 TPP in order to address P6 and P7 contingencies resulting in overloads on multiple 115 kV lines.[7] The project proposes to reconductor two 115 kV lines and add a new 230 /115 kV transformer at the Ravenswood substation.  While reconductoring the 115 kV lines largely provides local benefits, the new transformer at the Ravenswood substation would provide reliability benefits to the 230 kV system it connects to.

References

[7] CAISO 2022-2023 Transmission Plan, May 18, 2023, Section 2.5.2 Projects Recommended for Approval, at 45.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

            The parties impacted by increased competitive bidding are the CAISO, project developers, PTOs, and California ratepayers.

            This initiative supports ISO strategic Objective 4D: “Maintaining customer confidence through continued disciplined cost management and strategic investments” because “[c]ontinued fiscal discipline across the energy sector will be a key performance measure in successfully achieving energy policy goals.”[8] This objective is critical for ratepayers who bear the brunt of escalating electrical costs.  This initiative also supports Objective 2A: “Ensuring development of long-lead transmission plans that meet goals reliably and economically.”[9]

Objective 4D: Maintaining customer confidence through continued disciplined cost management and strategic investments.

            As stated earlier, competitive bidding can reduce project costs, and should be a critical consideration as California builds more transmission to meet demand.  Cost efficient spending benefits CAISO ratepayers by reducing the burden of rates on them and ensuring that electric utility service remains affordable, even in the face of the increased transmission spending required to reach California’s energy goals.  Expanding competitive bidding ensures ratepayers are aware that CAISO is attempting to pursue cost effective spending on their behalf and is trying to reduce the rate burden on ratepayers.

Objective 2A: Ensuring development of long-lead transmission plans that meet goals reliably and economically.

            Cal Advocates recognizes that CAISO has argued that increased competitive bidding will in turn increase the amount of effort CAISO spends to coordinate the competitive solicitation process.[10] Nevertheless, this increased effort would be worthwhile to help reach the objective of ensuring that transmission plan goals are actually met in a cost-efficient manner.[11]  Currently, projects that are not competitively bid are completed by Investor-Owned Utilities (IOUs, i.e., PG&E, SDG&E and SCE), who are not held to cost caps or provided financial incentives in the same way competitively bid projects are for not completing projects on time.

            During each TPP cycle, CAISO adds to the IOUs’ backlogs of TPP-approved projects.  As of October 2022, PG&E had a backlog of approximately 100 unbuilt TPP-approved transmission projects.[12]  There is no clear understanding of if or when these projects will be built.  CAISO can avoid exacerbating this problem by distributing more projects among different developers through competitive bidding.  More developers working on many projects could increase the number of projects that actually get completed on time, and ensure that CAISO reaches both its transmission goals and California’s clean energy goals.  This solution will also help develop a larger pool of skilled transmission developers, which can lead to more competition and lower costs for ratepayers.

References

[8] CAISO, Strategic Plan 2022-2026, at 13, available at https://www.caiso.com/Documents/2022-2026-Strategic-Plan.pdf.

[9] CAISO, Strategic Plan 2022-2026, at 7, available at https://www.caiso.com/Documents/2022-2026-Strategic-Plan.pdf.

[10] Reply Comments of the California Independent System Operator Corporation, NOPR Docket No. RM21-17-000, September 19, 2022, Section G.1.d at p. 74.

[11] See, e.g., Pub. Util. Code § 399.11 (codified version of SB 100 (De León), 2018, setting renewable energy goals for California); see also, Cost Savings Offered by Competition in Electric Transmission, Brattle Group Report, April 2019, at 4, 8-10 (discussing potential savings at CAISO).

[12] According to data from the CAISO’s Transmission Development Forum from October 2022 analyzed by Cal Advocates Staff. Data available at https://www.caiso.com/informed/Pages/MeetingsEvents/UserGroupsRecurringMeetings/Default.aspx.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

          There is no regulatory requirement for an implementation date, nor is this policy initiative time sensitive.  However, there are significant impacts to ratepayers.  The more projects are prevented from being competitively bid, the greater the ratepayer burden of potentially imprudent costs being spent on transmission projects.  Projects that can be built faster and more cost effectively by non-incumbent utilities also provide regional benefits that should be eligible for competitive bidding.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

         The chart below shows that different ISOs have different competitive bidding project exclusions based on voltage (unrelated to the mandates of Order 1000).  CAISO has moderate voltage restrictions, in comparison to other ISOs, which have lower voltage restrictions, or in NYISO’s case, none at all.  The voltage threshold is unnecessary to comply with Order 1000, restricts which projects are eligible for competitive bidding, and should be amended to allow projects from 100 kV to 200 kV to be competitively bid if there are clear regional benefits.

[13]

            A current data gap that should be addressed is what type of regional benefits can be quantified at CAISO when projects are being considered eligible for competitive bidding, regardless of voltage.  Additionally, it would be worthwhile to investigate if projects awarded to IOUs but have yet to be completed could be put up for competitive bidding.  This could help reduce and prevent the increase of IOUs’ project backlogs and encourage IOUs to complete their projects in a timely manner.

References

[13] Cost Savings Offered by Competition in Electric Transmission, Brattle Group, April 2019, p.20. Edited for brevity.

8. Submission Title

Second entry provide responses to questions 8-14.

            Add Schedule Incentive Clause to the APSA.

9. Has this issue been previously submitted?

            No.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

           The CAISO selects an approved project sponsor based on a variety of cost containment terms (i.e., cost caps), penalties, and incentives which are proposed by project sponsors during the competitive bidding process.  The selected project sponsor and the CAISO ultimately memorialize and agree to the terms contained in the competitive bid in the Approved Project Selection Agreement (APSA).  The APSA contains standard contract terms and incorporates project specific and competitive bid terms in appendices to the APSA, which are typically confidential, but sometimes publicly disclosed.[1]   For example, a schedule incentive has been proposed previously in Project Sponsor Selection Reports.[2]  The schedule incentive involves a reduction on the return on equity (ROE) by certain basis points for every month that the project is delayed beyond a proposed date (typically the latest in-service date as determined by CAISO), up to a total of maximum basis points.  This type of ROE reduction can provide an incentive for timely project construction, which is beneficial to both the CAISO and ratepayers.  The CAISO benefits because needed projects are completed on time, and California ratepayers are protected from cost overrun of projects that are not energized by the latest in-service date.

            The CAISO does not currently require this schedule incentive to be included in a project sponsor’s competitive bids.  It is also not a standard and required term in the APSA.  The schedule incentive should become a standard term of the APSA because timely completion of projects can help contain costs for California ratepayers, maintain grid reliability, and fulfill California’s climate change goals.

References

[1] See, e.g., FERC Docket ER23-2309-000, Exhibit No. DCRT-02: APSA Package, Attachment 2, at Appendix E (“Approved Project Sponsor’s Costs of Project”).

[2] See, e.g., CAISO’s Gates 500 kV Dynamic Reactive Support Project Sponsor Selection Report, January 17, 2020, Section 3.12.8 (“Information Provided by LSPGC”), at 108 “On time schedule financial incentive that would reduce LSPGC’s return on equity by 2.5 basis points for every month that the project is delayed up to a total of 30 basis points.”; see also, CAISO Collinsville 500/230 kV Substation Project, Project Selection Report, January 23, 2023, Section 3.6.7 (“Information Provided by LSPGC”), at 21;  see also CAISO Newark-NRS HVDC Project, Project Sponsor Selection Report, March 21, 2023, Section 3.6.7 (“Information Provided by LSPGC”), at 24.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

          Cal Advocates proposes that the standard terms of the APSA be amended to include a schedule incentive.  The schedule incentive clause would reduce the ROE by certain basis points for every month that the project is delayed beyond the latest in-service date, up to a set maximum of basis points.  Cal Advocates proposes that this schedule incentive clause be added to Article 10 of the APSA to state: The Approved Project Sponsor shall have its return on equity be reduced by 2.5 basis points for every month that the project is delayed beyond the Latest In-Service Date, up to a total of 30 basis points.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

        The parties impacted by requiring a schedule incentive in the APSA are the CAISO, project developers, PTOs and CAISO ratepayers.

        Yes, this initiative supports ISO strategic objective 4D: “Maintaining customer confidence through continued disciplined cost management and strategic investments.”[3]  The CAISO can help protect California ratepayers from imprudent cost overrun by requiring APSAs to include a schedule incentive to finish projects on time and energized by the latest in-service date identified by CAISO.

     This initiative also supports Objective 2A: “Ensure development of long-lead transmission plans that meet policy goals reliably and economically.”[4]  The CAISO can support the timely completion of transmission projects that meet policy goals by standardizing expectations of timely project completion for competitively bid projects.

References

[3] CAISO, Strategic Plan 2022-2026, at 13, available at https://www.caiso.com/Documents/2022-2026-Strategic-Plan.pdf.

[4] CAISO, Strategic Plan 2022-2026, at 7, available at https://www.caiso.com/Documents/2022-2026-Strategic-Plan.pdf.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

           There are significant impacts on ratepayers that are magnified as more projects are subject to competitive solicitation.  The CAISO can strengthen its competitive solicitation process by adding this powerful tool to manage project costs and instill customer confidence that CAISO prudently invests in cost-effective transmission solutions. Further, the schedule incentive will aid the CAISO as it works to meet California’s climate change goals by getting transmission online by needed dates.  This amendment to the APSA will also standardize a term that has been in several competitive bids that the CAISO ultimately selected as the project sponsor.  

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

         CAISO identified 48 projects in the 2022-2023 TPP recommended for construction, of which, 23 will need to be energized in the next 5 years.[5]  CAISO also identified 122 previously approved projects whose in-service dates have been updated, and that were not energized as of the 2022-2023 TPP Report’s publishing.[6]  The majority of the projects are being constructed by investor-owned utilities (IOUs), and 9 of the 122 projects were approved by the CAISO before 2010.[7]  The volume of projects that have yet to be energized could indicate that the IOUs are failing to keep up with the pace of transmission project construction needed.

          Note: Cal Advocates recommends that this proposed tariff change be bundled with Cal Advocate’s other proposed APSA change, titled “Add Enforceability of Cost Containment Terms to the Approved Project Sponsor Agreement (APSA)” to ensure that an APSA’s terms are enforced during FERC rate cases.  Both proposed policy initiatives deal with requiring certain terms in the APSA and strengthen Objective 4D: Maintaining customer confidence through continued disciplined cost management and strategic investments.

References

[5] CAISO 2022-2023 Transmission Plan, May 18, 2023, Section 8.2 Transmission Projects found to be needed in the 2022-2023 Planning Cycle, at 167.

[6] CAISO 2022-2023 Transmission Plan, May 18, 2023, Section 8.1 Transmission Project Updates, at 161.

[7] CAISO 2022-2023 Transmission Plan, May 18, 2023, Section 8.1 Transmission Project Updates, at 161.

15. Submission Title

Third entry provide responses to questions 15-21.

            Add Enforceability of Cost Containment Terms to the Approved Project Sponsor Agreement (APSA)

16. Has this issue been previously submitted?

            No.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

            Currently, the Approved Project Sponsor Agreement (APSA) does not contain clear and explicit language where the selected project sponsor agrees that the terms, including cost containment terms, are legally binding and will be reflected and enforced in the FERC rate case.[1]  While it is implied that the APSA terms are enforceable at FERC, adding language that states as much in clear terms will further demonstrate the project sponsor’s commitment in a FERC rate case. The APSA also does not include an explicit statement that any cost overrun not explicitly excepted out in Appendix E would not be considered prudently incurred and may not be recoverable in the FERC rate case. Appendix E contains the approved project sponsor’s costs of a project.  Some project sponsor bids have included in their proposal “FERC would have the authority to enforce the cost cap and cost containment measures set forth in [their] proposal.”[2]  While the final terms in most APSAs are confidential, this does not appear to be a term contained in all APSAs based on the project selection reports for competitively bid projects. Further, in the FERC rate case filed by DCRT in the Ten West Link project, DCRT filed the APSA as a public exhibit, and it does not contain the proposed term in Appendix E (addressing cost containment terms).[3]  DCRT is currently at FERC requesting cost recovery in excess of the project cost cap that DCRT agreed to in its APSA with CAISO. Since the proposed term is not standard to the APSA, developers are not required to include this term in their competitive bid or agree to have the term added to the final APSA in Appendix E.  DCRT’s FERC rate case demonstrates developers may attempt to skirt existing terms to recover expenses that are not approved in the APSA.  This cost recovery uncertainty exposes California ratepayers to imprudent costs and increases their rates beyond what is approved for the proposed projects.

References

[1] See, e.g., Comments submitted by Greg Poulos (Executive Director, Consumer Advocates of the PJM States, Inc.): PJM Consumer Advocates position on PJM Cost Containment proposals, available at: https://www.pjm.com/-/media/committees-groups/committees/pc/20170821-special/20170821-pjm-proposed-principles-greg-p.ashx.

[2] See, e.g., CAISO’s Gates 500 kV Dynamic Reactive Support Project Sponsor Selection Report, January 17, 2020, Section 3.12.13 (“Information Provided by LSPGC”), at 116.

[3] See FERC Docket No. ER23-2309-000, DCR Transmission, L.L.C., Request for Acceptance of Transmission Owner Tariff and Transmission Revenue Requirement, Request for Waivers, and Request for Confidential Treatment, June 29, 2023; Ex. No. DCRT-2, Attachment 1, Original APSA, Appendix E; Exhibit No. DCRT-2, Attachment 3, Second APSA Amendment, Appendix E.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

           The CAISO tariff should add a provision to the standard terms of the APSA, in clear and concise language, that the approved project sponsor agrees that all the terms of the APSA are legally binding and will be reflected and enforced in the FERC rate case, including but not limited to maximum costs, cost caps, or other cost containment measures agreed to in Appendix E.  The APSA should also add a statement that the approved project sponsor agrees any cost overrun not explicitly excepted in Appendix E would not be considered prudently incurred and therefore, would not be recoverable in the FERC rate case.  The APSA should also add that FERC would have the authority to enforce the maximum costs, cost caps, and cost containment measures set forth in APSA, subject to the parties’ agreement.  Specifically, this language should make clear that overruns above the cost cap are deemed imprudent and unreasonable.  Cal Advocates proposes this language be added to Article 10 or another subsection.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

       The parties impacted by requiring enforceability of the contract terms in the APSA at FERC are the CAISO, project developers, Participating Transmission Owners (PTOs), and CAISO ratepayers.

       This initiative supports CAISO strategic Objective 4D: “Maintaining customer confidence through continued disciplined cost management and strategic investments,” and Objective 4A: “Fostering broad stakeholder trust through transparency, collaboration, and mutually beneficial solutions.”[4] It also is in line with the CAISO’s Business Practice Manual addressing the Transmission Planning Process which states that the proposed project sponsor must demonstrate "binding cost control measures the project sponsor agrees to accept, including any binding agreement by the project sponsor and its (planned) team to accept a cost cap that would preclude costs for the regional transmission facility above the cap from being recovered through the CAISO’s transmission access charge."[5]

      CAISO ratepayers should be able to trust that the CAISO is doing everything it can to ensure that approved projects’ costs are managed and reasonable. In addition, this proposal would not require a drastic change to the standard language in the APSA of the CAISO tariff. The added language will strengthen the language of the APSA and aid the CAISO in future FERC rate cases by addressing in a clear manner the agreed to cost containment terms and a projects sponsors' agreement to have those terms enforced in a FERC rate case. By standardizing the APSA cost containment terms that will be enforceable at FERC, CAISO can help ensure that ratepayers are only paying for what benefits them, and not imprudent cost overruns, beyond what is agreed upon in the APSA.

References

[4] CAISO, Strategic Plan 2022-2026, at 13, available at https://www.caiso.com/Documents/2022-2026-Strategic-Plan.pdf.

[5] Business Practice Manual for Transmission Planning Process, Version 24.0, CAISO, February 9, 2023, Section 5.6.1.(j) at 64.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

         There is no regulatory requirement for an implementation date, nor is this policy initiative time sensitive.  However, there are significant impacts on ratepayers.  The consequences for not addressing this issue are that CAISO’s ability to regulate the costs of competitively bid projects may result in CAISO ratepayers eventually bearing the cost of imprudent investments.  Requiring the inclusion of this particular term in the APSA is a simple yet substantive way to help the CAISO ensure that developers are held to their competitively bid cost caps that they agreed to in the APSA.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

       DCRT Ten West Link's APSA maximum project cost was $258 million. The California Public Utilities Commission’s approved project cost was $389 million. The APSA states that the total project costs should not exceed the maximum cost and lists certain costs that are exempt from the cost cap.  DCRT filed at FERC for a total project cost of $553 million, claiming that the increase was caused by contingency, interconnection costs, permitting delays, and contractual adjustments, including events of Force Majeure.[6]  Adding the proposed language provided in response to Question 4 to the standard terms of the APSA, may reduce the risk of similar actions by project developers and solidify CAISO assertions that the cost containment terms are enforceable.

         Note: Cal Advocates recommends that this proposed tariff change be bundled with Cal Advocate’s other proposed APSA change, titled “Add Schedule Incentive Clause to the APSA” to require a timely penalty term in APSAs.  Both proposed policy initiatives deal with requiring certain terms in APSAs and strengthen Objective 4D: Maintaining customer confidence through continued disciplined cost management and strategic investments.

References

[6] See FERC Docket No. ER23-2309-000, DCR Transmission, L.L.C., Request for Acceptance of Transmission Owner Tariff and Transmission Revenue Requirement, Request for Waivers, and Request for Confidential Treatment, June 29, 2023; Ex. No. DCRT-2, Attachment 1, Original APSA; Exhibit No. DCRT-2, Attachment 3, Second APSA Amendment.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Allow Storage to Bid up to $2,000/MWh During High-Price Conditions

2. Has this issue been previously submitted?

At the request of CAISO management, CESA is submitting this initiative into the catalog process.  It is urgent that this issue is addressed prior to Summer 2024.  The CAISO must start discussing solutions with stakeholders.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Currently, during high-priced conditions, storage resources energy bids cannot exceed $1,000/MWh whereas non-resource adequacy (RA) imports and low priority (LPT) exports can bid up to $2,000/MWh with no cost justification.  In addition, internal generation with cost verified bids can bid above $1,000/MWh and RA imports can bid up to the calculated maximum import bids price which is greater than $1,000/MWh.    

This results in the CAISO market optimization sub-optimally depleting storage resources state of charge prior to the peak need later in the day.  This is because storage resources are not allowed to reflect this opportunity cost in their energy bids.

Non-RA imports and LPT exports are allowed to bid up to $2,000 without cost justification because FERC recognized in Order No. 831 that such a prohibition could discourage imports at times when they are most needed.  Non-RA imports and LPT exports must consider intraday opportunity costs when deciding whether to bid into the CAISO market or transact bilaterally outside the market.  A storage resource with 4-hours duration has similar intraday opportunity costs which need to be reflected in their energy bids to ensure the resource is used at the times it is most needed.  The storage resource should be able to offer energy bids at levels that indicate its intention to reserve its use for CAISO internal load needs rather than supporting off-system sales (i.e., supporting exports).  Thus, storage resources should be given the same ability to bid up to $2,000/MWh during high-price conditions.

The consistent treatment of resources with intraday opportunity costs will also address the sub-optimal scheduling of CAISO storage resources that occurs when considering just internal generation and RA imports ability to bid above $1,000/MWh.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Storage resources, with intraday opportunity costs, are allowed to bid up to $2,000/MWh during high-priced conditions.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This is time sensitive and should be implemented by Summer 2024.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

CAISO has on numerous occasions highlighted that storage is discharged too early.  Most recently at the January 24, 2024 Price Formation Enhancements Working Group which reviewed Summer 2022 findings.  In addition, several commenters to the working group from the Pacific Northwest stated that they observed similar issues with their NGR modeled resources during the January cold snap.

8. Submission Title

Second entry provide responses to questions 8-14.

Accurate Modeling of Storage at High/Low State-of-Charge 

9. Has this issue been previously submitted?

Yes.  It is CESA’s expectation that this enhancement is within scope of the Energy Storage Enhancements initiative on the 2024 Roadmap yet to commence.  

