Comments on Final Discussion Paper

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the topics and problem statements in the California Independent System Operator’s (CAISO) Demand and Distributed Energy Market Integration (DDEMI) Final Discussion Paper (Discussion Paper).[1] The comments herein recommend modifications to the Distributed Energy Resource Aggregation (DERA) problem statements, methods for assessing stakeholders’ prioritization of problem statements, and CalCCA’s priorities related to the Performance Evaluation Methodology (PEM), Economic Demand Response (DR) Participation model, and DERA problem statements. The comments also describe how the CAISO should incorporate the demand-side bidding topic into the initiative. In summary, the CAISO should:

• Modify the DERA problem statement assessment to address the need for coordinated development of a DERA Resource Adequacy (RA) pathway with the California Public Utilities Commission (CPUC);  
• Broaden the DERA problem statement to address concerns about separate resources at a single site participating in separate aggregations as they apply across participation models and program administrators;
• Prioritize the Economic DR Participation, PEM, and DERA participation topics within the DDEMI initiative:
  • Enhance the proxy demand resource (PDR) model used for Economic DR participation to provide behind-the-meter (BTM) resources with the ability to export in the short term;
  • Develop and vet new PEMs that can better reflect evolving market needs in the short term;
  • In coordination with the CPUC, develop an RA pathway for DERAs in the medium-term using lessons learned from implementing the modified PDR (mPDR) RA rules;
  • Continue to explore the challenges and opportunities of individual BTM device-level measurement in the short term;
  • Seek to reduce the significant administrative and cost barriers created by metering requirements on each individual resource within an aggregation; and
• Explore demand-side bidding in parallel with the problem statements to ensure solutions developed for PEMs, exports, and other topics support the eventual addition of demand-side bidding.

[1]           References herein to the terms “topics” and “problem statements” may differ from those used in the Discussion Paper. In these comments, ‘topics’ refers to the six issue areas identified in the Discussion Paper and ‘problem statements’ refer to the 31 statements associated with these issue areas.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

CalCCA generally supports the six problem statements for the DERA market participation model, but reiterates its November 6, 2025, comments on the October 16, 2025, Working Group Session 10: [1][2]

First, the inability to provide resource adequacy (RA) is one of the primary barriers to Distributed Energy Resource (DER) expansion. CalCCA agrees that the lack of a pathway for DERAs to qualify for RA must be addressed at both the CAISO and the CPUC. However, the problem statement implies that the actions of the CAISO and the CPUC must be sequenced to resolve the RA counting issue. While the CAISO and the CPUC each have separate jurisdictional responsibilities regarding the qualification of DERAs for RA, activities to modify these processes should occur in coordination, rather than sequentially, to continue the momentum on improvements necessary to expand DERA participation. 

Second, the concern about separate resources at a single site participating in separate aggregations applies to the conflicting operations of DERs enrolled in any market participation model, as well as to DER participation in wholesale and retail markets. In addition, the problem statement states that “utilities may be concerned that the battery operation for DERA participation impacts the other program.” These concerns extend beyond just utilities and their programs. Other aggregators, including CCAs and third-party entities, will be affected by this issue.

CalCCA’s October 16, 2025, comments provide recommendations on how to revise the problem statements to incorporate these changes, including modified language, redlines, and strikethrough.[3]

[1]              CalCCA interprets this question to reference the six problem statements for the DERA topic discussed during Working Group Session 10 on October 16, 2025.

[2]           See CalCCA Comments on the October 16, 2025, Working Group Session 10 (Nov. 6, 2025): https://stakeholdercenter.caiso.com/Comments/AllComments/2f80e46e-e576-427a-b671-f2a9b4ae390a#org-61be003b-121c-49f3-a381-f6094b7105a1.

[3]           Ibid.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

The Discussion Paper includes six topics and 31 problem statements within these topics. The CAISO asks stakeholders to identify their top five highest-priority problem statements. When evaluating stakeholders’ priority problem statements, the CAISO should consider key linkages among problem statements, as identified by CalCCA below, and the breadth and diversity of stakeholder alignment on these problem statements to determine next steps.

The CAISO should prioritize the Economic DR Participation, PEM, and DERA topics within the DDEMI initiative. Enhancements to the Economic DR Participation models will enable the participation of more price-responsive demand that can offer reliability benefits through participation in the RA program and bid economically into the market to respond to price signals. The CAISO’s existing PEMs should be improved to more accurately assess the performance of emerging DR programs, including those with BTM batteries and electric vehicle chargers. The DERA model is currently underutilized due to the inability to provide RA capacity. It could be better utilized if the CAISO and the CPUC developed a pathway to provide RA capacity.

