Please provide a summary of your organization’s comments on the CPM Enhancements Track 1 draft final proposal
The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the Capacity Procurement Mechanism (CPM) Enhancements Phase One Draft Final Proposal. CalCCA supports the Draft Final Proposal with a caveat regarding the tariff clarification to forbid resources from taking on new Resource Adequacy (RA) obligations after they have accepted a CPM designation.
The CAISO proposes two modifications that would provide additional flexibility in accessing CPM capacity. First, the CAISO proposes to have the authority to reduce the volume (in megawatts (MW)) of significant event CPM designations when the designated capacity is otherwise committed to the CAISO (e.g., through a RA contract, Reliability Must-Run (RMR) designation, or monthly CPM designation). Second, the California Independent System Operator Corporation (CAISO) proposes to have the authority to reduce the term of significant event CPM designations when the designated capacity is already committed or unavailable to the CAISO (e.g., capacity contracted to an entity outside the CAISO balancing authority area, RA resources not on a supply plan, or planned outage substitution). CalCCA supports these enhancements as they will provide the CAISO additional access to CPM capacity which may result in increased reliability and lower CPM costs.
However, in the draft final proposal the CAISO also indicates that it plans to clarify the tariff to forbid resources from taking on new RA obligations after they have accepted a CPM designation if those new RA obligations conflict with the CPM obligations. CalCCA understands that this aspect of the proposal would apply to Significant Event CPMs and CPMs associated with resolving RA deficiencies (and not exceptional dispatch CPMs).
CalCCA supports this clarification for CPMs associated with resolving RA deficiencies only. For CPMs resolving RA deficiencies, the RA credit associated with the CPM capacity is allocated to load-serving entities (LSEs). Therefore, it makes sense to forbid the CPM capacity from taking on new RA obligations because that capacity is already counting towards RA obligations and the RA value of that capacity is already allocated out to LSEs through CPM credits. CalCCA agrees with the CAISO that the CPM rules should ensure the same MW of capacity is not sold twice and is not counted for RA twice.
CalCCA does not support this clarification for Significant Event CPMs. For Significant Event CPMs, the RA credit associated with the CPM capacity is not allocated to LSEs because these CPM types are meant to obtain capacity in excess of RA requirements. If these CPMs extend beyond the initial 30-day term, there may be a situation where an LSE is looking to buy capacity for its monthly showing, but the capacity is already tied up in a long-term CPM. For example, assume a 10 MW resource accepts a 90-day CPM on September 10. The CPM, therefore, lasts until December 10. If an LSE is looking to procure an additional 10 MW for its November monthly RA showing due Sept 15 or its December monthly RA showing due October 15, after the resource accepts the multi-month CPM, it would not be able to access that capacity for its November or December RA obligation. The CPM process should be a backstop to the RA program, meaning that it should not preclude LSEs from procuring RA from resources if they can use the capacity for their RA showings. This is especially critical in today’s RA market, where RA capacity is extremely scarce and LSEs must procure most, if not all, available RA capacity to meet their obligations in peak months. Therefore, CalCCA recommends that the CAISO clarify the tariff to forbid resources from taking on new RA obligations after they have accepted a CPM designation if those new RA obligations conflict with the CPM obligations for CPMs associated with resolving RA deficiencies only. For Significant Event CPMs, the CAISO should allow the CPM resource to enter into an RA contract to serve CAISO Balancing Authority (BA) load and when it does, release the resource of its CPM status. The CAISO could issue another Significant Event CPM to cover the capacity from the resource that transitioned from a CPM resource to an RA resource should the need for the Significant Event CPM continue and excess capacity to CPM exists. Allowing LSEs to contract with capacity that is CPM capacity but whose RA value is not already allocated to LSEs would better enable LSEs to meet their RA obligations at lower costs and reduce the risk of the CAISO needing to perform additional CPM to cover RA deficiencies.
CalCCA understands that the CAISO’s clarification that would forbid resources from taking on new RA obligations after they have accepted a CPM designation if those new RA obligations conflict with the CPM obligations would not apply to Exceptional Dispatch CPMs and that resources that receive an Exceptional Dispatch CPM could subsequently enter into an RA contract and have their CPM volume adjusted. CalCCA recommends this rule apply to Significant Event CPMs as well. If the CAISO believes this rule should not apply to Significant Event CPMs, more clarification is needed as to why it would apply for Exceptional Dispatch CPMs and not Significant Event CPMs.