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

As storage resources near their maximum state-of-charge, the charging power rate to receive additional charging dispatch reduces rapidly.  Similarly, when nearing the minimum state-of-charge the discharging power rate to receive additional discharging dispatch reduces rapidly.  Because the current non-generator resource model uses a single power rate regardless of the actual state-of-charge, this leads to storage resources receiving infeasible dispatch instructions from the market.  Since storage resources are unable to respond as modeled in the market, operators must rely on regulation resources or out-of-market actions to maintain system reliability. 

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Review non-generator resource model and new models that will observe that the different power charging/discharging rates of storage resources changes based upon the state-of-charge.  

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3 

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

CAISO should commence the Energy Storage Enhancements initiative on the current roadmap as soon as possible, or address this through another avenue as soon as possible. As the storage fleet grows, CAISO could experience reliability impacts of overestimating the power capability of the storage fleet at low SOC and result in shortages of power.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None.

15. Submission Title

Third entry provide responses to questions 15-21.

Enhanced Storage Bidding to Better Reflect State-of-Charge Marginal Costs

16. Has this issue been previously submitted?

Yes.  It is CESA’s expectation that this enhancement is within scope of the Energy Storage Enhancements initiative on the 2024 Roadmap yet to commence.  

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Currently a storage resource can submit a ten-segment bid curve across its charging and discharging range (operating range); however, the marginal cost to charge or discharge is different based upon the state-of-charge. Additionally, the willingness to charge or discharge may vary across the operating range and the ability to ensure that even under mitigation the relative value associated with these segments is retained will improve storage awards and dispatches under mitigation.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Review non-generator resource model or new models that will support energy bids that reflect the marginal cost to charge/discharge based upon the state-of-charge and allow energy bids when mitigated to retain their relative willingness to charge or discharge by segment.  

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3 

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

CAISO should commence the Energy Storage Enhancements initiative on the current roadmap as soon as possible. 

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None 

22. Submission Title

Fourth entry provide responses to questions 22-28.

Ancillary Services Real-Time Re-Optimization  

23. Has this issue been previously submitted?

Yes.  Currently, ancillary services deliverability is included in Phase 3 of the Price Formation Enhancements initiative.  Changes to the Ancillary Services state-of-charge constraint should be included in the scope.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Currently, only incremental ancillary services are procured in the fifteen-minute market.  Storage resources must maintain sufficient state-of-charge to meet the continuous discharge requirement for ancillary services.  In the event the state-of-charge is insufficient to meet the ancillary services state-of-charge constraint, or the unit has been derated/rerated, the market will attempt to charge or discharge the storage resource not taking into consideration the tradeoff between charging or discharging the resource or paying to reprocure ancillary services from another resource at a lower cost.    

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Within the Ancillary Services re-optimization initiative, changes to the ancillary services state-of-charge constraint should be considered to allow more efficient management of storage resources in the 15-minute market and real-time dispatch.  Also changes to the upper economic limit and lower economic limit of storage resources should be considered to ensure incremental ancillary services procurement is identified or full re-optimization is performed without issuing storage energy awards.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3  

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

CAISO should maintain the existing Price Formation Enhancements schedule. 

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None 

29. Submission Title

Fifth entry provide responses to questions 29-35.

Long-Duration Energy Storage as a Transmission Asset  

30. Has this issue been previously submitted?

No

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

CAISO currently has rules for storage resources to address short-term contingencies which would have triggered reliability upgrades in the transmission plan.  This initiative would review the ability of long-duration energy storage to address reliability, economic, and policy upgrades.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Under current storage as a transmission asset rules, the storage resource can recover its costs through the transmission access charge and is prohibited from participating in the CAISO energy market.  Long duration storage could expand the transmission system but may need the ability to recover additional revenues through the wholesale energy market.   

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3  

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The lead time for developing transmission projects is significantly greater than storage resource development.  Expanding transmission capability as soon as possible is needed to meet California’s preferred resource portfolio and emissions reduction goals.

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None 

1. Submission Title

First entry provide responses to questions 1-7.

Reliability Demand Response Resource (RDRR) Minimum On Time (MOT) and Pmin economic evaluation for dispatch

2. Has this issue been previously submitted?

The issue was explored through a stakeholder process articulated in Reliability Demand Response Resource Minimum on time Final Proposal published January 18, 2024 (RDRR MOT Proposal).

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The RDRR MOT Proposal describes the issue well:

A June CPUC resource adequacy (RA) decision clarified the CAISO should be allowed to use a
reliability demand response resource upon declaration of an Energy Emergency Alert (EEA)
Watch.1 This clarification allows the CAISO to enable bids for the resources into the market
before an EEA 1. Enabling bids allows the real-time market to optimize the use of reliability
demand response resources (RDRRs) on their operational characteristics and economic bids.
Following the CPUC decision, stakeholders expressed concern regarding increased chances of
economic dispatch and potential attrition of customers from their retail programs, resulting in
reduced RDRR capacity. Stakeholders have also expressed that in order for the CAISO to
effectively optimize the dispatch of RDRR, resources’ physical operating characteristics should
be accurately reflected.
To mitigate these risks, stakeholders have requested that the CAISO allow RDRRs to reflect
minimum on times greater than one hour, to more accurately reflect RDRR run times in CAISO’s
market optimization and dispatch.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Initiative Scope has two primary components:

1. The original proposal of the RDRR MOT Proposal:

The CAISO proposes removing the current restriction for an RDRR to have a minimum run time
of no more than one (1) hour. Now that RDRRs are enabled into RTPD, there is flexibility as to
what the resources’ minimum on time could be within limits.
The RDRR minimum on time in combination with its start-up time must be optimized within a
real-time market (RTM) process Time Horizon. The RTM applications that have Unit
Commitment capabilities can commit resources optimally within their Time Horizon; however,
because their Time Horizon is short, only Short Start Units can be committed. A Short Start Unit
was defined as one that can be committed in the RTM Short-Term Unit Commitment (STUC)
process.
The STUC runs once at the beginning of each hour and looks ahead eighteen 15-minute
intervals, i.e., a Time Horizon of four hours and 30 minutes (i.e., 270 minutes).13 However, only
255 minutes are available to perform the unit commitment process. Therefore, a Short Start Unit
must have a Start-Up Time plus Minimum Run Time less than or equal to 255 minutes.
To ensure that an RDRR remains dispatchable in RTPD and considered in the STUC process,
while extending its minimum on time beyond 1 hour , the CAISO proposes to align the RDRR
requirement with the definition established for a Short Start Unit. Alignment with the definition of
a Short Start Unit makes the RDRR minimum on time requirement synonymous with the
Minimum Run Time requirement for Short Start Units.
The CAISO proposes that an RDRR have a minimum on time that combined with its Start-Up
Time does not exceed 255 minutes.
 

2. Address the issue of RDRR minimum on time not being considered in economic evaluation for dispatch articulated in the RDRR MOT Proposal:

The final proposal to specify minimum on time requirements does not change how RDRR realtime
bids, if enabled in the market, are considered in RTPD for dispatch. A longer minimum on
time does not decrease its likelihood of dispatch within RTPD, it only guarantees that when
dispatched the longer minimum on time will be respected.
Resources with a Pmin of zero, including RDRRs, do not have their minimum on time
considered in RTPD economic evaluation today. The economic RTPD evaluation will evaluate
whether RDRR is economic to commit based on the resources’ real-time bid MW quantity and
price. If economic for even a 15 minute window in the RTPD hor izon, the RDRR could get
committed, and if committed, it would be kept on in forward intervals through its minimum on
time.
This will be most impactful for RDRRs registered with the discrete14 dispatch option. When
dispatched, the discrete RDRR will remain dispatched at or near their maximum bid quantity for
their registered minimum on time.15 RDRRs registered as continuous (non-discrete) will
continue to be economically dispatched between their Pmin (0 MW) and their maximum bid
quantity. Once committed, the resources minimum on time will be respected. Because the Pmin
is 0 MW for RDRR, the resources is considered “on” even at 0 MW. This proposal does not
change how the optimization considers non-discrete RDRRs: the optimization would have the
option to dispatch a non-discrete RDRR resource down to 0 MW throughout its minimum on
time. 

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The fact that minimum on time is not considered in economic evaluation for the dispatch of RDRRs creates inherent inaccuracy in the optimization of reliability resources and associated market inefficiency. This inaccuracy has become more critical since RDRRs became eligible for dispatch as early as EEA Watch conditions as a result of CPUC Decision (D.) 23-06-029 on June 29, 2023. Impacted parties include customers participating in RDRR programs, Demand Response Providers, Investor Owned Utilities and all customers that depend on reliable elecricity. 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This issue is urgent and time sensitive. Customers providing RDRR are rightly concerned about inaccurate economic evaluation of their resources for dispatch and the associated risk of errant excessive dispatch. The customer MWs enrolled in these programs have declined significantly in the recent disenrollment period(s). Addressing MOT and Pmin for economic dispatch evaluation could restore confidence for customers that their RDRR resources will not be inaccurately or excessively dispatched in the future, allowing retention and re-enrollment of RDRR participating customers. The RDRR MOT Proposal explains the intended objective to:

Mitigate concerns with continued participation in the retail programs integrated as
RDRRs and retain demand reduction capacity they provide.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The key missing information is how to reform Pmin settings and treatment for RDRRs so that MOT can be adequately considered in economic evaluation for dispatch. 

8. Submission Title

Second entry provide responses to questions 8-14.

RDRR fixed cost per dispatch

9. Has this issue been previously submitted?

The issue has been suggested previously but not explored in depth to our knowledge. 

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

RDRR participating customers incur fixed costs associated with curtailment and start up that are incurred per dispatch event rather than based on event duration. This concept is similar to conventional generator startup costs but not currently reflected in RDRR dispatch parameters. 

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Explore methods to consider fixed costs in economic dispatch decisions for RDRR. 

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Improved accuracy in economic dispatch of key reliability resources.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Customers providing RDRR are rightly concerned about improving the accuracy of economic evaluation of their resources for dispatch. 

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Key missing information is how to calculate the appropriate fixed cost per dispatch for heterogeneous RDRR resources. 

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Enable Non-Generating Resources to Participate in Inter-SC Trade (IST)

2. Has this issue been previously submitted?

No

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

In the current market design, standalone battery storage projects are not available to be selected in the “Location” dropdown list for transacting Physicals in IST. Battery storage resources are categorized as Non-Generating Resources. According to the SIBR Business Rule 121007, only registered Generator Resources are allowed for Physical Energy Product.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

To continue effective integration of higher capacities of energy storage and meet resource adequacy and greenhouse gas compliance goals, the CAISO should allow Non-Generating Resources (NGRs) to participate in Inter-SC trade and offer Physical Energy Product.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Enabling battery storage to participate in Physical IST would increase overall market efficiency and reduce uncertainty in the preschedule window. This aligns with CAISO’s Strategic Objective 3C by enabling more storage technologies via efficient rules and interfaces that can be used for transactions across the WECC.

Allowing battery storage projects to participate in Physical IST would also complement the existing resource adequacy structure by allowing battery storage to offer supplement capacity or replacement energy through IST. This aligns with CAISO’s Strategic Objective 2C by improving the ISO’s resource adequacy strategy, consistent with SB100 goals and procurement plans that rely on significant volumes of energy storage.

Finally, allowing battery storage to transact Physical Energy through IST just as other resources can, including hybrid renewables-and-storage projects, meets regulatory requirements from FERC to avoid undue discrimination.

No parties are expected to be adversely impacted by the proposed initiative.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This market enhancement is low complexity for operations and can thus be completed in the near term with minimal resource needs. Not addressing this issue will allow discriminatory market access to persist.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

As this is not a market modeling change, no data are needed for backcasting and forecasting analysis.

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Resource Sufficiency Evaluation De Minimis Band Enhancement

2. Has this issue been previously submitted?

Idaho Power has not previously submitted this proposed initiative. 

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Resource Sufficiency Evaluation (RSE) De Minimis Band Enhancement would create a de minimis band that if scheduling coordinators fail the RSE by a de minimis amount, such as 10 MW or less, the entity is not deemed to have failed the entire test and can still participate in the EIM.   Such de minimis failures are insignificant and should not cause reliability concerns if they actually materialize.  This de minimis band would be similar to the RSE Tier 1 failure thresholds in EDAM.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The scope of this proposed initiative would be focused on the RSE and creating a de minimis band in which such failure quantities would not be deemed failures of the RSE.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The proposed initiatives are not in response to regulatory requirements.  The RSE De Minimis Band Enhancement aligns with the EDAM market design.   

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are no regulatory requirements for implementation dates.

 Consequences of not addressing the de minimis RSE issue may result in unnecessary EIM transfer restrictions and at times when the entity is opted in to the AET program, unnecessary financial penalties for small, nonmaterial failure amounts. 

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None

8. Submission Title

Second entry provide responses to questions 8-14.

Metering Enhancement

9. Has this issue been previously submitted?

Idaho Power has not previously submitted this proposed initiative. 

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Metering Enhancement would create clear metering guidelines for all new resource types, and provide additional information related to energy storage/batteries for EIM entities.  Metering requirements need to be provided for those entities located outside the California BAA as these may be different than those entities located inside of the California BAA and such requirements could be simplified.  Clear and simplified guidelines will ensure consistency among EIM entities in their metering set-ups.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The proposed initiative would address metering requirements and provide consistency and clarity for those EIM Entities that do not have resources inside of the California BAA.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The proposed initiative is not in response to regulatory requirements.   The Metering Enhancement promotes the ISO’s initiative to reliably and efficiently integrate new resources by proactively upgrading operational capabilities.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Failure to address the metering requirements will lead to continued confusion, inconsistency, incorrect settlements, and delay in setting up meters and bringing new resources into EIM.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None

15. Submission Title

Third entry provide responses to questions 15-21.

Proxy Demand Response Program Enhancement

16. Has this issue been previously submitted?

Idaho Power has not previously submitted this proposed initiative. 

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Idaho Power supports PacifiCorp’s proposal of a Proxy Demand Response Program Enhancement to create a refreshed demand response offering that anticipates and integrates the needs of all EIM and future EDAM entities.  There is great benefit in allowing all EIM entities to utilize their demand response programs in the market.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The scope would be consideration of proxy demand response programs and updated methodologies for non-California entities.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

For the Proxy Demand Response Enhancement, CAISO will need to collect information from demand response programs as well as metering infrastructures from non-California entities.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

See attached.

2. Has this issue been previously submitted?

See attached.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See attached.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See attached.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

See attached.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

See attached.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

See attached.

8. Submission Title

Second entry provide responses to questions 8-14.

See attached.

9. Has this issue been previously submitted?

See attached.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See attached.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See attached.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

See attached.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

See attached.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

See attached.

15. Submission Title

Third entry provide responses to questions 15-21.

See attached.

16. Has this issue been previously submitted?

See attached.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See attached.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See attached.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

See attached.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

See attached.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

See attached.

22. Submission Title

Fourth entry provide responses to questions 22-28.

See attached.

23. Has this issue been previously submitted?

See attached.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See attached.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See attached.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

See attached.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

See attached.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

See attached.

29. Submission Title

Fifth entry provide responses to questions 29-35.

See attached.

30. Has this issue been previously submitted?

See attached.

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See attached.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See attached.

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

See attached.

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

See attached.

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

See attached.

1. Submission Title

First entry provide responses to questions 1-7.

Device-Level Metering Proposal

2. Has this issue been previously submitted?

No

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

When advanced metering infrastructure was first introduced in California in 2010-2011, it heralded a new era for grid management. For the first time, utilities were able to receive electricity usage data in real time from millions of customers. The installation of smart utility meters appeared to also usher in a new era for residential demand response, enabling the measurement of the real-time energy reductions of customers participating in demand response programs. But technology and the market have developed in very different ways than could be envisioned over a decade ago.

Today, millions of smart devices capable of both measuring energy consumption and receiving dispatch instructions are in California homes. The exponential growth of smart devices will continue with the state’s clean energy goals of installing six million heat pumps by 2030 and eliminating the sale of gas-powered vehicles by 2035. As electrification trends upward, the grid will see higher peaks, but also greater opportunity for demand flexibility. And, thanks to SB 49 (Skinner), the California Energy Commission is adopting standards for appliances that facilitate flexible demand technologies in everything from pool pumps to heat pump water heaters to refrigerators. 

But, since fewer than 5% of IOU customers are enrolled in a demand response program, the vast majority of existing smart devices are not currently measured or controlled for the purpose of demand flexibility. If we could measure and control the energy use in those smart devices, the potential benefit to the grid and the grid operator is stunning: an estimated 4 GW of controllable flexible load today – and 20 GW of controllable flexible load by 2030 if California meets its EV and home electrification goals. Unfortunately, however, the continued reliance on smart meter data has many crippling shortcomings in the context of the proliferation of smart devices and the grid’s need for demand flexibility:

• CAISO has limited visibility into the quantity and type of devices behind the utility meter that can respond to market signals;

• Meters only record data and do not modify load;

• Current smart meter-based rules limit participation to a single demand response provider;

• The click-through authorization process for sharing utility meter data is cumbersome and many potential demand response customers do not complete the process - providers see completion rates from 35-50%;

• There are many OEMs in the smart device ecosystem; devices are often not interoperable by a single DRP.

Device level information for demand response, by contrast, has many important benefits:

• Dramatically increased participation of distributed energy resources in the ISO’s wholesale energy market. Estimated potential of 5 GW for existing smart devices today and 20 GW by 2030 if California meets its EV and home electrification goals;

• Faster and more accurate measurement of load curtailment;

• Increased situational awareness with visibility into the quantity and types of devices responding to market signals;

• Dual participation in conflicting programs can be determined at the device level;

• Does not require meter data for participation or settlement;

• Enables greater customer choice of DRP for devices, aggregators, or IOUs.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The Demand Response Registration System (DRRS) should be modified to accommodate device level locations. There is precedent for expanding the capabilities of DRRS: the Energy Storage and Distributed Energy Resources (ESDER) initiative allowed the designation of device types. Similar to the ESDER changes to DRRS, the following modifications would identify participating devices and prevent dual participation of individual devices and premises:

• Expand the number of device types to include capable devices (i.e. heat pump water heaters);

• Add a field for device serial number.

Device-level energy usage data should be permitted for performance evaluation and settlement of Proxy Demand Resources (PDRs). The CAISO Business Practice Manual for Metering, Attachment G Technical Metering Specifications for DER Devices 0.2% accuracy requirement applies if local regulatory standards do not exist. The California Public Utilities Commission (CPUC) previously adopted standards outside of CAISO’s requirements for electric vehicle supply equipment. In D.22-08-024, the CPUC concluded it should adopt submeter accuracy standards of 1 percent accuracy tolerance and 2 percent maintenance for electric vehicle supply equipment (p. 40). The CPUC should adopt similar accuracy standards for other device types.

Device level data would undergo the validation, editing, and estimation process to arrive at settlement quality data based on the Business Practice Manual for Metering Attachment H: Data Validation, Estimation and Editing (VEE) for DER Devices if the CPUC does not adopt a different requirement. Existing baseline methodologies described in Section 4.13.4 of the CAISO tariff (and the Business Practice Manual for Demand Response) could be applied to calculate demand response energy measurement (DREM). This proposal requires changes to both the CAISO tariff Section 4.13.4 and the Business Practice Manual for Demand Response to accommodate device level measurement.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposal is well aligned with CAISO’s strategic objectives one and two shown below:

• Strategic Objective 1

  • Reliably and efficiently integrate new resources by proactively upgrading operational capabilities

    • Modernize tools that support control center operations

    • Ensure IT is secure, scalable, and resilient

    • Increase coordination with distribution system operators

• Strategic Objective 2

  • Strengthen resource adequacy and meet California’s SB 100 goals through long-term transmission planning and effective coordination with state agencies

Senate Bill 100 (SB 100, De León) “The 100 Percent Clean Energy Act of 2018” updated the renewable portfolio standard to 60% by 2030 and set a goal that all retail electricity is served by renewables and zero-carbon resources by 2045. According to the 2021 SB100 Joint Agency Report, the state must build 6 gigawatts of new solar, wind, and battery storage annually to meet those goals. However, future risks to the timely procurement and commercial operation of supply resources abound. D.24-02-047 cited the following risks listed in PG&E’s most recent Integrated Resource Plan: “Uncertainties regarding project development timeframes including supply chain constraints or delays;  Significant demand for projects, including new construction and emerging resources as LSEs ramp up procurement for increasing GHG emissions reductions and Renewables Portfolio Standard (RPS) requirements for 2030 and beyond;  Potential cost impacts due to state and federal policy changes in tax credits and/or tariffs on imported materials;  Potential increase in demand due to increased electrification, especially across the transportation sector;  Potential transmission constraints for new projects, and potential scarcity of viable projects if required transmission infrastructure does not keep pace with the number of new resources needed; and Potential for competition for out-of-state resources as jurisdictions out of California increase their climate mitigation efforts (p. 43).” The state policy goals and their associated risks to the bulk power system underscore the need for demand-side solutions to maintain system reliability, as recognized by the North American Electric Reliability Corporation (NERC).