Within these topic areas, CalCCA’s highest priority problem statements are:

1. Topic 4/Problem Statement 1: “While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market.”

CalCCA’s highest priority within this initiative is enhancing the PDR model used for Economic DR Participation to provide BTM resources using the PDR model with the ability to export. Allowing PDR exports will accurately reflect resource capabilities, minimize barriers to participation, and offer both reliability and cost-efficiency benefits. Expanding the pool of dependable capacity able to participate using the PDR model will unlock additional available capacity able to provide reliability value during times of system stress and improve price formation by increasing the amount of demand that can respond to market price signals. For these reasons, CalCCA supports evaluating an mPDR model to more accurately reflect the capabilities of PDR resources that can export.

The CAISO should address PDR exports in the short term. Addressing this issue in the short term would align the timing of this initiative with the CPUC’s recently opened DR (R.25-09-004) and RA (R.25-10-003) proceedings, in which many stakeholders, including CalCCA,[1] asked the CPUC to develop a qualifying capacity (QC) methodology for PDRs capable of exports. RA participation necessitates both a QC methodology and a market participation model. The CAISO and CPUC should coordinate to ensure that both entities address the issues within their separate jurisdictional responsibilities, thereby supporting full RA and energy market participation of PDRs with export capabilities.

2. Topic 1/Problem Statement 2: “Existing Performance Evaluation Methodologies (PEM), such as the commonly used 5-in-10 and 10-in-10 approaches, are not well suited for emerging DR participation (inclusive of all technology types such as Behind-the-meter batteries, aggregations, Electric Vehicle charging, etc.) whose frequent dispatching distorts baseline calculations.”

The existing PEMs create a high barrier to entry for non-investor-owned utility load-serving entities and program operators, including community choice aggregators, and do not adequately support the participation of DERs, like BTM batteries and electric vehicles (EVs), in CAISO markets. Simplifying and improving the accuracy of the baseline methodologies can help promote market diversity and competition and accelerate the integration of clean resources that support state policy goals and overall market efficiency. Along with the development of an mPDR model, the PEMs will also need to be updated to measure exported energy. This initiative should seek to develop, and vet new PEMs that can better reflect evolving market needs than the existing PEMs, especially given that many existing PEMs are underutilized, indicating these PEMs may not be suitable for the types of programs participating in the CAISO markets.

Relatedly, CalCCA supports the CAISO’s ability to adjust PEM details without tariff changes to keep pace with evolving programs and market needs, as articulated in Topic 1/Problem Statement 4. CalCCA also supports improvements to the control group PEM and modifications to the registration requirements that could increase the use of the control group PEM, as documented in Topic 1/Problem Statement 5. While CalCCA supports this problem statement, it is concerned that the control group methodology may not be scalable without other modifications that address challenges beyond registration requirements. Should this problem statement be scoped into the initiative, the CAISO should therefore allow for the exploration of additional modifications related to the control group PEM.

The CAISO should address PEM issues in the short term, given their high priority and the ability to reach resolution on them quickly relative to the other high priority problem statements.

3. Topic 5/Problem Statement 3: “There is currently no pathway for DER aggregations (DERAs) to qualify for resource adequacy, and this is a multi-agency issue needing CAISO’s attention because CAISO would need to address or help resolve some issues (including deliverability determination and visibility) before the CPUC would develop a Qualifying Capacity methodology, as well as because CAISO needs to develop Net Qualifying Capacity methodologies.”

As described in Section 2 above, the inability to provide RA is one of the primary barriers to DER expansion. CalCCA encourages continuing the momentum on improvements necessary to expand DERA participation through participation in the RA program. The CAISO and the CPUC should coordinate while undertaking the tasks necessary within their jurisdictional responsibilities to allow DERAs to provide RA.

The inability to provide RA is a barrier to DERs seeking to provide exports through the PDR model or participate through the DERA model. The CAISO, in coordination with the CPUC, should first seek to develop a mechanism for DR exports to obtain RA using the mPDR model in the short term, as discussed above, as the PDR model is the more widely used and more accessible model. The CAISO should then develop an RA pathway for DERAs in the medium-term using lessons learned from implementing the mPDR RA rules. 