The 2023 NERC Reliability Issues Steering Committee (RISC) 2023 Reliability Risk Priorities Report (RISC Report) notes that reliability considerations must match the rapid pace of grid transformation (p. 7).  For the first time, the biannual report includes a new risk profile: energy policy. The RISC Report acknowledges there are numerous policy issues, but to enhance reliability, it's crucial to prioritize three policy areas: energy adequacy, coordination between natural gas and the electric industry, and Distributed Energy Resources (DERs)(p. 7). The fast expansion of DERs brings greater opportunity for load flexibility. One subset of DERs, demand response, particularly load modifying smart devices, presents an opportunity to both increase the visibility and number of devices that can respond to market signals. The RISC Report also notes the importance of understanding the grid-supporting capabilities and potential interactions of all technologies and resources and accurately including them in planning and operating analyses (p. 25). Integrating smart devices at the market level in DRRS with details of the technology type and location will inform the ISO’s planning and operational needs to harness and maximize their reliability benefits, meeting the strategic objectives of the ISO.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are presently no regulatory requirements for the implementation date of this proposal. However, there is substantial urgency to begin efforts to develop the market models and regulations to support device level PDR participation beyond EVSE given the continuance of California’s capacity shortage and expected rapid growth of smart devices.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The submitting parties are not aware of any data requirements for this issue and solution set.

8. Submission Title

Second entry provide responses to questions 8-14.

Modified Proxy Demand Resource (mPDR) Proposal

9. Has this issue been previously submitted?

No

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

This proposal is focused on the implementation of a Modified Proxy Demand Response (mPDR) product. mPDR is a variant of the Proxy Demand Resource (PDR) product that enables customers with behind-the-meter (BTM) storage (either storage only or solar plus storage) to have their exports counted by netting performance at the Sub-Load Aggregation Point (Sub-LAP) level rather than having exports zeroed out at the individual customer meter level. This concept contemplates an aggregation with a mix of storage and non-storage customers that permits customer exports as long as there are no net exports at the Sub-LAP level of the aggregation. The information provided within this proposal is based primarily on content contained in the Energy Division’s August 2023 Industry Briefing (Industry Briefing) titled Modified Proxy Demand Resource (mPDR).

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This proposal creates a new variant of the PDR, called the mPDR, to more accurately reflect the load reductions of PDR participants with BTM energy storage and Rule 21 export permits. Currently, PDR performance is calculated in aggregate and excludes measured export of energy from any of the individual locations. The primary existing PDR performance evaluation options for energy storage are the Day Matching 5-in-10 and 10-in-10 baseline methodologies, the metering generator output (“MGO”) methodology (including MGO with customer baseline), and the Proxy Demand Resource-Load Shift Resource (PDR-LSR). The Distributed Energy Resource Provider (DERP) is a separate model that is not discussed here as it is ineligible for RA. 

The MGO methodology calculates performance solely on the output of the separately metered generator, based on the output in excess of its generating baseline (BPM for DR Section 5.1). However, for individual locations that have intervals in which the net meter shows exports, the amount settled for that interval is zero. This performance evaluation option does not take into account changes in the facility load of the premise. The MGO with customer load baseline methodology incorporates both the behind the meter generator and facility load (BPM for DR Section 5.2). By contrast, the Day Matching 5-in-10 and 10-in-10 baselines measure performance at the individual customer meter (rather than at separately metered generators). 

Both of the MGO options and the PDR-LSR are problematic for two reasons: 1) they require separate metering of a generator in addition to the utility meter, and 2) intervals with exports do not receive full credit for settlement. First, securing and installing an additional meter of a generation resource is cost prohibitive for residential customers. Second, the assignment of a zero value for intervals showing exports cuts out a significant portion of the value that a BTM battery can provide the grid. By not allowing battery exports to count towards a PDR’s performance in RA, customers are effectively forced to derate capacity nominations for their battery resources. 

Due to the technical requirements of the MGO baseline and need for multiple streams of interval data for each device, most customers with BTM storage use the 5-in-10 or 10-in-10 baseline methodologies. However, these methodologies still face the second issue described above because the CAISO’s Business Practice Manual specifies that DR performance measurements cannot include exports. As a result, any intervals in which the utility meter load falls below zero will not be credited toward that meter’s performance, meaning that battery storage exports beyond the existing site load will still not be compensated. As a result, BTM battery capacity in RA is effectively limited to the site load, regardless of the actual capacity of the BTM battery at that site.

The mPDR addresses these issues by allowing a customer’s energy exports to be counted at the resource level as long as aggregate net load of storage and non-storage customers at the sub-LAP level is greater than zero. This effectively means that performance in demand response (DR) events will be measured at the sub-LAP rather than the individual customer meter. If a Rule 21-compliant battery exports power to the grid, it will lower the effective load at that sub-LAP, showing an overall improved performance in that DR event and allowing the aggregator managing that battery to nominate that battery’s full capacity for that event. Net exports across the sub-LAP “virtual meter” (i.e. a situation where the sub-LAP load is negative) will not be counted, so from an operating perspective this would only ever look like a load reduction at the relevant sub-LAP.  

This proposal requires revisions to the CAISO tariff section 4.13.4. The BPM for Demand Response also requires editing to implement mPDR. The Product Overview (Section 2.1) refers to the overall treatment of exports in PDR. Existing sections that detail the performance calculation methodologies that utilize MGO formulas may be revised if warranted (BPM for DR Sections 5.1, 5.2, and 5.7). DRRS and existing processes should be able to accommodate the mPDR concept without any major changes.

A deliverability study should not be needed to implement mPDR. NEM customers are not subject to deliverability requirements because they are netted with load, and similarly, all participants in an aggregation are located within the same sub-LAP and net energy export would be disallowed at the aggregation level; no energy would be transferred to the transmission system. Exports are likely to be consumed by other nearby customers. Alternatively, a MW cap for exports allowed within a mPDR could be instituted as a stepped-approach while deliverability processes are considered. Additional concerns around deliverability can be addressed during the stakeholder process.

To establish qualifying capacity, it is recommended that the methods in place at the time of implementation are utilized. Given that the mPDR participant mix will include both storage and non-storage customers, the method available today would be the Load Impact Protocol process. However, at the time mPDR becomes a viable performance evaluation option, the supply-side incentive based methodology or some other option may be available.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposal would advance the following CAISO Strategic Objectives from its 2022-2026 Strategic Plan:

• Strategic Objective 2: Strengthen resource adequacy and meet California’s SB 100 goals through long-term transmission planning and effective coordination with State agencies.
  • 2C: Sharpen the CAISO’s resource adequacy strategy and clarify priorities for engagement in CPUC and CEC policy processes.
• Strategic Objective 3: Build on the foundation of the Western Energy Imbalance Market (WEIM) to further expand western market opportunities.
  • 3C: Enable new technologies through efficient market rules and interfaces.

Specifically, this proposal would allow for and incentivize greater participation of BTM storage in the RA program and broader WEIM, providing additional resources at a time when the state is still facing a capacity shortage. At the end of 2023, California had approximately 843 MW of residential battery capacity in the state. However, because the PDR construct does not currently compensate batteries for grid exports, only a relatively small portion of this available capacity is accessible by grid operators.

In a recent pilot project by PG&E testing residential battery exports to the grid (PG&E Emerging Technologies project number ET21PGE7300), the utility found that Tesla Powerwall owners could discharge an average of 4.5 kW to the grid during DR events between the hours of 4 to 9pm. Because this pilot was conducted in October and November, this equated to roughly 3.3 kW of exports per battery. If these battery exports were not credited towards DR performance, the customers’ performance would essentially be capped at their household load of around 1.2 kW, reducing the value of these batteries to roughly 27% of their total potential. 

Assuming this performance holds true for the majority of residential battery owners in California, this means that close to 620 MW of BTM battery capacity is “inaccessible” to grid operators because there is no mechanism in PDR that will compensate resources for that capacity. Although this estimate may be lower during periods of peak demand when households’ site load is higher, it also doesn’t include C&I battery installations, many of which are substantially larger than residential systems and can face similar challenges from lack of mechanisms to credit exports. Moreover, BTM storage participation levels in RA are hindered by the reduced compensation expectations as a result of the lack of credit for exports. The opportunity to earn higher revenue will incentivize more customers to participate.

This represents a significant amount of additional capacity that would theoretically be accessible today if exports were credited, and in the future, this potential will grow substantially. If residential battery storage installations rates continue to increase linearly at the same growth rate exhibited over the past five years, California will have over 1.9 GW of residential battery capacity in 2030, roughly 1.4 GW of which would be inaccessible if there is no incentive for them to export to the grid. This is a substantial amount of lost capacity, and it is a relatively conservative estimate considering that Tesla’s next generation of Powerwalls are slated to have nearly twice the exporting capacity as those used in the PG&E pilot.

The scale of additional capacity from DER exports will be even more significant as electric vehicles become more ubiquitous across California. The state currently has a goal of having 5 million zero emission vehicles (ZEVs) operating in the state by 2030. By that point, the ability for EVs to export power back to the grid will likely be more common as bidirectional charging technology becomes more widespread. Many passenger EVs also have export capacity greater than the Powerwalls used in a PG&E pilot, approximately 11.5 kW per Level 2 charger. If California meets its ZEV target, and if even 10% of those batteries are passenger EVs participating in vehicle-to-grid export programs, this would equate to a roughly 5.1 GW resource that would be available for CAISO to dispatch provided its RA rules allowed for exports from distribution-connected resources.

There has been significant effort made by energy storage providers in the CPUC’s Resource Adequacy proceeding to develop Qualifying Capacity (QC) counting rules for exporting BTM energy storage. However, the inability to receive credits for exported energy is a major barrier - or even the primary barrier - to BTM energy storage participating in Resource Adequacy.  If a market product that compensates exporting BTM energy storage can be created in the CAISO market, then recognition by the CPUC as a Resource Adequacy product (like the PDR and Reliability Demand Response Resource (RDRR)) would likely follow. Establishing an “mPDR” product would constitute a substantial step forward in the ability for BTM battery exports to be credited in RA, bringing substantial new capacity into the market today and in the future.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are presently no regulatory requirements for the implementation date of this proposal. However, there is considerable urgency to start implementation given the continuance of California’s capacity shortage, expected rapid growth of BTM battery and EV sales in California, and multiple steps downstream of finalizing an mPDR proposal, such as incorporating in the year-ahead Net Qualifying Capacity process.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The submitting parties are not aware of any data requirements for this issue and solution set.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Maximum Import Capability (MIC) Enhancements.

2. Has this issue been previously submitted?

No.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Load-serving entities (LSE) are facing challenges in contracting out-of-state (OOS) resources for Integrated Resource Planning (IRP) and Resource Adequacy (RA) because of a lack of availability of MIC at present and uncertainty around the availability of MIC in future. California is facing ongoing tightness in the RA market, especially in light of competition for capacity from OOS entities. As a result, California depends critically on contracted import capacity to maintain reliability. This is demonstrated by data provided by the California Independent System Operator Corporation (CAISO) on January 12, 2024, informing sources of RA and showings for LSEs in the CAISO balancing authority area (BAA) over the last five years. The data, when combined with the Net Qualifying Capacity (NQC) lists over the same five-year period, depict an RA requirement that has grown more import-dependent (See Table 1).

Table 1 – Amount of RA Requirement Not Covered by CAISO Connected NQC[1]

This trend is likely to continue in the coming years. The California Public Utilities Commission’s (CPUC) recently adopted Preferred System Plan (PSP), a resource planning tool that informs new capacity that will be built to support reliability requirements, includes over 7 gigawatts of new OOS wind by 2035.[2] These OOS wind resources will require MIC to count towards LSEs’ RA and IRP obligations. Therefore, uncertainty around whether MIC will be available to support these projects is a barrier to LSEs moving forward with Power Purchase Agreements (PPA) for OOS projects.  Enhancements in the efficiency of MIC allocations and increasing the availability of MIC should help make import capacity more available to meet RA and IRP requirements. 

Specific concerns around the MIC calculation and allocation process include:

• The availability of MIC, in part because of the amount of MIC overall and in part because of the locking in of MIC to LSEs who do not use it.
• Inability for LSEs to lock in MIC long-term to support long-term RA contracts or PPAs with resources with online dates multiple years into the future.
• Lack of transparency into the MIC process regarding how MIC will expand in future years to align with the PSP, non-CPUC jurisdictional local regulatory authority (LRA) procurement policies, and MIC expansion requests.

Inability to use the same MIC for two resources that will not be shown simultaneously (e.g., two battery storage resources shown under slice-of-day (SOD) where one is shown in the morning and the other is shown in the evening, or for showing solar resources during the day and wind in the nighttime hours).

[1]             If the amount of resources not covered by CAISO connected resources is negative (in parenthesis), then the RA requirements could have been met entirely by resources internal to the CAISO BAA. If the amount of resources not covered by CAISO connected resources is positive, then CAISO LSEs must secure imports up to the amount shown in the table, assuming all CAISO connected resources are also secured for CAISO RA requirements, in order to meet aggregate RA requirements.

[2]             D.24-02-047, Decision Adopting 2023 Preferred System Plan and Related Matters, and Addressing Two Petitions for Modification, R.20-05-003 (Feb. 20, 2024): https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M525/K918/525918033.PDF.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The CAISO should create a new initiative exploring the MIC calculation and allocation methodology. This initiative would be a follow-on to the generator deliverability initiative, which explored ways to increase deliverability of internal generation while balancing reliability and cost containment considerations. Proposals that may be raised in such an initiative may include, but not be limited to:

• A process to allocate MIC on a multi-year going forward basis to accommodate LSEs with long term contracts, as opposed to only allowing multi-year MIC the year prior to resource COD.
• A mechanism to make unused MIC better available to LSEs rather than creating a marketable right that requires cumbersome bi-lateral trading to obtain. The current process allows LSEs to hold MIC that otherwise could be used to support imports.
• Evaluation of an hourly or block MIC system to align better with the CPUC’s SOD RA rules and to allow MIC allocated for solar to be used by other resources in non-solar hours. 

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This initiative supports strategic objective 2, “Strengthen resource adequacy and meet California’s SB 100 goals through long-term transmission planning and effective coordination with state agencies.” As described in response to question 3, the ability to meet near-term RA requirements and long-term renewable integration goals necessitates access to imports. Those imports must be deliverable to support reliable operations of the CAISO grid.

Numerous parties are potentially impacted by a MIC Enhancements initiative. LSEs are the most directly impacted parties, as they are the ones contracting for new and existing resources to meet their various compliance obligations. Resource owners and developers outside of the state are also impacted, as their ability to sign contracts and PPAs with LSEs depends in part on the LSE’s level of certainty that it will have a MIC allocation to support such capacity. Finally, California electricity customers are impacted as it is in their best interest from a reliability and affordability perspective to have access to resources at least cost to reliably operate the grid.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This initiative should be addressed urgently. CalCCA stack analyses show that estimated RA supply will be insufficient to meet RA requirements in 2024 and 2025, and the market will continue to be tight in 2026.[1] Imports are one of the few options to increase the supply stack in such a short timeframe, and the ability to obtain the MIC necessary to support those imports could make the difference between having enough RA supply to meet reliability targets and coming up short. LSEs are also contracting to meet IRP requirements, including the mid-term reliability requirements with delivery dates between now and 2028, and their own IRPs which plan procurement out to 2035. Non-CPUC jurisdictional LSEs are likewise actively engaged in planning and procurement to meet long-term needs. In fact, some OOS projects are currently in the process of contracting to provide capacity to California but the lack of available MIC is hampering those efforts even today. The CAISO should urgently begin a MIC Enhancements initiative to ensure the reliable delivery of supply now and in the future.

[1]             Public Version California Community Choice Association’s Comments on Assigned Commissioner’s Scoping Memo and Ruling, R.23-10-011 (Jan. 19, 2024), Exhibit A: https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M524/K571/524571013.PDF.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The CAISO already posts in a Yes/No format whether each LSE used its MIC allocation by branch group. This data shows many branch groups with unused MIC, but does not reveal the magnitude of unused MIC at each location. To take this analysis further, the CAISO should aggregate and publish data showing total megawatts (MW) of unused MIC by branch group. If a significant amount of MWs went unused at valuable branch groups, we can assume that the allocation process needs enhancements to ensure there is MIC available in the right location to LSEs that need it without too many transactional barriers. If there is not a significant amount of MWs unused at valuable branch groups, we can assume that the overall availability of MIC is at issue, and we should focus our efforts on how to expand the total MIC available to LSEs. Transparency into this data is a necessary first step in this process so that the CAISO and parties can develop proposals specific to needs identified by the data.

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Accurate Modeling of Storage at High/Low States of Charge 

2. Has this issue been previously submitted?

REV Renewables (as LS Power) has raised this issue in the Energy Storage Enhancements initiative previously.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Storage resources at very high and low states of charge (SOC) have different ability to charge or discharge at the full power rate. As storage is a growing portion of the CAISO resource portfolio, it is critical that CAISO have a way to model these SOC charge/discharge rates in order to understand the full energy capabilities of the system, especially during times of grid stress. If CAISO does not fix this issue, at best it will continue to create CAISO and resource operator frustration with infeasible dispatch signals. However, at worst if this is not addressed it could create reliability concerns if CAISO is assuming that more power is available from storage than is actually able to be delivered to the grid at that specific time.

For lithium-ion batteries, available power changes as a function of SOC. As SOC approaches 100%, charging power rate begins to taper off as individual battery cells reach their high voltage limits before the rest and turn off in order to respect the limitation. AS SOC approaches 0%, discharging power rate begins to taper off as individual battery cells reach their low voltage limits before they rest and turn off in order to respect the limitation. This changing capability at very high and low SOC is commonly referred to “foldback.” However, the ISO’s Non-Generator Resource (NGR) model and Master File does not have the parameters to model this charging/discharging power rate change, which results in ISO operators not having an accurate view of the system when the fleet of NGRs are at very low or high SOC.

This storage charge/discharge power rate change is very similar to thermal generators ramp rate. Just as thermal generators have parameters in their Master File to account for ramp rates, storage resources need the ability to set parameters where these charging/discharging rates change for the resource and provide those to CAISO to include in the models.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Review the NGR model and more accurately model power charge/discharge rates at low and high SOC, which could include at minimum setting parameters in blocks of SOC. For example, 10-90% SOC could be at full power, and less than 10% and more than 90% SOC could be at a slightly different power.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objectives 1 and 3

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

REV recommends addressing this issue as soon as the software changes and new input parameters can be added to the model. On an extreme weather day, CAISO could experience reliability impacts from not being able to accurately model and understand the power rate of the entire 7+GW BESS fleet. These consequences grow larger as the storage fleet size grows and is more critical for meeting net peak reliability needs.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The charts below show real life examples of how the charging power rate changes in a 250 MW/250MWh battery system. The battery is able to charge at the full 250 MW power up until about 88% SOC and then can only charge at lower power levels until it reaches 100% SOC. An analogous change happens when discharging at rates <10% SOC.

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Transmission Capability Estimates Whitepaper – Increased Transparency

2. Has this issue been previously submitted?

 No

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Establish a stakeholder process to support the development of the transmission capability estimates whitepaper.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The Transmission Capability Estimates Whitepaper has become an integral part of the resource and transmission planning processes in California.  It provides key inputs into the CPUC’s resource planning models that limits the amount of resources that can be selected in transmission-constrained areas.  The whitepaper includes cost and timing estimates for conceptual transmission upgrades and the resulting increase in transmission capability.  This information is critical because it provides stakeholders with insights into where future resources might find access to increased transmission capacity. 