4. Topic 1/Problem Statement 3: “BTM device-level measurement is not recognized for use in developing baselines for PEM options. Performance evaluations depend on energy measurement (load and generation) and don’t recognize non-energy metered technologies contributions to load reduction calculation equivalents.”

Because performance at the individual BTM device-level is not currently recognized in developing PEM baselines, the baselines could potentially undervalue the BTM device-level’s contribution to load reduction calculation equivalents. Without visibility into individual BTM devices, the CAISO cannot accurately determine their performance or forecast short term loads. In particular, BTM energy storage charging and discharging in response to dispatch instructions could be “hidden” by other loads behind the customer meter and may be more accurately measured by device-level measurement. CalCCA therefore supports the continued exploration of device-level measurement to better understand its challenges and opportunities.

The CAISO should address this problem statement in the short term, given the expected proliferation of BTM devices and the potential impact on the grid.  This creates an urgent need for greater visibility into the performance (and expected future performance) of BTM resources to ensure safe and reliable grid operations.

5. Topic 4/Problem Statement 2: “Current metering requirements for PDR restrict the ability to use device-level metering. Requiring revenue-grade meters (with ANSI C12) on each individual resource within an aggregation creates significant administrative and cost barriers.”

CalCCA agrees with the problem statement that requiring revenue-grade meters on each individual resource within an aggregation creates significant administrative and cost barriers. These barriers will restrict the ability to use the device-level measurement described in Topic 1/Problem Statement 3, above. To ensure proper measurement of BTM devices’ contribution to load reduction and provide visibility into their performance and forecasted performance, the CAISO should seek to reduce such barriers.

Addressing this problem statement is a necessary factor in exploring the implementation of device-level measurement, should the CAISO move forward as a result of the exploration of Topic 1/Problem Statement 3 described above. As such, the CAISO should seek to address this problem statement in the short term, along with Topic 1/Problem Statement 3.

Topic 6 - Expanding Demand-Side Bidding

In addition to the ranked problem statements above, the CAISO should continue to explore the Expanding Demand-Side Bidding topic within this initiative. As the CAISO notes in the Discussion Paper, demand-side bidding can “expand participation, strengthen price responsiveness, and enable new approaches to load management, all while preserving market integrity and reliability.”[2]

The implementation of demand-side bidding is likely a long-term endeavor given its transformational impact on the market and potential complexity. By prioritizing this topic now, the CAISO and stakeholders can ensure that more immediate DDEMI reforms (e.g., modifications to PEMs and enhancements to the PDR model to allow exports) are aimed towards aligning the market and DER participation models with a two-sided system that allows for demand-side bidding. The CAISO should therefore explore demand-side bidding in parallel with the above problem statements to ensure solutions developed for PEMs, exports, and other topics support the eventual addition of demand-side bidding.

[1]          See California Community Choice Association’s Reply Comments on the Order Instituting Rulemaking to Enhance Demand Response in California, R.25-09-004 (Dec. 1, 2025) at 11-12: https://cal-cca.org/wp-content/uploads/2025/12/Reply-Comments-on-the-OIR-to-Enhance-Demand-Response-in-California-12-01-25.pdf.

[2]          Discussion Paper, at 26.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

The California Department of Water Resources – State Water Project (CDWR-SWP) appreciates the CAISO’s efforts to compile stakeholder feedback and synthesize the extensive discussions held throughout the 2025 DDEMI Working Group. The Final Discussion Paper provides a clear summary of the Working Group’s themes, problem statements, and initial assessments. CDWR-SWP agrees that this forms a strong foundation for the next policy development.

CDWR-SWP observes that the final discussion paper does not carry forward the six guiding principles: Efficiency, Competition, Feasibility, Simplicity, Reliability/Compliance, and Facilitation of Public Policy. Stakeholders relied upon them to shape and refine problem statements. CAISO’s initial assessment in the Appendix instead uses Policy, Regulatory, and Implementation. While Implementation partially aligns with the original principles of Simplicity and Feasibility, and Policy/Regulatory overlaps with Regulatory (one of the original six principles), several guiding principles remain unaddressed. The comment template reintroduces Efficiency and System Reliability, but Competition and Facilitation of Public Policy do not appear in the assessment framework. This creates a disconnect between the criteria that stakeholders were directed to use and the criteria the CAISO is now applying to evaluate next steps. CDWR-SWP encourages CAISO to use the six original principles when deciding on next steps because doing so will maintain consistency across the phases of the process that CAISO established. Evaluating the problem statements under different principles may incorrectly prioritize the problem statements, which were developed with the six original principles in mind.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