The current process for developing the whitepaper is not transparent.  CAISO posts the completed whitepaper on its website after transmitting it to the CPUC.  There is no established timetable for the posting nor any opportunity for stakeholder engagement.  LSA proposes that CAISO should establish the following stakeholder process to increase transparency:

1. CAISO posts a draft Transmission Capability Estimates Whitepaper
2. CAISO holds a stakeholder call to present the draft whitepaper.  This should be timed to coincide with the CPUC’s Modeling Advisory Group (MAG) discussion of inputs and assumptions for the IRP, which usually occurs in the summer before LSEs must submit their individual resource plans.  Ideally CAISO’s presentation is part of the CPUC’s MAG meeting on inputs and assumptions. 
3. CAISO accepts one round of stakeholder comments
4. CAISO posts the final whitepaper and transmits it to the CPUC for use in the IRP process

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

One of CAISO’s strategic objectives is to “strengthen resource adequacy and meet California’s SB 100 goals through long-term transmission planning and effective coordination with state agencies.”  Creating a stakeholder process around the development of the Transmission Capability Estimates Whitepaper supports this objective by establishing a predictable and transparent timeframe for both market participants and state agencies and increasing stakeholder knowledge about where to focus resource development efforts. 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The next IRP cycle will likely kick off in the summer of 2024 with a MAG discussion of inputs and assumptions for the 2024/25 cycle.  This would be the ideal time to incorporate a presentation on the CAISO’s Transmission Capability Estimates Whitepaper.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Creating a stakeholder process requires no additional data.  The only change to the process of developing the whitepaper would be the posting of a draft and an opportunity for stakeholder engagement to increase understanding of the content.

8. Submission Title

Second entry provide responses to questions 8-14.

FERC Compliance Filings – Increased Transparency

9. Has this issue been previously submitted?

 No.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Establish a stakeholder process to support the development of FERC filings.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative is designed to establish a process by which CAISO provides draft FERC compliance filings for stakeholder review.  The scope should include discussion of:

1. The appropriate cadence for drafts and stakeholder calls (should CAISO provide one or multiple drafts); and
2. The process for stakeholder feedback (only verbal feedback during stakeholder calls or written feedback); and
3. How to proceed with FERC deadlines do not provide enough time for stakeholder feedback prior to filing.   

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

CAISO does not typically invite stakeholder participation in the development of FERC compliance filings.  However, decisions on how CAISO interprets and intends to implement FERC rules can significantly impact market participants. For example, in response to FERC order 23, CAISO will submit a compliance filing that will provide details regarding new financial security and site control obligations.  These details will impact major commercial decisions that market participants will make as they determine where to focus the project development efforts.  Although CAISO has provided some information about what it intends to submit to FERC through the Interconnection Process Enhancements initiative, stakeholders ultimately will not see final language until CAISO submits its compliance filing to FERC. 

LSA is not aware of any policy reasons why CAISO cannot provide an opportunity for stakeholders to review and participate in the development of FERC filings.  As mentioned above, there may be times when FERC’s schedule does not provide enough time for stakeholder feedback, but when there is sufficient time, stakeholders would benefit from an opportunity to engage.  Increased transparency for FERC filings will ultimately benefit CAISO by creating a more aware and engaged market that responds more effectively to the new requirements.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Ideally, CAISO would be able to implement a stakeholder engagement process for the FERC Order 2023 compliance filing.  However, at this point there is not enough time to establish a new stakeholder engagement process for that filing.  LSA recommends that CAISO work to establish this process ahead of any upcoming significant FERC compliance filings.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Creating a stakeholder process requires no additional data.  The only change to the process of developing FERC compliance filings would be the posting of a draft (or drafts) and an opportunity for stakeholder engagement to increase understanding of the content.

15. Submission Title

Third entry provide responses to questions 15-21.

Variable Energy Resources Providing Ancillary Services

16. Has this issue been previously submitted?

 Yes

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

IRP forecasts show that the volume of volume of intermittent resources is expected to increase dramatically over the next 10 years.  As the resource portfolio shifts, it will be more important for CAISO to access as much operational flexibility.  However, current CAISO ancillary service practices are not designed to support variable resources.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative would explore potential refinements to its ancillary services rules to facilitate greater participation by intermittent resources in its ancillary services markets. The initiative would also explore how the ISO’s market systems and forecasting practices can accommodate greater participation by intermittent resources in its ancillary services markets. 

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposal supports CAISO’s number 1 strategic objective, which is to “reliably and efficiently integrate new resources by proactively upgrading operational capabilities.” 

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This issue will become more urgent as resources continue to be added to the grid but does not have a specific time-sensitive reliability impact. 

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

To support this initiative, CAISO could provide data on the participation and performance of current variable resources participating in the ancillary service market.  This would allow stakeholders to determine where problems exist and target solutions to facilitate additional variable resource participation.   

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Allow Multi-Stage Generating (“MSG”) units to be used within an Aggregate Capability Constraint (“ACC”).

2. Has this issue been previously submitted?

No, not as a policy initiative, though Middle River Power LLC (“MRP”) has discussed this issue with CAISO Subject Matter Experts. 

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

When the CAISO first implemented the ACC, it proposed, and FERC accepted, that several resource types could not be used within an ACC, including Multi-Stage Generators, Pumped Storage Hydro Units.^[1]  The CAISO explained that “…[t]hese resource types have yet to express an interest in using an aggregate capability constraint in the CAISO’s stakeholder initiative, and there are very few, if any, of each type in the CAISO interconnection queue.”^[2]  The CAISO further explained that “Expanding the aggregate capability constraint to these resource types would create significant additional complexity in implementing the constraint this year. Until the CAISO has sufficient operational experience with the aggregate capability constraint, the CAISO believes good utility practice supports the proposed incremental implementation approach.”[3]

Three years, later, when the CAISO implemented Phase 2 of its Hybrid Resource initiative, which provided for additional sub-aggregate capability constraints, it proposed, and again, FERC accepted, to allow Pseudo-Tied Resources within an ACC.[4]  The CAISO did not propose to any other of the resources previously excluded from using an ACC to use the ACC. 

MRP owns and operates a combined cycle generating unit that shares an interconnection with renewable and battery energy storage system (“BESS”) resources.  CAISO Tariff Section 27.8.1 compels MRP to register and operate this unit as an MSG resource, which, under current rules, forbids MRP from applying an ACC to these resources.  Allowing these resources to operate under an ACC would allow these resources to be used more efficiently and effectively.  MRP cannot do so, however, because, nearly four years after implementing the ACC, the CAISO still does not allow MSG resources to be operated within an ACC.  MRP therefore proposes that, now that the CAISO has sufficient operating experience with the ACC model, the CAISO undertake a stakeholder process to allow other resource types, including MSG units, to be operated within an ACC, just as it expanded the use of an ACC to Pseudo-Tied Resources in Hybrid Resource Phase 2. 

[1] ER20-2890 Transmittal Letter at page 9, proposed CAISO Tariff Section 27.13.

[2] Id.

[3] Id.

[4] Transmittal Letter to ER23-2357 at pages 2-3 and proposed amendments to CAISO Tariff Section 27.13. 

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

MRP proposes that the CAISO undertake a stakeholder process to allow other resource types, including MSG units, to be used within an ACC.   

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

As noted above, MRP is – and its three units with a combined output of over 1 GW are - impacted by the CAISO not allowing MSG units within an ACC. MRP does not know what other market participants, and how many MW in total, are affected by this limitation; that data lies with the CAISO.  

MRP understands that there are other generating resources within the CAISO that adopted the MSG model to facilitate efficient market operation of those resources, but which are now considering or in the process of moving away from the MSG model because the MSG model prevents those resources from operating under an ACC.  While disaggregating such resources may not be optimal from a market operation standpoint, it may the only viable option given the prohibition on using MSG resources within an ACC.  The current push to build out battery energy storage systems and  the challenges of interconnecting new resources at new sites through the CAISO’s over-burdened interconnection process reinforces the need to address this limitation to make better use of existing interconnection capacity.

This proposed initiative is supported by several of the CAISO’s critical strategic and tactical objectives,[1] including:

1. Reliably and efficiently integrate new resources by proactively upgrading operational capabilities.   The efficient combined operation of these three resources is hampered by the current limitation on the use of the ACC. 

4. Provide highly responsive and inclusive stakeholder engagement and customer service.  As noted above, MRP has discussed this limitation with CAISO SMEs but, four years after the implementation of the ACC, the CAISO has yet to resolve this limitation. 

[1] CAISO Strategic Plan 2022-2026 at page 4.  This document is available at https://www.caiso.com/Documents/2022-2026-Strategic-Plan.pdf. 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are no regulatory requirements.  Given that certain resources must register as MSG resources, the consequence of not addressing this issue is that MRP – and potentially other market participants – cannot optimize the use of those and other resources behind a single interconnection constraint, depriving them and the CAISO market of the efficient use of resources, and hindering the deployment of certain resources (battery energy storage) that would use existing interconnection capability.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

As noted above, MRP does not know what other market participants, and how many MW in total, are affected by this limitation; that data lies with the CAISO.  

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Hydrogen Electrolyzer Market Participation

2. Has this issue been previously submitted?

No.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Initiative to develop market rules that would apply to the use of hydrogen electroyzer technology to support grid reliability, including hydrogen electroyzer technolgy as energy storage when pair with other generation technologies, and as dispatchable demand when operated independently.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The focus of this initiative would be to develop new market rules that will enable hydrogen electrolyzer technology to participate in the CAISO markets, factoring in the unique operating charateristics of hydrogen electrolyzers.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Hydrogen technology will be a critical tool that can be used to support system reliability in the future, and will support Califonia's environmental goals.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

As this new technology continues to advance and grow, understanding how this technology will participate in the market will be important.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

No comment at this time.

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Gas Management

NV Energy appreciates the opportunity to comment on the 2024 policy initiative catalog. As discussed below, NV Energy recommends that the CAISO should expedite and conduct a stakeholder initiative for the problem statements that have been developed in the gas management workgroup to ensure that EIM and potential EDAM participating Entities have sufficient tools to manage gas constraints.

2. Has this issue been previously submitted?

The gas management working group has developed 11 problem statements that encompass the major issues that have been identified with a participant’s ability to manage gas nominations while participating in the CAISO wholesale market. A couple of the problem statements are covered in the CAISO policy catalog like 6.1.9 Use Limit and Opportunity Cost Enhancements, however, a majority that have been identified have not made it into the Catalog. CAISO should include all problem statements in the catalog and conduct a stakeholder initiative in 2024 to resolve the problem statements identified in the working group.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Problem statement 1: Participants do not have enough certainty in the accuracy of 2 day ahead advisory awards and forecasts to confidently utilize this information as a procurement target for gas in the more liquid timely nomination cycle.

Problem statement 2: Because the Electric Day-Ahead results are not published until 1pm during Gas Day 1, participants do not have sufficient information about their own dispatch schedules to make confident and risk-informed gas procurement decisions (7am day ahead) to support those market schedules.

Problem statement 3: During episodes of natural gas system constraints and volatility, especially when participants are issued OFOs, generators encounter difficulties in representing their costs within the Energy Market because bid caps may be too restrictive and there may be a higher likelihood of being mitigated down.

Problem statement 4: The reference level change request processes are too burdensome because the automated process can only be submitted for one resource at a time, and the 8am deadline to submit a change request through the manual process conflicts with other trading activities. These restrictions limit their intended usefulness for cost recovery. 

Problem statement 5: The current Default Commitment Costs and Default Energy Bids limit generators from reflecting actual gas costs.

Problem statement 6: The reasonableness thresholds used to assess automated reference level change requests are too low given the increasing volatility in today’s gas market.

Problem statement 7: Heat rates used for reference level calculations do not account for greater heat rate variation from larger temperature ranges in diverse western climates.

Problem statement 8: Energy markets do not reflect the appropriate gas day’s cost that are used in Default Commitment Cost and Default Energy Bid formulation for HE1 through HE7 despite the fact that this cost information is available.

Problem statement 9: Generators are unable to reflect accurate costs in the market due to a limitation on the number of gas hubs that can be reflected in the calculation of their reference levels.

Problem statement 10: Use-limited registration criteria does not explicitly recognize certain reliability-based limitations of gas resources in a balancing area and as a result, renders resources ineligible for the opportunity cost calculation.

Problem statement 11: Gas burn limitations are not reflected in the market for WEIM balancing areas, which may lead to inaccurate or infeasible unit commitment or dispatch instructions.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The market initiative scope should encompass all areas that impact gas management. For instance, this initiative scope should cover market bidding methodology, market mitigation, market timelines, and any necessary analysis or reporting that is identified as a solution.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The gas management issues have been ongoing for the Desert Southwest region in the EIM.  These issues need resolution for the EIM as well as for participants that are considering the possibility of joining the Day Ahead Market.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

The gas management issues are the top priority for NV Energy and should be addressed in a stakeholder initiative beginning in 2024. As stated earlier, these issues have been ongoing in the EIM and should not be pushed off any further.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

N/A

8. Submission Title

Second entry provide responses to questions 8-14.

Demand Response and Resource Sufficiency Evaluation

NV Energy is supportive of an additional EIM demand response item to be added to the catalog. Demand response will become even more important in the future and CAISO should consider adding specific enhancements to the proxy demand response that are needed for EIM Entities. Additionally, NV Energy is supportive of adding in an additional catalog item to evaluate and consider a higher de minimis tolerance band that was established for the Resource Sufficiency Evaluation.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

PacifiCorp provides all initiative proposals within the first submission which includes the following:

• Proxy Demand Response Enhancements
• Gas Resource Management Enhancements
• Scarcity Pricing Enhancements
• BAA-level Market Power Mitigation
• De Minimis Tolerance Band Enhancements for WEIM
• Beyond Price-Based GHG Policy

2. Has this issue been previously submitted?

PacifiCorp has not previously submitted any of the proposed initiatives in the past. 

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Proxy Demand Response Program Enhancements
In December 2020, PacifiCorp presented lessons learned from a nearly year-long process of attempting to register one or more demand response programs as a Proxy Demand Response (PDR). While our findings at the time were largely focused on PacifiCorp’s 200MW Irrigatiator DR program, our findings indicated at that time that specific for irrigation programs, the CAISO’s available baseline methodologies did not perform well and more generally, that the PDR process was incredibly cumbersome for non-CAISO entities. At the time, CAISO commented on proxy demand response programs being designed primarily for California market participants and that a holistic refresh of the PDR would be needed. Demand response programs have been shown to be a valuable resource for the ISO BAA in times of tight system conditions. Many entities outside of California, including PacifiCorp, are in the process of expanding their demand response resource fleets. The PDR program is the key opportunity for WEIM entities to register programs to allow for market participation. PacifiCorp requests the CAISO open a stakeholder process for proxy demand response programs with the goal of creating a refreshed offering that anticipates and integrates the needs of all WEIM and future EDAM entities. While having the CAISO develop and add an appropriate methodology for irrigation programs is a key priority for PacifiCorp, given the age of the underlying baseline methodology study and the fact that it only included demand response programs in California, PacifiCorp requests that in preparation of the stakeholder process, the CAISO complete a comprehensive baseline methodology update. Additionally, the stakeholder process should also include gathering data on existing and planned demand response programs across the WEIM footprint along with information regarding customary metering infrastructure among non-California based WEIM entities. While PacifiCorp is aware that the CAISO developed a work around using a load forecast adjustment, developing a PDR program that allows all market participants to equally participate in the market is preferred.  As more non-California entities join EDAM and extreme weather conditions continue to challenge local BAAs and the entire footprint, the issue will only be exacerbated. The inability to utilize our demand response programs creates difficulty in planning long term to bring additional demand response programs of this nature in the future. 
 

Gas Resource Management Enhancements
PacifiCorp requests the CAISO create a stakeholder initiative that addresses the problem statements identified within the gas resource management working group. During the EDAM design phase, a number of the issues brought forth in that venue were discussed within the gas resource management working group thus far along with additional complex issues. PacifiCorp is pleased with the momentum and coordination to dive into these difficult topics and notes that as more market participants join EDAM, the market will need to accommodate market participants with primarily high generation fleets of gas resources by creating guardrails for managing gas usage so stakeholders can recover their operational costs and manage burn limitations. 
 

Scarcity Pricing Enhancements
The Price Formation Enhancements working group has developed problem statements related to scarcity pricing that are currently impacting the WEIM. In the working group, there have been robust discussions on the lack of scarcity pricing mechanisms for the WEIM, which may be leading to inefficient price signals during times of supply shortages. By improving price signals during times of supply scarcity, the WEIM will be able to access all the capacity available to the market, adequately incentivize performance, and increase price certainty for future investments. The working group has also developed problem statements related to out-of-market actions by operators that impact price formation during times of supply scarcity. While operators performing out-of-market actions is a method primarily used to maintain system reliability during emergency conditions, these actions can sometimes have adverse effects on price formation that lead to market prices that disincentivize desired market participant behavior. PacifiCorp believes the Price Formation Enhancement working group will be ready to move to a full initiative in 2024 to address the problem statements related to scarcity pricing and out-of-market actions impacts to price formation.  
 

BAA-Level Market Power Mitigation Enhancements
As part of the Price Formation Enhancement working group, stakeholders have been discussing how BAA-level market power mitigation (MPM) is used in the WEIM and how it will be used in the EDAM. As a potential enhancement, the CAISO presented on the grouping methodology that was introduced as part of the EDAM design. PacifiCorp believes there are enhancements that can be made to the BAA-level MPM that will reduce occurrences of the market mitigating resource bids when there isn’t a risk to exert market power. The current BAA-level MPM mechanism assumes that BAAs should be tested for MPM when they are import constrained from the CAISO and while this was a reasonable assumption when the WEIM had a few members, the increase in WEIM participants has led to more supply outside of the CAISO that can be used to competitively supply the market. As such, PacifiCorp believes the problem statements related to BAA-level MPM developed in the Price Formation Enhancements working group should be moved into a full initiative. 
 

De Minimis Tolerance Band Enhancements for WEIM
PacifiCorp supports Idaho Power’s stakeholder initiative proposal to create a de minimis tolerance band for the WEIM akin to the tier 1 failure consequences in the EDAM design. PacifiCorp agrees that if a WEIM participant fails its resource sufficiency evaluation by 10 MW or less, the entity should not outright fail the entire test. Small failure quantities do not result in reliability issues and can likely be cured after the test has been completed. The CAISO should consider their proposal and create a stakeholder initiative to extend the EDAM design to the WEIM immediately. 
 

Beyond Price-Based GHG Policy
The CAISO has dedicated to further exploring the GHG design as a future EDAM enhancement within the GHG coordination working group. PacifiCorp highlights a specific problem statement brought forth by the stakeholders entitled Beyond Price-Based GHG Policy. The problem statement relates to the market's inability to account for GHG emissions reduction programs that have a declining cap, rather than a price component, and therefore cannot be included in the market optimization. Currently in an organized market, it is unclear how BAAs subject to state policies with declining emissions targets will have their load served while also maintaining compliance with those programs. PacifiCorp believes creating a focused initiative for this issue is prudent and will provide stakeholders comfort for deciding on EDAM participation. 

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Proxy Demand Response Program Enhancements 
The scope of this initiative is to conduct a holistic refresh of proxy demand response programs and update the baseline methodologies to integrate demand response programs for non-California entities.  
 

Gas Resource Management Enhancements 
The scope of this initiative is to address problem statements identified in the working group related to the two day-ahead advisory, reference level costs, and gas burn limitations.   
 

Scarcity Pricing Enhancements 
The scope of this initiative is to address the potential inefficiencies of price formation in the WEIM during times of supply scarcity. The initiative will also address challenges with price formation due to out-of-market actions by operators. 
 

BAA-Level Market Power Mitigation Enhancements 
The scope of this initiative is to improve BAA-level market power mitigation for the WEIM and EDAM. The improvement should lead to the market optimization less frequently mitigating resources that do not have the ability to exert market power.  
 

De Minimis Tolerance Band Enhancements for WEIM 
The scope of this initiative is to create less WEIM resource sufficiency evaluation failures for small failure quantities of 10 MW or less by instilling a de minimis tolerance band. 
 

Beyond Price-Based GHG Policy
The scope of this initiative is to create a market mechanism where states with non-price based GHG compliance programs will have the ability to reach their emissions targets while participating in an organized market. 

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The proposed initiatives relate to critical strategic and tactical objective 1 reliability and efficiently integrate new resources by proactively upgrading operational capabilities and objective 3 build on the foundation of the Western Energy Imbalance Market to further expand Western Market Opportunities. It is important the market continues to grow and enhance alongside the needs of its market participants. Many, if not all market participants, are impacted by all proposed initiatives either currently or in the future. PacifiCorp believes examination of the proposed initiatives will create a well-balanced market across the entire WEIM and EDAM footprints and increase market participation with those solutions. 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

PacifiCorp believes the proxy demand response program enhancements, gas resource management enhancements, and beyond price-based GHG policy initiative are highly essential for EDAM participation and believe a January 2027 implementation, at a minimum, is needed. These issues may be more challenging to create solutions for but are critical for adequate market participation and starting a stakeholder initiative as soon as feasible is needed due to the EDAM interaction. The de minimis tolerance band enhancements for WEIM will likely be able to be implemented by the start of 2025. PacifiCorp recognizes scarcity pricing and BAA-level MPM proposed initiatives may require more time to garner common ground from the stakeholder community and believe 2028 would be an appropriate implementation year due to those realities. 

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Proxy Demand Response Program Enhancements
To conduct a complete comprehensive refresh of PDR programs, the CAISO will need to gather existing data from current and future planned DR programs, and metering infrastructures of non-California entities when re-designing baseline methodologies. 
 

Gas Resource Management Enhancements
For discussions on the two day-ahead advisory, PacifiCorp requests the CAISO show how accurate the advisory would be using the inputs the CAISO is currently receiving from market participants. In this potential initiative, it will be important for stakeholders to understand what they will be required to submit to the CAISO to receive a useful two day-ahead advisory schedule.   
 

Scarcity Pricing Enhancements
PacifiCorp requests the CAISO to show the amount of supply that was not dispatched as energy during the July 2023 heatwave. One of the main motivations for gradually increasing energy prices as supply dwindles is to incentivize supply to participate in the market. However, PacifiCorp seeks more information from the CAISO on how much supply is actually available to the market during times of supply scarcity.  

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Attached

2. Has this issue been previously submitted?

Attached

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Attached

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Attached

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Attached

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Attached

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Attached

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Proxy demand response enhancements

2. Has this issue been previously submitted?

 Portland General Electric (PGE) has not yet submitted this initiative.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

PGE supports PacifiCorp’s stakeholder initiative proposal to create a proxy demand response enhancement. Demand response programs are a valuable resource for the ISO BAA in times of tight system conditions. PGE, along with many entities outside of California, is expanding its demand response resource fleets which will include energy storage and other behind-the-meter resources such as electric vehicle charging. The PDR program would allow WEIM entities to register these resources and participate in the market. PGE requests the CAISO to open a stakeholder process for proxy demand response programs with the goal of creating a refreshed offering that anticipates and integrates the needs of all WEIM and future EDAM entities. The stakeholder process should include gathering data on existing and planned demand response programs across the WEIM footprint along with information regarding customary metering infrastructure among non-California based WEIM entities. In addition, it may also be beneficial for the CAISO to complete a comprehensive baseline methodology update in anticipation of the stakeholder process. Demand response resources provide benefits to BAAs and as grid experiences increased frequency of contingency events, having the ability to call upon these resources in the market will become beneficial for the region.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The scope of this initiative is to conduct a holistic refresh of proxy demand response programs and update the baseline methodologies to integrate demand response programs for non-California entities.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The proposed initiatives relate to critical strategic and tactical objective 1 reliability and efficiently integrate new resources by proactively upgrading operational capabilities and objective 3 build on the foundation of the Western Energy Imbalance Market to further expand Western Market Opportunities. It is important the market continues to grow and enhance alongside the needs of its market participants. Many, if not all market participants, are impacted by this initiative either currently or in the future. This also includes WRAP participants the WRAP is allowing for the accounting of demand response programs in the demonstration of resource sufficiency as either a qualifying capacity resource or a load reduction capability. It would be prudent to ensure that the demand response capability is represented across the footprint in a way that ensures harmony and avoids mis-representation of an entities’ capability in the market versus the obligation a participant faces in the WRAP.  Examination of the proposed initiative will create a well-balanced market across the WEIM EDAM, and WRAP footprints and increase market participation with those solutions.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Based on the timing of projects coming online, PGE needs a resolution prior to 2030.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

To conduct a complete comprehensive refresh of proxy demand response programs, the CAISO will need to gather existing data from current and future planned demand response programs, and metering infrastructures of non-California entities when re-designing baseline methodologies.

8. Submission Title

Second entry provide responses to questions 8-14.

Energy storage enhancements

9. Has this issue been previously submitted?

PGE has not yet submitted this initiative.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The region, including PGE, is seeing increasing amounts of energy storage resources coming online in the coming years. For PGE, these resources are not only on the transmission system, but also on the distribution system either behind-the-meter or interconnected with PGE facilities. These are customer and PGE owned. These resources are valuable to the market with appropriate market design in place. The initiative would address differentiating market requirements between resources inside the ISO BAA and external resources. In addition, the CAISO simplifying the initial setup and operations to participate these resources in the WEIM, EDAM, or as an external CAISO BAA.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The scope of this initiative would focus on differentiating the market requirements from internal to the CAISO BAA and external resources. In addition, the CAISO simplifying the initial setup and operations to participate these resources in the WEIM, EDAM, or as an external CAISO BAA.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

See response to number 5.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

PGE expects the first wave of storage resources to come online in 2024; therefore, if the right market mechanisms are not in place, these resources risk excessive cycling in exceedance of warranty agreements. PGE sees potential risks of under/over-utilization of ancillary services if controls are not defined and simplified for managing Battery Energy Storage Systems with state of charge requirements correctly captured in ISO market designs.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

Price formation: scarcity pricing enhancements, BAA-level market power mitigation

16. Has this issue been previously submitted?

PGE has not yet submitted this initiative.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The Price Formation Enhancements working group has been discussing both scarcity pricing and BAA-level market power mitigation (MPM). PGE supports PacifiCorp’s recommendation to move both of these into a formal stakeholder initiative process.

The working group has developed problem statements related to scarcity pricing that are currently impacting the WEIM. In the working group, there have been robust discussions on the lack of scarcity pricing mechanisms for the WEIM, which may be leading to inefficient price signals during times of supply shortages. By improving price signals during times of supply scarcity, the WEIM will be able to access all the capacity available to the market, adequately incentivize performance, and increase price certainty for future investments. The working group has also developed problem statements related to out-of-market actions by operators that impact price formation during times of supply scarcity. Operators use out-of-market actions to maintain system reliability during emergency conditions. These actions can sometimes have adverse effects on price formation that lead to market prices that disincentivize desired market participant behavior. PGE would also like to include default bids for hydro resources and address the opportunity cost incurred when hydro resources operate during periods with high market prices exceeding the Western Electricity Coordinating Council (WECC) price cap for bid cost recovery. Currently, hydro resources in CAISO markets submit their own energy bids and are limited to the WECC $1000 price cap. This does not allow for times when physical ponds need to be refilled without issuing an outage. The Price Formation Enhancement working group should be ready to move to a full initiative in 2024 to address the problem statements related to scarcity pricing and out-of-market actions impacts to price formation. Therefore, PGE is including this initiative in its comments to further emphasize the importance of this initiative to the CAISO.

Regarding BAA-level MPM, stakeholders have been discussing how it is used in the WEIM and how it will be used in the EDAM. The CAISO presented on a potential improvement, called the grouping methodology. There are enhancements that can be made to the BAA-level MPM that will reduce the occurrences of the market mitigating resource bids when they do not have the ability to exert market power. The current BAA-level MPM mechanism assumes that BAAs should be tested for MPM when they are import constrained from the CAISO. While this was a reasonable assumption when the WEIM only had a few members, the increase in WEIM participants has led to more supply outside of the CAISO that can be used to competitively supply the market. PGE is supportive of the problem statements related to BAA-level MPM developed in the Price Formation Enhancements working group and recommend that they be moved into a full initiative in 2024.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

For scarcity pricing, the scope of this initiative would be to address the potential inefficiencies of price formation in the WEIM during times when supply is scarce. The initiative should also address challenges with price formation due to out-of-market actions by operators, establishing default energy bids for hydro resources, and the opportunity cost incurred when hydro resources operate during periods with high market prices exceeding the WECC price cap for bid cost recovery.

For BAA-level MPM, the scope of this initiative would be to improve BAA-level MPM for the WEIM and EDAM. The improvement should lead to the market optimization less frequently mitigating resources that do not have the ability to exert market power.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

 See response to number 5.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Considering the connections with the WEIM and EDAM, PGE would recommend this be resolved prior to EDAM go-live.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

One of the main motivations for gradually increasing energy prices as supply dwindles is to incentivize supply to participate in the market. Therefore, PGE requests the CAISO to show the amount of supply that was not dispatched as energy during the July 2023 heatwave to help determine how much supply is actually available to the market during times of supply scarcity.

22. Submission Title

Fourth entry provide responses to questions 22-28.

De Minimis Tolerance Band Enhancements for WEIM

23. Has this issue been previously submitted?

PGE has not yet submitted this initiative.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

PGE supports Idaho Power’s stakeholder initiative proposal to create a de minimis tolerance band for the WEIM akin to the tier 1 failure consequences in the EDAM design. PGE agrees that if a WEIM participant fails its resource sufficiency evaluation by 10 MW or less, the entity should not outright fail the entire test. Small failure quantities do not result in reliability issues and can likely be cured after the test has been completed. The CAISO should consider their proposal and create a stakeholder initiative to extend the EDAM design to the WEIM immediately.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The scope of this initiative is to create less WEIM resource sufficiency evaluation failures for small failure quantities of 10 MW or less by instilling a de minimis tolerance band.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

 See response to number 5.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Implementation by 2025.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

The Public Generating Pool (PGP) is comprised of 9 public utilities serving approximately 1.4 million customers in Washington and Oregon. All nine PGP members own or purchase approximately 8GW of non-federal generating resources, and eight members also purchase approximately 45% of the requirements power sold by the Bonneville Power Administration. Two PGP members are direct participants in the WEIM. PGP members are interested in market development efforts and the Public Generating Pool has jointly published NW Public Power Organized Market Design Principles that guide our priorities and objectives in market policy development.

Continue to prioritize Price Formation Enhancements and related initiatives.

2. Has this issue been previously submitted?

Yes, this item is in the catalog as item 5.4, Price Formation Enhancements. It is in the “Working Group” phase, and may result in multiple initiatives. Currently the discussion also incorporates catalog item 6.1.1.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See issue paper from Price Formation Enhancements Working Group.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See issue paper from Price Formation Enhancements Working Group. Most of these issues impact price formation, bidding parameters/DEBs, Market Power Mitigation, system management and pricing mechanisms under scarce conditions, and potentially system reliability. See Question 3 above for more information.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

PGP would like to see the prioritization of any initiatives that form out of the PFE Working Group, and if this results in limited ability for the CAISO to add discretionary topics, we support this prioritization. Of note, the Scarcity topic could result in multiple discreet initiatives based on the wide range of problem statements and potential solutions already raised within the working group process and still under exploration based recent stakeholder comments. The resolution of the revised problem statements that come from feedback on the scarcity scoping should be prioritized in advance of EDAM go-live. The mechanism to send appropriate, transparent, consistent price signals during tight system conditions is paramount to the success of EDAM and could impact any and all market participants and system reliability. A successful initiative should also focus on further differentiating the market operator function from the CAISOs BA function to enable a level-playing field and fair design while enabling a further reduction of out-of-market actions by the CAISO MO, which is a strategic objective. Similarly, the BAA-level Market Power Mitigation refinements are also necessary for the EDAM to function appropriately, and should also be prioritized to enable and encourage EDAM participation. PGP is also supportive of continued exploration of the concept of introducing fast-start pricing or some other mechanism to ensure appropriate marginal cost signals are available to market participants, particularly flexible resources, and to minimize the use of out of market payments where feasible. Many other initiatives listed are related to these themes.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Price Formation is a critical component of the market design. As regional participants are deciding whether or not to join the EDAM, they must have confidence in the price formation and MPM mechanisms of the market.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The price formation enhancement working group needs to do a deep dive on recent tight system events to seek out and document the use of out of market actions and any price formation impacts that have been experienced recently. This analysis may include FERC 831 triggered price periods and other tight system conditions, and should incorporate the broader WEIM rather than just the ISO to enable deeper discussion of the issues that fall under all of these submitted entries.

8. Submission Title

Second entry provide responses to questions 8-14.

Continue to prioritize Greenhouse Gas Coordination Working Group and related initiatives.

9. Has this issue been previously submitted?

Yes, this item is in the “Working Group” phase as the GHG Coordination Working Group, and may result in multiple initiatives.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

See issue paper from Greenhouse Gas Coordination Working Group

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See issue paper from Greenhouse Gas Coordination Working Group

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The GHG Working Group and any related initiatives do have direct links to the ability for market participants to comply with statutory obligations, and therefore should also be prioritized.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Participants considering joining a market need confidence that they can comply with regulatory obligations and appropriately value and/or attribute the non-energy attributes of their portfolios to the correct loads in the market. This has urgent implications particularly for WA and CA utilities, but any participant likely has the ability to fulfill statutory obligations as minimum requirement for joining a market. The GHG design was an area of outstanding concern and disparate perspectives in the EDAM final design, and the working group needs to continue to progress towards consensus in this area and on related topics.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

As the Working Group progresses towards proposals, support in developing examples may be beneficial, and in the interim the proposed "evergreen trainings" will be a valuable contribution to the process.

15. Submission Title

Third entry provide responses to questions 15-21.

FERC order 831 Implementation solution to opportunity cost-based DEBs when prices/costs exceed the $1000/MWh soft offer cap

16. Has this issue been previously submitted?

It is a broader version of precluded item “Energy Storage Bid Cap Not Aligned with FERC Order 831” because it applies to hydro resources.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The FERC order 831 implementation for opportunity cost-based DEBs issue has been listed as an implementation gap for storage resources that cannot reflect opportunity costs when the offer cap is raised to $2000, but applies more broadly to other opportunity-cost or use-limited resources in the WEIM and potential EDAM, including hydro resources. This item may also include re-visiting the 831 implementation to avoid the extreme volatility and lack of visibility introduced by this trigger mechanism.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This impacts price formation, bidding parameters/DEBs, system management under scarce conditions, and potentially system reliability. See prior question and question 3 for more information.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

If fuel or use-limited resources are dispatched at an inopportune time due to inability to reflect costs it could have price formation and operational/reliability impacts on the broader market, and/or discourage participation from some resources.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

If fuel or use-limited resources are dispatched at an inopportune time due to inability to reflect costs it could have price formation and operational/reliability impacts on the broader market, and/or discourage participation from some resources.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

The price formation enhancement working group needs to do a deep dive on recent tight system events to seek out and document the use of out of market actions and any price formation impacts that have been experienced recently. This analysis may include FERC 831 triggered price periods and other tight system conditions, and should incorporate the broader WEIM rather than just the ISO to enable deeper discussion of the issues that fall under this item. This analysis may indicate broader changes to the 831 Implementation beyond the corrections to the DEB logic.

22. Submission Title

Fourth entry provide responses to questions 22-28.

Use Limit and Opportunity Cost Enhancements

23. Has this issue been previously submitted?

Yes, as catalog item 6.1.9 “Use Limit and Opportunity Cost Enhancements”

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

We are supportive of the issue description in the existing policy catalog for Use Limit and Opportunity Cost Enhancements. As the system relies more on use-limited resources such as hydro and limited-use gas for reliability purposes, these resources must be able to reflect these fuel limitations and true opportunity cost in their Default Energy Bids (DEBs) to avoid dispatching resources at times that may not be appropriate or beneficial to the reliability of the system. Mechanisms to add in additional parameters or conditionals that help to shape the bids and ultimate dispatch of use-limited resources will support confident participation in the market, resulting in system benefits both from a reliability and from a cost-benefit perspective. As noted in the existing catalog, the concept of enabling a portion of these resources to be set aside for ancillary services is also an important component of the design. There may be an opportunity to develop the trading platform suggested under the EDAM Final proposal to support RSE assistance as an additional reference price for consideration in DEBs. This concept and other mechanisms to enhance opportunity cost transparency, fairness across resource types, and appropriate dispatch of use-limited resources should be discussed among stakeholders.  

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This has the potential to impact price formation, bidding parameters/DEBs, system management under scarce conditions, and potentially system reliability. See prior question/existing issue description.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

If fuel or use-limited resources are dispatched at an inopportune time due to inability to reflect costs it could have price formation and operational/reliability impacts on the broader market, and/or discourage participation from some resources.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

If fuel or use-limited resources are dispatched at an inopportune time due to inability to reflect costs it could have price formation and operational/reliability impacts on the broader market, and/or discourage participation from some resources.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

N/A

29. Submission Title

Fifth entry provide responses to questions 29-35.

Working group to begin to explore seams management for future EDAM seams.

30. Has this issue been previously submitted?

No, but the working group to begin to explore seams management for future EDAM seams may incorporate items included in catalog items 6.1.2, 6.1.45, 6.1.46, among other concepts brainstormed in the working group process.

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

As multiple Day-Ahead (DA) markets may be developing in the West, there will likely be a variety of new seams: (1) between Markets+ and the CAISO, EDAM, and EIM footprints, (2) between EDAM and the existing CAISO and EIM footprints, and (3) between EDAM and the bilateral market. These will exist alongside the existing seams between CAISO, the EIM, and the bilateral market.  Stakeholders should come together in a working group process to document potential seams management topics and begin framing potential tools for resolution. PGP has partnered with WPTF to document potential seams topics in the Western Seams Exploration by Energy Strategies and Gridwell Consulting. Of immediate concern is that the lack of economic interchange at the non-CAISO EDAM borders will limit the ability of the EDAM to coordinate market to market interchange with any neighboring market with which it may have a seam. Initiatives that may relate to and could ultimately be prioritized out of a seams working group include Intertie Scheduling Enhancements (6.1.2), Third Party Transmission Contribution (6.2.45), and Bidding Rules on External WEIM Interties (6.2.46), and corresponding issue equivalents for the DA markets,  among other topics. Tools and mechanisms to be explored in the working group include but are not not limited to interface definitions and pricing mechanisms, economic interchange scheduling, firm flow entitlement exchange, coordinated transaction scheduling, and market to market coordination.  

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See prior question.

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Coordination with neighboring markets is critical to realizing market benefits and ensuring reliable operation of CAISO, EDAM, and neighboring systems.

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Coordination with neighboring markets is critical to realizing market benefits and ensuring reliable operation of CAISO, EDAM, and neighboring systems.

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Analysis of recent price events related to seams between the ISO and bilateral markets, and the CAISO and the WEIM would be helpful to articulate solutions sets that could be explored under this working group or under the existing price formation enhancements effort. A summary of new potential seams and changes to the WEIM footprint and seams based on the initial EDAM participation pool and initial Markets+ Phase 2 funders would also help to begin to outline the scope of this topic. 

1. Submission Title

First entry provide responses to questions 1-7.

SMUD Input on Discretionary Policy Initiatives – Distributed Energy Resources for External BAAs; Tolerance Band for WEIM; GHG Policy.

2. Has this issue been previously submitted?

No, SMUD has not previously submitted any of the proposed initiatives in the past

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

1. Distributed Energy Resource Program Enhancements

Extend and harmonize demand response (DR), including distributed energy resources (DERs), both dispatchable as well as load flexibility programs, within WEIM operations (and eventually EDAM).

2. Tolerance Band Enhancements for WEIM

Establish a de minimis tolerance band for failures under the WEIM resource sufficiency evaluation (RSE).

3. GHG Policy Initiative

Develop an initiative to address the CAISO’s standards and methodologies for tracking GHG. 

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

1. Distributed Energy Resource Program Enhancements

The CAISO’s DER program incorporates retail load flexibility/DR and dispatchable resources only within the CAISO footprint. SMUD, as well as other utilities in the WEIM, have DER programs that play an important role in their resource mix.  As these resources continue to grow and scale up, WEIM Entities will rely on DERs to play an increasingly significant part of utility portfolios. Harmonization is needed between WEIM Entities’ DER portfolios and the market operation. If WEIM Entities are utilizing these resources in the planning window, they should be incorporated in the operational window as well. Currently, there is no CAISO market mechanism to incent DERs in external Balancing Authority Areas. This creates uncertainty and difficulty in SMUD’s (and BANC’s) planning for resources that qualify for Resource Adequacy and can be utilized in the RSE. Expanding the CAISO’s DER market capability to external BAs will be critical for WEIM Entities, and future EDAM Entities as well, to utilize DERs in the CAISO market. Currently, there are no clear rules or protocols on how WEIM Entities utilize DERs in their bids, especially DR, and at times, these are not accounted for in the operational window as part of the CAISO’s RSE.

2. Tolerance Band Enhancements for WEIM

Under the EDAM framework, there is a tolerance band for de minimis Tier 1 failures. SMUD considers this an important function of EDAM and the scope of this initiative should focus on development of a similar de minimis tolerance band in the WEIM if an entity fails its RSE. While SMUD does not advocate for a specific MW level, there is likely a percentage of a BA’s RSE where minimal failure quantities do not result in reliability issues and can be cured subsequent to the RSE test.  

3. GHG Policy Initiative

SMUD has been engaged in the ongoing GHG coordination working group. While the discussions have been informative, SMUD considers the CAISO’s standards and methodologies for tracking GHG a critical part of WEIM (and the future EDAM) and deserving of a focused initiative. As the CAISO implements EDAM over the next two years and external entities consider joining EDAM, the appropriate treatment and tracking of GHG is imperative, and should be consistent with other regional efforts to account for GHG emissions. 

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

The three initiatives proposed above are important for various objectives, namely to ensure the WEIM and EDAM are robust markets that provide benefits to the entire CAISO footprint, including WEIM and EDAM. 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

SMUD considers the initial launch of EDAM in 2026 as a critical implementation date for these initiatives.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

N/A

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

 Base Scheduling Below Pmin Enhancement

2. Has this issue been previously submitted?

Yes, for the 2022 catalog and again for 2023.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

This initiative was submitted by SRP for the 2022 catalog and is being resubmitted for 2023. In the Spring 2021, SRP participated in Market Simulation to test the ability to submit base schedules below Pmin to account for startup energy. During the simulation, SRP worked with CAISO to identify that the Startup Ramp Time parameter specified in the Generator Resource Data Template (GRDT) was not flexible enough to allow the use of warm and cold startups.  This parameter is required to be the same as or shorter than the hot startup time registered.  Therefore, for warm or cold startups, this parameter does not represent the true startup ramp time required to get to Pmin. Test results from Market Simulation indicated that base scheduling below Pmin for additional hours beyond the startup ramp time would be unexpected by the market, and startups would therefore not be able to be scheduled. The internal DOT would then be zero for the hours beyond the duration of the Startup Ramp Time.  A solution to this would be to allow for the submission of hot, warm, and cold Startup Ramp Time parameters in the GRDT, though other options may exist as well. 

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative aims to enhance the market’s flexibility in scheduling startup energy and ensure that the market's internal dispatch operating targets (DOT) reflect actual unit capabilities by:

• Modifying the Generator Resource Data Template (GRDT) to include separate parameters for hot, warm, and cold startup ramp times.
• Allowing for base scheduling below Pmin to accurately represent different startup conditions and ensure resources are dispatched efficiently according to their operational capabilities.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective 1: Enhancing Operational Capabilities - This initiative is intended to refine market design to accurately capture startup energy needs, directly enhancing CAISO’s capability to integrate resources with varying startup requirements, thus improving operational flexibility.

Objective 2: Strengthening Resource Adequacy - By enabling precise scheduling of units based on their startup type, this initiative supports CAISO's resource adequacy goals. It ensures that all available resources can be effectively utilized, contributing to grid reliability.

Objective 3: Expanding Market Opportunities - Accommodating diverse startup conditions expands market access for a variety of generation resources, particularly combined cycle units, enhancing market depth and operational efficiency.

Objective 4: Improving Stakeholder Engagement - Addressing this technical limitation demonstrates CAISO's commitment to stakeholder feedback and collaborative market enhancements, encouraging a more inclusive and responsive market development process.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

While not driven by regulatory mandates, the urgency for implementing this initiative stems from the need to align market operations with the practical realities of generating unit startups. Delaying its resolution could continue to hinder the efficient integration of resources, particularly those with variable startup times, potentially impacting grid reliability and increasing operational costs. Immediate attention is recommended to ensure the operational flexibility needed for efficient grid management, particularly for units that face scheduling challenges under the current GRDT constraints. Further, SRP appreciates the CAISO’s previous commitment to enable base scheduling below Pmin, however its effectiveness is currently limited for multiple resources due to existing operational constraints. This initiative is intended to address these limitations and ensure that the ability to schedule below Pmin is available and fulfill the CAISO’s commitment.  

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Existing Data: Historical instances where base scheduling below Pmin was necessary for startup energy, including data from Market Simulation tests.

Missing Data: Detailed operational data distinguishing between hot, warm, and cold startups startup profiles for various unit types, and their respective ramp times, to accurately model and simulate the impact of allowing base scheduling below Pmin for these conditions.

8. Submission Title

Second entry provide responses to questions 8-14.

Accounting for Upward Transition Costs in Settlements after Economic Commitments to Lower Configurations

9. Has this issue been previously submitted?

Yes, for the 2022 catalog and again for 2023.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

This initiative was submitted by SRP for the 2022 catalog and is being resubmitted for 2023. A recent case was identified where a Multi-Stage Generator (MSG) was base scheduled in an upper configuration but was instructed to transition to a lower configuration per economic commitment by the WEIM. Due to a long minimum down time/transition time, the Short-Term Unit Commitment (STUC) run did not identify the need to transition back up to the higher configuration shortly after the STUC horizon. The unit met its minimum down time, but it did not stay in the lower configuration much longer. The transition cost was then not accounted for in the market decision to move back to the upper configuration in a subsequent market run because the unit continued to be base scheduled in the upper configuration. It is SRP’s understanding that this transition cost is also not accounted for in Bid Cost Recovery (BCR) or other settlements processes, even though it is a direct result of the market decision to transition to the lower configuration. One solution might be to keep the transition cost out of the market optimization decision, but later account for it in the BCR process in the event the unit does not recover its cost for following the transition instruction.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative seeks to ensure fair compensation for transition costs resulting from market instructions by:

• Introducing a settlement adjustment to account for the costs associated with transitioning between configurations as directed by the market.
• Modifying the Bid Cost Recovery (BCR) process or similar settlement mechanisms to include transition costs not recovered due to market-optimized commitments to lower configurations.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective 1: Enhancing Operational Capabilities - Acknowledging transition costs in settlements enhances market operational integrity by ensuring that costs associated with market-directed actions are accurately accounted for and compensated.

Objective 2: Strengthening Resource Adequacy - This initiative indirectly supports resource adequacy by ensuring that resources are not economically disincentivized from following market instructions, therefore maintaining their availability and operational flexibility.

Objective 3: Expanding Market Opportunities - By addressing settlement discrepancies this initiative promotes fair market participation, ensuring that all operational costs are recognized, thereby encouraging broader participation from diverse resources.

Objective 4: Improving Stakeholder Engagement - This initiative demonstrates a commitment to addressing stakeholder concerns regarding market fairness and transparency, fostering a collaborative environment for continuous market improvement.

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There are no explicit regulatory deadlines for addressing this initiative; however, the timely rectification is critical for maintaining market fairness and participant trust. The absence of a solution to this issue may lead to financial disincentives for compliance with market instructions, risking the efficient functioning of the market and potentially leading to reliability concerns over time. Immediate consideration is warranted to prevent financial losses for participants adhering to market instructions, ensuring that operational decisions are economical.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Existing Data: Examples of MSGs being economically committed to lower configurations without subsequent accounting for transition costs in upward transitions.

Missing Data: Comprehensive cost analysis data detailing the financial impact of unaccounted transition costs, including detailed instances of economic commitments leading to losses due to not recovering transition costs.

15. Submission Title

Third entry provide responses to questions 15-21.

Market to Not Provide Zero Dispatch Operating Targets (DOT) Causing Infeasible Solution

16. Has this issue been previously submitted?

Yes, for the 2023 catalog

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

SRP has experienced several cases where bids are missing/updated for the resources, and the market solution was to provide zero dispatch operating targets (DOT). This has caused reliability issues for BAA operations. SRP has CIDI ticket# 237417 which acknowledged that CAISO has identified a defect that causes 0 DOTs in certain combinations of multi-stage generation (MSG) resources and bids, or lack of bids in all configurations. CAISO has a proposed solution under consideration by the MES and legal teams.

SRP heard that other market participants have raised similar concerns.

SRP requests CAISO implement a mechanism to provide a non-zero DOT aligned with the base schedule of the resource instead of zero DOT under the scenarios where bid misalignment will cause an infeasible market solution. SRP has also submitted an enhancement request through CIDI # 251822 for similar scenarios.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This proposal focuses on preventing operational and reliability issues caused by zero dispatch operating targets (DOTs) by:

• Establishing a mechanism within the market algorithms to issue non-zero DOTs aligned with base schedules in instances of bid misalignment.
• Enhancing the market’s bidding and dispatch processes to avoid issuing zero DOTs, ensuring resources are scheduled in a manner that reflects their actual availability and operational constraints.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective 1: Enhancing Operational Capabilities - Ensuring resources receive non-zero DOTs in cases of bid misalignment enhances the market's ability to maintain grid reliability and prevents operational disruptions.

Objective 2: Strengthening Resource Adequacy - By avoiding zero DOTs, this initiative supports continuous resource availability, contributing to overall system resource adequacy and reliability.

Objective 3: Expanding Market Opportunities - Mitigating bid misalignment allows for more flexible participation by resources in the market, enhancing opportunities for diverse resources to contribute to grid stability.

Objective 4: Improving Stakeholder Engagement - Addressing this known issue through stakeholder-initiated requests demonstrates CAISO's commitment to collaborative problem-solving and responsiveness to stakeholder concerns.

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This initiative does not fall under direct regulatory time constraints but addresses a significant reliability concern with immediate operational implications. Failing to promptly address the issuance of zero DOTs can lead to unnecessary reliability risks and operational inefficiencies, undermining the market’s integrity and participants’ confidence in the system’s ability to manage resources effectively. Immediate action is required to prevent further instances of infeasible solutions and potential reliability issues, especially during critical operational periods.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Existing Data: Incidents where zero DOTs were issued due to bid misalignment, including specific cases and outcomes documented in CIDI tickets (#237417 and #251822).

Missing Data: Detailed analysis of conditions leading to zero DOT, including bid misalignment scenarios, and an evaluation of the market’s responses to these scenarios to identify gaps in the current logic or data handling.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

FERC Order 831 Alignment for Energy Storage Resources

2. Has this issue been previously submitted?

SDG&E has not submitted this issue to-date, but SCE has submitted this issue in the 2023 Catalog.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Energy Storage Resources currently may only bid up to the soft bid cap of $1,000 MWh, which is not in alignment with FERC Order 831, which raised the soft bid cap of $1,000/MWh to a hard bid cap of $2,000/MWh under certain circumstances. CAISO should adjust their rules to reflect this updated bidding parameter.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative would have a fairly narrow scope, focusing on policy changes related to bidding rules for energy storage resources

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This initiative aligns with CAISO’s Strategic Objective 1: reliably and efficiently integrate new resources by proactively upgrading operational capabilities. This initiative will allow energy storage resources to operate as other resources do in the market, allowing them to properly reflect their costs in their bids when market prices exceed $1000/MWh, thereby resulting in better operational decision-making with streamlined processes and automation.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Energy Storages resources should not be treated differently from other resources. Bidding for energy storage resources should be the same as for any other resources.    

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

N/A

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Storage Resources Bid Cap Limit (including Hydro)

2. Has this issue been previously submitted?

This is part of the PFE Scarcity Pricing work but will likely need to be its own initiative and needs to include all storage resources, including hydro.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Energy storage resource bids/DEBs are limited to a bid cap of $1000/MWh which may not reflect opportunity costs in tight system conditions when the bid cap is raised to $2000/MWh.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This will include correcting implementation errors for a short term fix and longer term policy considerations that need to address opportunity costs.

Hydro Default Energy Bid opportunity cost is based on electricity and natural gas prices. However, only the natural-gas component of the DEB is eligible for adjustment. This determination was based on the consideration that Hydro default energy bids are based on a comprehensive formulaic approach that considers their opportunity costs, and are not driven by fuel price changes as is the case with gas-fired resources. The DEB formulation and even the manual request are built around this gas centric approach. 

Currently, the Hydro DEB cannot increase above $1,000/MWh based on bilateral electricity prices, even if those bilateral prices are above $1,000/MWh. Additionally, bids cannot exceed $2,000/MWh, in line with FERC Order 831. During the policy discussion phase and in connection to FERC order 831, there were market power considerations around the expectation that bids above $1000 could be cost verified.

Unfortunately resources using the Hydro DEB option cannot use the automated Reference Level Change Request functionality in SIBR- if used it will return nothing meaningful (see tariff section 30.11.3.1). It’s possible that an adjustment to the DEB could be made depending on how the resource is registered in the Master File. DEBs that are registered to a specific fuel region may submit a manual Reference Level Change Request to indicate the fuel price impacting its gas floor component has changed. However, the CAISO will only use same-day fuel prices and/or the volume-weighted average price based on multiple manual Reference Level Change requests for that hub to determine the gas floor component update of the Hydro DEB. This has limitations and is not a useful option when gas prices remain moderate in times of scarcity.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This is a component of the Price Formation Enhancements and impacts all storage resources from batteries to hydro.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This is an urgent issue with reliability impacts and needs to be addressed as soon as possible. The impacts can occur anytime scarcity conditions arise. Seattle experienced these negative impacts in January during the cold weather event. Stakeholders have called for a fix by the summer and Seattle supports that timeline. 

Hydro units need a real time method to verify costs and bid up to $2000 when the soft market cap is lifted, otherwise those units will be dispatched at inappropriate times for system reliability, and the BAA will be subject to buying power at prices above their maximum allowable bid to replace the power dispatched earlier. This bidding limitation can result in a dispatch that exhausts a resource’s fuel supply or violates operating constraints (like reservoir levels) and then leaves its BAA without fuel or capacity to cover their own peak load in later hours of high priced times. BAAs need to maintain control of resources for reliability in high load/energy emergency conditions. The soft price cap is lifted based on the determination that high prices and scarcity are likely to occur. The hard market cap is triggered for defined hours in real time based on day ahead prices. The cost to refill a hydro reservoir or refuel a battery in those hours can easily be greater than $1000.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

N/A

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Ancillary Services Pay for Performance Accuracy Calculations

2. Has this issue been previously submitted?

Yes.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

SCE believes there are issues with the methodology that CAISO uses to evaluate, verify, and dispute the regulation pay for performance accuracy calculations.  SCE sees issues with how CAISO market dispatches with very small regulation up and down awards (less than 1 MW) are measured for regulation accuracy.   Measurements of such small quantities are meaningless in proving if a resource can provide accurate amounts of regulation awards, often time resulting in AS de-certification.   Furthermore, the market rule does not consider how gas-fired generation with spinning mass and inertia cannot respond to extremely short duration and small quantity regulation up and regulation down dispatches when on AGC. In order for this initiative to fully address SCE's concerns, the scope of this initiative should focus on the following areas:

- Small award (MW) for resources with large Pmax

- Small awards (MW) for resources regardless of Pmax

- Short duration (seconds) "dispatches/setpoints deltas" per 15-minute interval

- Small qty (count) of 15 min intervals with awards per month

- Data availability for verification

- Dispute process

- Allowance for 2% telemetry error

- Adjustment for 8 second data lag in calculations

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

See question #3.  

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposed initiative will support “Strategic Objective 1 - Reliably and efficiently integrate new resources by proactively upgrading operational capabilities”.  The proposed initiative impacts old and new resources that offer Ancillary Services.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

There is a major burden on scheduling coordinators to have to recertify AS resources.  This will impact CAISO ability to procure AS regulation resources because those resources require recertification.  In addition, it could also impact the number of available reserves within the CAISO market.    

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

SCE will provide additional data upon request.

8. Submission Title

Second entry provide responses to questions 8-14.

?Evaluating and addressing market rule inconsistency among 5/15/60 min bid options for Demand Response Resources. 

9. Has this issue been previously submitted?

Yes

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

RDRR participating under the 15-minute and 60-minute bid option does not have their start-up time accurately modeled in the market.   The CAISO should revisit and address apparent inconsistency in market rules applying to demand response resources, including Reliability Demand Response Resources (RDRR). Today, when a RDRR resource is participating under the 15-minute or 60-minute bidding options, the start-up time registered in the RDT is ignored and instead a hard-coded start up time will be used in market clearing and generating dispatch. The start-up time will be respected only under the 5-minute bidding option. This inconsistency discourages resources from participating under the 15-minute or 60-minute options, even if the 15-minute or 60-minute bidding option would be more appropriate for the resource otherwise.  Given the important role of demand response resources for reliability, the CAISO should ensure market rules are consistent and workable for demand response resources by addressing the issue identified herein. 

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Allow for any RDRR bid option (5-minute, 15-minute, 60-minute) to utilize the start-up time listed in the RDT.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposed initiative will support “Strategic Objective 1 - Reliably and efficiently integrate new resources by proactively upgrading operational capabilities”.  The proposed initiative will improve the market’s ability to model RDRR resources’ operating capabilities.   

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This enhancement will better reflect RDRR dispatching capabilities and response times. 

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

SCE will provide additional data upon request.  

15. Submission Title

Third entry provide responses to questions 15-21.

Remove RDRR Discrete Dispatch Limit of 100MW 

16. Has this issue been previously submitted?

Yes

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

CAISO limits RDRR to a discrete dispatch limit of 100MW even if the resource is larger than 100MW.  California Investor-Owned Unity Demand Response Programs are an aggregation of thousands of customers.   It is not practical to break the aggregation of customers into sub resources to stay under 100 MW limit and doing so excludes single resources that exceed this limit.  CAISO does provides exceptions to this limitation but the criteria is unrealistic to meet.   CAISO states that an exception would be granted if the following conditions are met:    

1. The Demand Response Provider attests that the Reliability Demand Response Resources is a) located at a single site; b) cannot safely or operationally be split into multiple loads; and c) does not have the ability to operate under the Marginal Real-Time Dispatch Operation; and 

2. The CAISO determines that RDRR’s use of Discrete Real-Time Dispatch Option does not cause significant reliability issues.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

The CAISO should consider eliminate the 100MW cap and address any concern thereof; alternatively, the CAISO should change the exception criteria in order for discrete RDRR resources above 100MW to participate in the CAISO market without unnecessary restrictions.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposed initiative will support “Strategic Objective 1 - Reliably and efficiently integrate new resources by proactively upgrading operational capabilities”. 

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

SCE has multiple RDRRs that exceed 100 MW.  Those that exceed 100MW require discrete dispatching. 

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

SCE will provide additional data upon request.

22. Submission Title

Fourth entry provide responses to questions 22-28.

Aligning Energy Storage Bid Cap with FERC Order 831.

23. Has this issue been previously submitted?

Yes.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Energy Storage Resources are not able to bid above the soft offer cap of $1000 when the hard offer cap of $2000 is in place.   Energy Storage Resources should be allowed to also bid above $1000 like other resources offered in the market.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Aligning with FERC Order 831..

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

This proposed initiative will support “Strategic Objective 1 - Reliably and efficiently integrate new resources by proactively upgrading operational capabilities”.  The proposed initiative will improve the market’s ability to model RDRR resources’ operating capabilities.

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Yes – this will be in alignment with FERC Order 831.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

SCE will provide additional data upon request.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Allow Storage to Bid up to $2,000/MWh During High-Price Conditions

2. Has this issue been previously submitted?

Yes

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Currently, during high-priced periods storage resources energy bids cannot exceed $1,000/MWh whereas non-resource adequacy (non-RA) imports and low priority (LPT) exports can bid up to $2,000/MWh with no cost justification.  In addition, internal generation with cost verified bids can bid above $1,000 and RA imports can bid up to the calculated maximum import bids price which is greater than $1,000.   

This results in the CAISO market optimization sub-optimally depleting storage resources state of charge prior to the peak need later in the day.  This is because storage resources are not allowed to reflect this opportunity cost in their energy bids.

Non-RA imports and LPT exports are allowed to bid up to $2,000 without cost justification because FERC recognized in Order No. 831 that such a prohibition could discourage imports at times when they are most needed.  Storage resources should be given the same ability to bid up to $2,000 during high-price conditions.

The consistent treatment will also address the sub-optimal scheduling of CAISO storage resources that occurs when considering just internal generation and RA imports ability to bid above $1,000.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Update current bidding provisions to allow storage resources to bid up to $2,000/MWh.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3 

Parties that would be impacted by CAISO not addressing this on an expedited basis include the CAISO operations, storage resource owners, other resource owners, load serving entities (LSEs) and ratepayers.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

High urgency.  If this issue is not addressed before this Summer 2024 the premature dispatch of storage resources will continue to be observed during high-priced periods of scarcity conditions. This is an economic and reliability concern that should be addressed as soon as possible.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

CAISO has on numerous occasions highlighted that storage is discharged too early.  Most recently at the January 24, 2024, Price Formation Enhancements Working Group which reviewed Summer 2022 findings.

8. Submission Title

Second entry provide responses to questions 8-14.

Hybrid & Co-Located Resource Enhancements

9. Has this issue been previously submitted?

 Yes

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

In this initiative, the ISO will consider improvements to the hybrid resources and co-located resources models to further enable them to operate effectively within the ISO market. The CAISO has not fully documented the appropriate use of hybrid or co-located operational tools or the interactions with them with other processes, including bidding and provision of Ancillary Services (AS), and other related provisions and procedures.  

For instance, Variable Energy Resource dispatch provisions as they relate to the resources operations, AS provision and AS Blocking by CAISO Operations should be explored in further detail to provide needed clarifications and guidance. These provisions and expectations should be more clearly outlined in the Tariff, Business Practice Manuals (BPMs), and Operating Procedures, where applicable. In the case of Regulation provision the CAISO has not provided adequate guidance for the appropriate use of outage cards through the Outage Management System versus the utilization of the Dynamic Limits concept for Real-Time hybrid resource participation. There is already existing tariff and BPM language that applies to NGRs providing AS that is not clear or conflicts with CAISO policy documents and training issues for hybrid resources that utilize the NGR model. Further, CAISO has not discussed AS provision by hybrid and co-located resources with stakeholders even though it had committed to following up on more complex and difficult issues such as the provision of AS after concluding its initial efforts for these resource configurations in its 2021 Hybrid Resources initiative process.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Hybrid and co-located resource market design and participation provisions.

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3 

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

High priority – These resources continue growing in number and CAISO has not provided clear guidance on their participation in its markets. 

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Review of the tariff and BPMs that apply to AS and market participation for hybrid resources. 

15. Submission Title

Third entry provide responses to questions 15-21.

Resource Adequacy Provisions for Hybrid Resources  

16. Has this issue been previously submitted?

No

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Provide a chance to review and discuss the treatment of hybrid and co-located Resource Adequacy (RA) related rules and procedures to address any significant gaps or concerns with applicable RA provisions.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Explore RA provisions, including generic/system and flexible RA provision for hybrid and co-located resources. 

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1 

Objective #3 

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

High priority – These resources continue growing in number and CAISO has not provided clear guidance on their participation in RA. 

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Review of the tariff and BPMs that apply to RA provisions for hybrid and co-located resources. 

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

The Energy Authority (TEA) supports the comments, initiative characterization, and prioritization submitted by the Western Power Trading Forum (WPTF), with emphasis on the expectation that current working-group efforts (Price Formation, Gas Resource Management, GHG Coordination, and RA Modeling and Program Design) will convert to the standard policy initiative and implementation process in short order. TEA views each of these, as well as continuation of WEIM Resource Sufficiency Evaluation Enhancements efforts, as complementary to the EDAM/DAME initiative implementations and encourages the CAISO to push each forward on parallel paths, breaking components of the initiatives into priority phases as necessary. TEA also supports the similarly aligned comments of the Public Generating Pool (PGP), as well as the technical WEIM and other concerns raised by the Bonneville Power Administration (BPA) in their comments.

In addition, TEA sees the need going forward for the CAISO to integrate addressing internal and external market seams within its initiative planning as a default assessment and planning exercise for any new or existing policy proposal. TEA outlined its observations regarding CAISO's internal market seams issues in its recent comments in the Price Formation Enhancements WG effort and notes here for emphasis that understanding and addressing differences in how market design elements are engaged with or applied differently in the non-CAISO WEIM and future EDAM areas versus the CAISO WEIM and future EDAM area, plus how each engages with the western bilateral market at CAISO's interties, is critical to the ongoing efficiency and reliability of the CAISO's multiple markets. TEA therefore supports efforts in this direction across multiple initiatives and/or assessments of existing market policy as a high priority.

TEA also believes it is important that the CAISO leave room within its policy initiative and implementation planning over the next 1-3 years to address external market seams, such as will exist in the 2026-27 horizon with Southwest Power Pool's (SPP) Markets+ and RTO-West markets. TEA expects that aspects of external market seams issues will surface in multiple areas, spanning from Price Formation, GHG coordination, and core market design issues (offer caps, interface pricing, congestion cost allocation, import/export/wheeling priorities, and economic intertie bidding in EDAM/WEIM) to reliability-focused efforts regarding RC services, emergency assistance, and FNM coordination. TEA views each of these areas as opportunities for the CAISO to improve outcomes for its customers while being a constructive regional partner that assists in building a more resilient western grid and encourages the CAISO to embrace and plan for the multi-market future of the Western Interconnect. 

__________________________

About TEA: The Energy Authority is a public power-owned, nonprofit corporation that as a national energy marketing company, evaluates challenges, manages risks, and executes solutions to help its clients maximize the value of their assets and respond competitively in the changing energy markets. TEA partners with over 60 public power clients, managing approximately 30,000 MW of peak load and 24,000 MW of generation in North America’s organized and bilateral wholesale energy markets. TEA’s Western Interconnect partners are directly engaged in and impacted by the CAISO’s existing and evolving day-ahead and real-time energy markets. TEA has deep experience in seams-management efforts in the Eastern Interconnect's organized markets and as a market services provider to entities engaged in SPP's market implementation efforts in the West looks forward to being a collaborative stakeholder in the CAISO's efforts in the core areas outlined in these comments. 

2. Has this issue been previously submitted?

Addressing market and other seams has been discussed in multiple stakeholder initiatives but to TEA's knowledge has not been submitted as an official stakeholder catalog item or priority effort.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Integrating addressing internal and external market seams within CAISO's policy review, development and implementation process is necessary given that CAISO's multiple markets are co-optimized yet include multiple divergences in scope and application of market elements and design attributes that have significantly impacted and will continue to impact market efficiency and reliability, and that over a 1-3 year horizon existing and new markets in the Western Interconnect will increasingly impact CAISO's market operations and open new opportunities to improve outcomes for CAISO's market participants and their end-use customers.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Integrating addressing internal and external market seams within CAISO's policy review, development and implementation process should be a holistic effort beginning with a gap analysis of current operations, market design elements, in-process initiatives, and business practices, and expanding over time to become a default component of initiative and implementation planning.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Yes. Integrating addressing internal and external market seams within CAISO's policy review, development and implementation process is critical to the CAISO meeting each of the three market-outcome focused strategic objectives outlined in its 2022-26 Strategic Plan (items 1-3). 

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Yes. Existing internal and external market seams, primarily regarding price formation, congestion cost allocation, and operations during tight supply conditions, are an immediate threat to the efficiency and reliability of the CAISO's day-ahead, hourly-bilateral intertie, and WEIM/RT markets, meanwhile future additional external market seams issues will be present within the implementation schedule of existing initiatives and should be addressed as soon as possible.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Integrating addressing internal and external market seams within CAISO's policy review, development and implementation process is primarily a qualitative effort that requires working with stakeholders in the CAISO's and adjacent markets to understand issues and opportunities, however, as specific proposals come forward reviewing CAISO market data in specific areas, as well as best-practices and outcomes from regions that have advanced seams management, will be important.

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Energy Storage Outage Improvements

2. Has this issue been previously submitted?

Yes, directly to CAISO management.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Improvements are needed to support day-to-day operations of any Non-Generator Resources (NGR) being impacted with lack of clarity on the storage outage reporting requirements and the outage management procedures that are ineffective. These requests aim to address operational needs primarily by clarifying the rules and automating manual processes that the Operations team must perform related to outage cards and addressing concerns with delays in communicating the real-time physical capability of storage resources. During periods of light loads and ample supply, the manual nature and time delays of managing forced outages utilizing the current OMS process may not cause a reliability event. However, during tight system condition days, the current OMS manual processes and associated delays could create unforeseen risks which may negatively impact system reliability. Finally, there appear to be inconsistent outage reporting practices and greater clarity is needed to ensure consistency. These requests are being provided to mitigate reliability risks and to improve CAISO Operations and NGR operations. The proposed changes will allow storage resources to be managed more effectively on all days, which will provide efficiency and reliability benefits to CAISO operations. 

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative would explore Tariff clarification on outage reporting and outage operational improvements that are needed to address Outage Management System limitations surfaced through storage, co-located, hybrid, or long duration energy storage operations.

CAISO outage reporting requirements in Tariff Section 9.3.10.3 describing requirements for advance reporting to the CAISO, potentially as Reliability Coordinator role, of anticipated and actual Forced Outages only clearly applies to Generating Units , Resource-Specific System Resources , or Eligible Intermittent Resources . CAISO should revise its outage reporting requirements to make clear how they apply to storage, co-located, hybrid resources, and long-duration storage. For example, storage have state of charge max and min energy levels, load max, and availability while conventional resources only have availability outages and the expectations for reporting on the other parameters need to be developed and clarified. Additionally, CAISO should clarify the appropriate nature of work types for storage-specific outages including so that storage is consistently using the same nature of work type to reflect similar impacts to its load max, availability, and min and max energy for issues such as foldback design characteristics, inverter failures, rack outages, or full plant unavailability.

The outage management improvements should include:

• Allowing updates to an existing forced outage card to be automatically accepted for any adjustments to the availability, load max, or max and min energy limits;
• Allow two or more overlapping outage cards on Availability, Load Max, Max Energy, and Min Energy;
• Allow existing or new overlapping outage cards that can adjust Availability, Load Max, Max Energy and Min Energy values on one card and allow non-NULL values in addition to NULL (no entry) for the other card(s);
• Allow the ability to check a single out-of-service (OOS) checkbox for NGRs which checks both OOS boxes in the Availability and Load Max tabs;
• Retain outage card values when existing outage card’s end date is extended; and
• Allow testing outage card to include Load Max (Pmin) amounts in the ticket instead of in the notes.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Summer 2024

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Not currently.

8. Submission Title

Second entry provide responses to questions 8-14.

Resource Adequacy Improvements

9. Has this issue been previously submitted?

Yes, through the Capacity Procurement Mechanism, Gas Resource Management working group, and Resource Adequacy Enhancements efforts as well as in various communications with CAISO policy and customer service teams.

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

The existing Resource Adequacy rules that cancel Planned Outages that do not also show substitution capacity are overly burdensome and frustrate the overall goal of the RA framework by disincentivizing capacity available for most of a month that has not been able to procure substitution capacity to cover an outage potentially only spanning a few days within the month. Vistra focuses our problem statement on the outages that are known after the RA monthly supply plan submission (T-45) but prior to the forced outage window (T-8) since this is the window that substitution tends to be unavailable.

As an operator of a gas Electric Generator (EG) we receive instructions from the gas company to take outages so that the necessary work can be performed. While we understand these outages may need to be taken to maintain the reliability of the gas infrastructure, the gas companies are usually inflexible on when the outages can be scheduled, and these outages generally do not overlap with EG planned outages that generally take place in the Spring. Further, in addition to gas operator directed outages, EG also receive Long Term Service Agreement (LTSA) vendors instructed outages to avoid plant failures. An EG would only advance plan to have substitution during an outage for EG planned outages it is aware of and can control when they occur during that month. In both gas company directed outages and LTSA directed outages an EG would not have advance notice to secure substitute capacity for any RA capacity. If identified prior to T-45, Vistra accepts that the existing policies require substitute capacity when shown on the RA plan at T-45. However, imposing the same standards on outages identified after the RA showing during a period where substitute capacity is illiquid, and in most cases unavailable, is unreasonable. This scope should include outages outside an EG control identified after T-45 that occur to gas EG that we cannot control.

Example 1 - Gas company directed outage for pipeline maintenance work after T-8

For example, the gas pipeline needs a maintenance outage that results in curtailment of EG on that portion of the pipeline. In this instance, we as the SC of the affected EG must submit outage card to the CAISO, however there are challenges with this because some pipeline maintenance advance notice may not yet define the days or hours, or MMBtu amounts that will be reduced. As such, it is likely that we will not know the hours and amounts until the forced outage horizon, when we submit this gas operator instructed outage to CAISO today it is under a “Ambient not due to Temp” card, which is exposed to Resource Adequacy Availability Incentive Mechanism (RAAIM) penalties. However, the CAISO Tariff adopted exclusions to RAAIM for certain outage types in Section 40.9.3.4(d) that include an outage in a nature of work category specified in BPM that relates to administrative action by resource owner, a cause outside of the control of the resource owner, short-term use limitation, or non-Run-of-River hydro resources management of water related operational or regulatory limitations. This example of an outage type meets the criteria outlined because it is not within the control of the EG, however outage management manual does not allow for a card to support this outage reason where the card is flagged as meeting these criteria. This is an existing issue that should be addressed to provide an outage card eligible for this outage type that is excluded from RAAIM per Tariff Section 40.9.3.4(d).

Example 2 - Gas company directed outage for non-routine pipeline (pigging) prior to T-8

There are also outages required by the gas company communicated more than eight days prior to the operating day that the CAISO calls Planned Outages in its Business Practice Manual. For example, gas companies can identify the set of days and hours within the day that the EG must operate to provide must flow amount to support pigging work. When submitting the outage prior to eight days before the operating day, the CAISO treats this as a planned outage when in practice it is a forced outage that is noticed sooner than eight days. The Tariff refers to Maintenance Outages that are known at least eight days prior to the operating day. The Tariff does not detail how forced outages outside the resource owner control that are issued prior to eight days of the operating day should be handled, because the Tariff only refers to maintenance outages. Maintenance outages are defined in Appendix A as, “A period of time during which an Operator (i) takes its transmission facilities out of service for the purposes of carrying out routine planned maintenance, or for the purposes of new construction work or for work on de-energized and live transmission facilities (e.g., relay maintenance or insulator washing) and associated equipment; or (ii) limits the capability of or takes its Generating Unit or System Unit out of service for the purposes of carrying out routine planned maintenance, or for the purposes of new construction work.” This leads to confusion when there is a lack of clarity in the Tariff on how Maintenance Outage rules should apply to Planned Outages that are not maintenance outages. For example, Vistra interprets the Appendix A definition of maintenance outage to refer to planned maintenance work on the Electric Generator or its interconnection facilities not work being performed by Transmission Operator or by Gas Operator that triggers curtailments on EG without our ability to affect those outages. Today, there is a path for submitting an EG outage triggered by transmission maintenance work performed on transmission elements under the “Transmission Induced” outage card that is exempt from RAAIM. However, there is no associated card for “Gas system induced” that is also exempt from RAAIM for an EG outage triggered by gas operator’s maintenance work. This issue has caused repeated challenges with gas management of EG as should be discussed in this effort. We believe discussions on improving how planned outage substitution obligations are defined, enforced, and addressed should be discussed in this effort as this is a significant challenge.

In addition to gas operator directed outages, EG also receive Long Term Service Agreement (LTSA) vendors instructed outages to avoid plant failures. For example, an EG may have planned and scheduled their Maintenance Outage far in advance and secured substitute capacity for that month. However, when the LTSA vendor instructs based on its tests that the maintenance work must be moved up, this effectively moves a planned maintenance outage forward due to plant failure risks if not taken when told to do so. This results in needing to submit a new outage card that may not have substitution, where today CAISO declines the outage request if there is no substitution. It is not reasonable to expect a SC to be able to secure substitution in e.g., the T-20 days prior to the start date of the accelerated outage. As a result, the CAISO would in most cases decline the outage, where the process for seeking approval to resubmit the outage as forced outage is not adequately defined. Consequently, Vistra generally believes this process requires CAISO leadership level approval, which adds burdens on CAISO staff. It is critical to understand that these outages are not optional. The outages impact critical plant equipment of gas generation that if it is continued to operate and leads to plant failure, which take more time to return to service. It is not in the best interest of the EG or grid to operate a plant such that it has an imminent risk of plant failure that could lead to it being out of service when needed for reliability.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative would discuss improving how planned outage substitution obligations are defined, enforced, and addressed should be discussed in this effort as this is a significant challenge for EG. Vistra recommends the following solutions be considered in scope:

• Advanced notice forced outages should be explicitly discussed and any necessary rules identified. Advanced notice forced outages are outages outside the resource owner control that are identified up to eight days prior to operating day. For purposes of compromising on the solutions, Vistra is comfortable starting with defining these as between T-45 and T-0 of the compliance month.
• Advanced notice forced outages that EG cannot delay or reschedule, since they are out of the owner’s control, whether gas or plant operations related should not be denied as planned outages and then forced to resubmit as forced. These should be accepted as planned outages that do not require substitution since the outage was identified after T-45 day showing. The logic is that at the time of showing the resource on the supply plan this outage was not known by the seller, and after which the RA resource cannot reasonably be expected to find substitute capacity for any advance notice forced outages due to lack of liquidity and structure of substitute capacity markets.
  • For the gas operator directed outages: These types of outages are entered into by the direction of the gas company and only after determined that they cannot move. The appropriate outage card for this type of work would be to treat it consistent with transmission outages. CAISO should ensure that EGs have an outage card that is not exposed to RAAIM for submitting these types of outages occurring after T-45.
  • For the reliability triggered EG outages instructed by LTSA vendor: These types of outages are entered into when plant equipment fails or is in danger of imminent failure resulting in a curtailment of dispatchable capacity. This is the appropriate description for these types of outages. However, CAISO should not expose them to RAAIM since these are outside the EG owner’s control. Additionally, CAISO should add Advanced Notice Forced time period to its processes for T-45 to T-8 and allow card to not require substitution for both Advance Noticed Forced and Forced but require substitution for any planned outages (up to T-45 from start of month).

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #2

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

This issue is well known and extremely urgent as it may reduce the amount of RA capacity available to meet summer 2024 needs, and given the tightness of the current RA market that would be imprudent and unnecessarily risk reliability.

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None currently.

15. Submission Title

Third entry provide responses to questions 15-21.

Energy Storage Bidding and Mitigation Enhancements

16. Has this issue been previously submitted?

Yes, in Energy Storage Enhancements and now in Price Formation Enhancements.

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

There are currently two major issues undermining the ability of storage to reflect prevailing market conditions’ opportunity costs in its offers.

The first issue is that currently, energy storage resources are only able to bid up to the soft bid cap of $1,000 MWh, unless mitigated under the Local Market Power Mitigation (LMPM) functionality to a Default Energy Bid (DEB) based on day-ahead prices. FERC Order No. 831 raises the soft bid cap of $1,000/MWh to a hard bid cap of up to $2,000/MWh when cost-based offers can be verified above $1,000/MWh or when the Max Import Bid Price is above $1,000/MWh. CAISO allows non-resource specific system resources to bid up to $2,000/MWh without cost-verification based on opportunity costs to sell the import energy or buy the export energy. Storage assets cannot bid at a level high-enough to show its State of Charge (SOC) should be preserved over export bids given its offers are limited to $1,000/MWh and the export bid can bid $2,000/MWh for the energy out of CAISO system. In this instance, analysis has shown that storage is being discharged earlier than it is needed to support CAISO Balancing Authority Area (BAA) needs to support the exports out of the system and put in the position to have to pay scarcity prices to charge to provide energy during BAA system needs while also exacerbating reliability conditions by adding load in periods nearing shortage conditions. Further, even under normal conditions the opportunity cost component of the storage DEB is set to only value its use beginning in the fourth highest hour failing to sufficiently allow managing its use to be available for the highest need.

The second issues is that under normal and stressed conditions, storage resources are subject to dynamic Local Market Power Mitigation and may also be subject to Balancing Authority Area-level mitigation depending on its location within a non-CAISO WEIM BAA. The existing storage DEB includes a higher of cost or Opportunity Cost methodology using prices from the Market Power Mitigation run for day-ahead and Integrated Forward Market run for real-time. It is critical to recognize that neither the MPM prices nor the IFM prices when used to estimate day-ahead or real-time Opportunity Cost are perfectly accurate, or even accurate on average, and as such adopting an approach to estimate future conditions using the fourth highest hour’s price for the opportunity cost of discharge introduces error and risk of premature usage. Setting the opportunity cost component of the storage DEB to only value its use beginning in the fourth highest hour fails to sufficiently allow managing its use to be available for the highest need.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

To address the first issue, this initiative should explore allowing storage to offer bids at the same level as non-Resource Adequacy export bids can to ensure at a minimum the market is indifferent to supporting the export energy versus holding the storage’s SOC for the BAA’s expected needs.

To address the second issue, this initiative would explore needed enhancements to the storage mitigation rules to better ensure when mitigated its use limitation is appropriately being valued in the mitigated energy price (Default Energy Bid or if adjusted its Reference Level Adjustment. Whether CAISO should:

• Revise mitigation of storage on all-days so that the opportunity cost component of its storage DEB is based on an estimate of the discharge cost at the highest hour’s expected price from the MPM or IFM as applicable to set opportunity cost for the day-ahead or real-time markets respectively so it represents the opportunity cost of its  last use not its first use during its first or second full cycle.
• Revise mitigation on scarce days to value storage resources’ opportunity cost used in its storage DEB based on the prevailing scarcity conditions and its opportunity cost of being discharged for internal purposes or to support off-system sales.
• Add the ability to request an energy reference level adjustments for its DEB to update the Opportunity Cost component of the storage DEB to a real-time opportunity cost when the real-time market prices diverge significantly from the day-ahead prices so that the storage can better manage its SOC across the day given the contemporaneous conditions on the grid.

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Undermines reliability and should be addressed by summer 2024.

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None currently.

22. Submission Title

Fourth entry provide responses to questions 22-28.

Commitment Cost Bidding Enhancements

23. Has this issue been previously submitted?

Yes, this issue has been stakeholdered previously and we are seeking CAISO to proceed to implementation. This has also been raised in the on-going Gas Management working group.

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

On June 30, 2017, the CAISO published a straw proposal for Commitment Costs and Default Energy Bid Enhancements including design principles to respect while developing the proposals to address Scheduling Coordinators challenges with effectively managing assets, including specifically gas assets.[1] Principles were refined and finalized in the Draft Final Proposal issued in December 2017 for principles under competitive conditions, uncompetitive conditions that apply to mitigation, and uncompetitive conditions that apply to mitigated prices.[2] For a detailed, largely still up to date description of the issues identified for gas management, please review Commitment Cost and Default Energy Bid Enhancements Issue Paper.[3] CAISO described in detail an important background on gas-electric markets including their misalignments, challenges facing suppliers, and challenges facing gas systems. The background also summarizes some of the gas cost tools the CAISO uses, and additional ones have been added with the portion of CCDEBE that was implemented. The problem statements were further refined as described in the Draft Final Proposal posted on August 23, 2017[4] and streamlined further in the Second Revised Final Proposal.[5] Please review these CAISO white papers for a detailed issue description. This issue relates to the existing Use Limit and Opportunity Cost Enhancements discretionary initiative, but we believe that scope may largely be addressed through implementing existing policies that have been shelved.

[1] Commitment Cost and Default Energy Bid Enhancements, Straw Proposal, June 30, 2017, Section 5, StrawProposal_CommitmentCosts_DefaultEnergyBidEnhancements.pdf (caiso.com).

[2] Commitment Cost and Default Energy Bid Enhancements, Draft Final Proposal, August 23, 2017, Section 6, DraftFinalProposal_CommitmentCosts_DefaultEnergyBidEnhancements.pdf (caiso.com).

[3] Commitment Cost and Default Energy Bid Enhancements Issue Paper, November 18, 2016, IssuePaper_CommitmentCost_DefaultEnergyBidEnhancements.pdf (caiso.com).

[4] Commitment Cost and Default Energy Bid Enhancements, Draft Final Proposal, August 23, 2017, Section 5, DraftFinalProposal_CommitmentCosts_DefaultEnergyBidEnhancements.pdf (caiso.com).

[5] Commitment Cost and Default Energy Bid Enhancements, Second Revised Final Proposal, March 2, 2018, Section 4, SecondRevisedDraftFinalProposal-CommitmentCosts-DefaultEnergyBidEnhancements.pdf (caiso.com).

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This implementation effort would implement or refine previously approved policies described below.

Bidding Rules Enhancements

CAISO Board of Governors approved Commitment Cost Bidding Improvements at the March 25, 2016 Board of Governors meeting.[1] Select elements from Bidding Rules Enhancements were included in this combined board package along with Commitment Cost Enhancements Phase 3 policy proposal. In Bidding Rules Enhancements, Board approved and CAISO implemented process for fuel region enhancements introduced to address WEIM-wide gas management issues. CAISO implemented changes to “create a more flexible process for scheduling coordinators to request adjustments to the fuel region values for registration in the Master File to better represent resource-specific costs.”[2] Scheduling coordinators can introduce a new resource-specific fuel region by submitting a request to add a new fuel region to Masterfile field. A fuel region will be defined as a unique combination of commodity price, transportation rate, and cap-and-trade credit.

On Page 20, CAISO is referring non-CAISO WEIM entities challenges raised during the stakeholder effort on areas with access to multiple trading hubs to source gas supply and multiple pipelines and rates that occur in the non-CAISO WEIM areas. CAISO stated:

“Through this stakeholder process, it has come to light that some entities may ship its fuel across more than one pipeline company. The ISO finds establishing unique fuel regions based on these companies and allowing the resource to update iteratively would introduce an overly burdensome validation process. The ISO proposes on resource request to define a resource-specific fuel region representing a combined commodity price or combined base gas transportation rate based on a weighted average. Where the combined price or rate is weighted by the percent of volumetric usage25 shipped by each company in the prior month, if available, and averaged to represent a reasonable estimate of resource-specific costs. Anticipating the appropriate weighted average costs is fairly static, ISO propose to limit revisions to weights annually.”[3]

It is my belief that many entities that this rule change to allow asking for a blended fuel region value that represents a weighted average of various pipeline rates and hub indices is not being used to its greatest extent. I hope to see WEIM entities located in areas like this seeking new fuel regions to better reflect their expected costs.

Another important functionality update implemented with Bidding Rules was the ability to re-bid commitment costs (albeit only a single value that applies across the horizon) in real-time if it did not receive a binding day-ahead commitment. It is worth noting that once committed by the real-time market, the ISO has automated bidding rules to ensure the commitment cost bids are locked at the last bid price level used by the market to initiate the commitment and maintained through the resource’s inter-temporal constraint (e.g. minimum run time, minimum on time). We note this additional item for clarity that the re-bidding in real-time is existing functionality and if you have not been committed yet and there is a change in gas prices or risks that it is important to make sure you have updated your commitment cost offers so that any real-time commitment is based on the best available gas market information. This is the intent of this functionality change.

Generally, it would be helpful for CAISO to report on how often these two key gas management procedures implemented under BRE are being used today inside CAISO versus in non-CAISO areas. This will help identify if there is sufficient training for Scheduling Coordinators on these options.

Commitment Cost Enhancements Phase 3

In the Commitment Cost Bidding Improvements Board package, CAISO also brought the Commitment Cost Enhancements Phase 3 proposed changes for a successful board approval. This functionality was implemented but the CAISO has not performed a review on how the Opportunity Cost Calculator (OCC) and its negotiated OC adders are performing to manage uses of gas resources subject to regulatory or design limitations.

Given the concerns raised by the gas resource managers identified in this discussion paper, it indicates to me either entities are not seeking the OCC CAISO added functionality for an Opportunity Cost adder for use limited resources, largely with gas resources in mind subject generally to monthly, annual, or rolling 12-month regulatory imposed use limitations. The OCC adder is needed to reflect the opportunity cost of using a limited use resource sooner than it would be more optimally used to meet the market’s needs. CAISO recognized when launching the new Opportunity Cost Calculator that it would have a learning curve.

CAISO committed in Draft Final Proposal for CCE3 to consider enhancements, stating:

“As the ISO and market participants gain experience with the opportunity cost model and using the opportunity cost as a management tool, the ISO will consider future enhancements to both the policy and model as warranted. Potential future enhancements and considerations include:

• Re-evaluating the frequency of model re-runs based on the time needed for each updated,
• Considering modifications to using 90% of a resource’s limitation in the model, or other ways in which to further enhance the effectiveness of the opportunity cost as a management tool such as possibly including an estimated RA payment, and
• Evaluate how well the opportunity cost model rations starts throughout the year, particularly for use-limited RA resources.

Vistra believes that the existing OCC runs may be inaccurately finding use limitations, that need to be managed by gas resources subject to binding regulatory or design limitations, not binding and producing results that undervalue the actual opportunity costs of its starts, run hours, or energy. Additionally, Vistra believes CAISO negotiated OCC adder process is not effectively allowing for establishing a negotiated OCC when this occurs. CAISO should follow through on its commitment to make OCC model enhancements and to review how use limited gas resources are able to ration their starts today to identify need to update OCC model and negotiated OCC rules and procedures.

Generally, it would be helpful for CAISO to report on the range of OC adders that the OCC is producing and how often an OCC result is found insufficient by the SC where they seek a negotiated OC adder. This will help confirm our theory on the effectiveness of the existing adders, whether calculated or negotiated.

Commitment Cost and Default Energy Bid Enhancements

One of the more recent CAISO efforts that was facilitated specifically to be mindful to include non-CAISO gas management concerns in focus is called Commitment Cost and Default Energy Bid Enhancements. CAISO took pains to clarify its enhancements would apply to all gas resources across the footprint included in WEIM.

CAISO should follow through on its commitment to implement the long overdue commitment cost bidding improvements approved by the Board of Governors on March 22, 2018.[4] The CCDEBE proposals to move to market-based commitment costs subject to caps and dynamic market power mitigation are designed to fulfill a commitment that CAISO Management made on August 29, 2007 to its Board of Governors.[5]

CCDEBE approved items critical to managing gas resources, especially in non-CAISO areas, that have not been implemented or are not being supported are to:

• Replace static commitment cost cap with “market-based” commitment cost bids subject to cap and commitment cost local market power mitigation test. This change was envisioned as addressing a lot of the challenging gas management issues that gas resources face that cannot and should not be coded into an optimization model for energy and ancillary services. The most appropriate way to allow Scheduling Coordinators that operate gas resources to reflect the risks and opportunity costs associated with commitment of their assets including running at Minimum Load is through allowing resources that are not situated with the ability to exercise market power the flexibility to submit market-based commitment cost bids that can reflect their risks and opportunity cost adders. The following Board approved policy changes should be implemented as soon as possible:
  • Management proposed to phase in the market-based bids to have the chance to confirm the commitment cost local market power mitigation was working effectively, by initially setting the market-based cap for the first 18 months at 150% of applicable reference level and increase to 300%. CAISO Management proposed to phase in 300% because as stated, “it provides a reasonable range based on historical gas-price volatility to capture costs the vast majority of the time and because it is similar to the bid amounts subject to mitigation under other ISO’s conduct and impact test commitment cost market power mitigation methodologies”.[6]
  • Management proposed to phase in the mitigated commitment cost levels while market participants and CAISO gain experience by mitigating to 125% of reference level (same as today’s cap) for first 18 months. After which, mitigated commitment cost would be at 110% of reference level similar to mitigated energy reference level.
  • Enhance its minimum load rerate functionality that performs a DEB integration into the Minimum Load Cost Proxy Cost to add a market-based bid ratio so the integrated DEB is scaled based on the ratio of the Minimum Load Market-Based Bid after bid validation to the minimum load cost reference level.
  • Adding a new dynamic market power test for commitment costs and proposing specific mitigation rules in light of the large scale bid reform including to mitigate resources within a minimum online constraint, mitigate exceptional dispatches commitment costs, settle exceptional dispatches at commitment cost bids at the time the exceptional dispatch was issued, and settle resources in full ramp at bid used in interval.
• Allow hourly Minimum Load Bids: Hourly Minimum Load Bids is the solution intended to address the gas-electric commodity horizon misalignment because the two different gas day prices could be reflected in different Minimum Load Bids once hourly minimum load is implemented. Gas resources can manage the change in fuel costs in their energy bids today and under a Minimum Load Design it is important to implement this change to give them flexibility to change the fuel cost across hours to address this. Additionally, this enhancement was envisioned addressing periods where the gas system is tighter and a risk adder or opportunity cost for higher (or lower) gas burn levels need reflected in bids in some hours and not others to better manage through periods observing both gas and electric operational issues. It is important to recognize that the ability to bid market-based minimum load costs or request a minimum load reference level adjustment will be essential to ensuring the two different gas day indices can be incorporated up to any commitment cost bid limits whether the cap or if subject to dynamic mitigation.
  • Note, once a binding start-up instruction is issued the market will apply re-bidding rules and lock the re-bidding window but under hourly MLC bids will lock to the value by hour instead of a single value. This was existing functionality, and found appropriate to mitigate gaming concerns with hourly minimum load bidding.
  • Also includes adding a commitment cost no bid rule will be to settle an interval without commitment cost bids where the resource receives a dispatch instruction at its commitment cost reference levels after minimum load re-rate process to perform a DEB integration with the new ratio of minimum load bid to minimum load reference level scalar into the revised MLC used for settlements.
• Allow reference level adjustments to reflect the risks of incurring a non-compliance charge a basis for requesting a reference level adjustment. These are the hours that a risk margin should be included in the bids to enable the market to better support shifting the merit order to produce a market solution that co-optimizes electric and natural gas constrained conditions. The purpose of this is to operate a market that endeavors to avoid violating constraints on either systems – ideally risk margin should shift merit order so that the penalty is not incurred.[7] Reference level adjustments are to be accepted for “Real-time supply bids reflecting risk margin or scarcity value needed to support reliability on upstream fuel systems only eligible for adjustments in hours after 4PM Pacific under scenarios where gas pipeline instruction has been released or gas system capacity levels are insufficient to deliver fuel supply to avoid violating a gas pipeline instructions”.[8]
  • CAISO Market Instruments BPM Section O.3 states, “The non-compliance charge associated with the specific level of flow order cannot be included in the fuel cost component of a submitted automated or manual Reference Level Change Request. Allowing market participants to recover gas imbalance charges would provide a disincentive for resources to follow gas pipeline instructions.”[9] This BPM language is inconsistent with CCDEBE’s proposal as approved by the Board of Governors and is a change that should be made promptly in a BPM change management process.

We request the CAISO implement its approved bidding rule changes to address the gas management issues raised and explored in CCDEBE as soon as possible. In instances, where CAISO has taken liberties in implementing what was board approved, reference level adjustment appropriate purposes and documentation, the CAISO should expediently revise its BPM to include the approved policies from CCDEBE in the BPM and educate stakeholders on when it is appropriate and required documentation to seek this risk so the market can avoid issuing awards that impose a negative externality on the gas system.

[1] Commitment Cost Bidding Improvements, Board of Governors, March 25, 2016, http://www.caiso.com/Pages/documentsbygroup.aspx?GroupID=4ABEF498-95D6-4EC8-9ACA-978CC8D14237.

[2] Bidding Rules Enhancements Revised Draft Final Proposal, March 22, 2016, Page 19-20, RevisedDraftFinalProposal-BiddingRulesEnhancements-GeneratorCommitmentCostImprovements-redlined.pdf (caiso.com).

[3] Id at Page 20. The ability to seek a new Gas Fuel Region is explained in Market Instruments BPM, Section C.2.1.

[4] Commitment Costs and Default Energy Bid Enhancements Board of Governors Approved Proposal, March 22, 2018, http://www.caiso.com/Pages/documentsbygroup.aspx?GroupID=A856A78D-5C53-4B74-8FD9-06B47BA42FE3.

[5] Decision on Bid Caps for Start-up and Minimum Load Bids under MRTU, September 7, 2007, http://www.caiso.com/Documents/070906DecisiononBidCaps_Start-upandMinimumLoadBidsunderMRTU-Memo.pdf.

[6] Commitment Cost and Default Energy Bid Enhancements Approved Board of Governors Memo, March 22, 2018, Page 5, http://www.caiso.com/Documents/Decision_CCDEBEProposal-Memo-Mar2018.pdf.

[7] See Draft Final Proposal for rationale, Page 60, http://www.caiso.com/InitiativeDocuments/DraftFinalProposal_CommitmentCosts_DefaultEnergyBidEnhancements.pdf.

[8] Second Revised Draft Final Proposal Page 37 for description of when and how negative reliability externality for non-compliance risks is supposed to be allowed.

[9][9] Market Instruments BPM at Page 441.

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #1

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

As soon as possible, ideally by summer 2024 otherwise by 2025.

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None currently.

29. Submission Title

Fifth entry provide responses to questions 29-35.

Transmission Planning Process Enhancements

30. Has this issue been previously submitted?

Yes, into the Interconnection Process Enhancements 2023 effort and CAISO identified it would be better evaluated as a Transmission Planning Process improvement.

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

There are limited avenues for merchant deliverability options to pursue the option to pay for a portion of a network upgrade increasing deliverability on the transmission system in exchange for receiving the commensurate benefit of Transmission Plan Deliverability allocation. Allowing for network service.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

This initiative would explore enhancements to the existing Transmission Planning Process to ensure sufficient transmission across the CAISO Balancing Authority Area or into local areas (i.e., network service) to meet California’s 100% clean energy goals by 2045. The transition is already in full swing and limitations on the amount of full capacity deliverability headroom available to support the transition stages in the near and mid term between 2024-2030 creates risks for the energy transition in the state portfolios. Additionally, there are likely additional reasons to consider not only reliability or planning upgrades but economic upgrades to resolve the congestion observed in the Production Cost Modeling to increase the effectiveness of the fleet being studies across the entire year and not only during the reliability or policy studies snapshots. Addressing areas at risk of persistent congestion will help unlock additional value from the growing storage fleet and should be prioritized in near to mid term. This initiative may include exploring issues such as network service subscription model that would allow developers to subscribe to the network upgrades in exchange for guaranteeing TPD allocations and refinements of Transmission Economic Assessment methodology that is outdated in its assumptions and undervalues economic projects.

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Objective #2

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

California is undergoing a clean energy transition that requires long-term planning processes to be improved in near term to better support the transmission and resource development efforts. Ideally, this effort could be implemented in near term to impact 2025-2025 Transmission Planning Process.

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

None currently.

1. Submission Title

First entry provide responses to questions 1-7.

Comments of the Western Energy Imbalance Market Body of State Regulators to the California ISO on the 2024 Policy Initiatives Roadmap Process

2. Has this issue been previously submitted?

Please see attached PDF

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see attached PDF

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see attached PDF

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see attached PDF

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see attached PDF

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see attached PDF

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

1. Submission Title

First entry provide responses to questions 1-7.

Please see attached document.

2. Has this issue been previously submitted?

Please see attached document.

3. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

Please see attached document.

4. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

Please see attached document.

5. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

Please see attached document.

6. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

Please see attached document.

7. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

Please see attached document.

8. Submission Title

Second entry provide responses to questions 8-14.

9. Has this issue been previously submitted?

10. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

11. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

12. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

13. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

14. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

15. Submission Title

Third entry provide responses to questions 15-21.

16. Has this issue been previously submitted?

17. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

18. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

19. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

20. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

21. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

22. Submission Title

Fourth entry provide responses to questions 22-28.

23. Has this issue been previously submitted?

24. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

25. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

26. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

27. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

28. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.

29. Submission Title

Fifth entry provide responses to questions 29-35.

30. Has this issue been previously submitted?

31. Issue Description: Briefly provide a description of the issue that the proposed initiative is intended to address.

32. Propose Initiative Description: To the extent possible, discuss proposed initiative scope. What elements of existing ISO market design do you propose to address?

33. Business Justification: Does the propose initiative support ISO strategic objectives or existing ISO initiatives? Identify parties potentially impacted by the proposed initiative. Is the proposed initiative in response to regulatory requirements?

34. Timing and Urgency: Are there regulatory requirements for implementation dates, or time-sensitive reliability impacts? Are there consequences to not addressing this issue?

35. Data: Identify existing data and missing data needed to analyze the issue and develop solutions.