 No comment.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

As stated above, CDWR-SWP believes that CAISO should prioritize those problem statements that demonstrate alignment with the greatest number of the six original guiding principles. CAISO can evaluate all comments submitted by the various stakeholders participating in the working groups to identify which problem statements are both grounded in the guiding principles and supported by specific and practical examples. The problem statements that rank highest based on this evaluation should then be advanced to future policy development for this initiative. CDWR-SWP believes that Sub-Problem Statements 7, 8, and 9 (PS7, PS8, and PS9) under Enhancing Demand Flexibility Market Options, and Expanding Demand-Side Bidding Options represent the clearest pathway to achieving near-term efficiency gains in the real-time market while supporting a long-term transition toward broader demand-side participation.

Recommended Prioritization and Sequencing

CDWR-SWP proposes that CAISO advance PS 7-9 using a phased, pilot program-based approach, beginning with the simplest, lowest-risk enhancement and scaling toward full participation and discrete-operation capabilities. This stepwise progression mirrors the Department of Market Monitoring’s (DMM) guidance that evolving demand response towards Participating Load-like participation should begin with Real-Time Load Bidding (RTLB) pilots, followed by incremental enhancements as operational and design experience increases. This sequencing is foundational to how demand-side participation matures under CAISO market design. Each problem statement builds upon progress. CDWR-SWP ranks PS7 and PS8 as the highest priority problem statements and encourages CAISO to address them in the short-term. PS7 and PS8 should be a high priority because they offer the benefits discussed below, and also because CDWR-SWP’s Participating Load resources already possess telemetry, proven operational responsiveness, and integrated scheduling capabilities, meaning those resources are largely prepared to engage in the RTLB piloting program recommended by DMM.

Short-Term (2026–2027): Highest Priority

1. PS8 - Participating Load (PL) resources cannot submit energy bids in the RTM to decrease/increase consumption. This does not allow full participation due to constraints imposed by the current PL model and wholesale DR market. 
2. 1. Allowing PL’s full participation to bid energy and respond to real-time market signals, without limiting it to DR events, would allow it to better respond with providing greater system flexibility by shifting demand and additional slope to the demand curve.

Once RTLB is piloted and validated, PS8 scales PL from partial responsiveness to full real-time participation. PS8 allows PL resources to both decrease and increase consumption in response to market signals. These capabilities are necessary to enhance price responsiveness and provide increased market benefits.[1] PS8 builds on PS7 where demand-side flexibility begins to resemble a two-sided market. This is the long-term direction implied in the CAISO’s Demand-Side Problem Statement.

2. PS7 - To achieve additional demand capacity in real-time for Resource Adequacy purposes, participating loads need the ability to submit upward and downward energy bids for demand in the real-time market. If provided while preserving key features such as energy offers, contingency bidding, and non-spin ancillary services; would enhance system flexibility and improve market efficiency.

CDWR-SWP requests the following updates to PS7 for added clarity and refinement:” To achieve additional demand capacity in real-time for Resource Adequacy purposes, with participating loads' capability to submit upward and downward energy bids for demand in the real-time market. If provided while preserving current features such as energy offers, contingency bidding, and non-spin ancillary services for Resource Adequacy; would enhance system flexibility and improve market efficiency.”

PS7 introduces the most critical functionality needed to begin the transition from supply-side DR to a true demand-side resource (the ability for load to submit energy bids that reflect real-time willingness to consume electrons). RTLB creates real-time elasticity, enables loads to reduce demand when economically efficient, and establishes the foundational telemetry, metering, and dispatch interactions needed for later stages.

3. Demand-Side Bidding in CAISO wholesale electricity markets refers to the active participation of electricity consumers—typically large industrial users or load-serving entities—in the market by submitting bids that reflect their willingness to consume electricity at various price levels. This transforms the market from being supply-centric to a more balanced, two-sided system.

4. PS9 - Certain Participating Loads can only operate in full on/off states cannot follow dispatch instructions between their minimum and maximum output levels.
   1. These loads need the ability to submit upward and downward bids that reflect discrete operations, while maintaining the core features of the Participating Load Models and Agreement.
   2. Difference between resource operations and market schedules can result in significant uninstructed deviation costs.

The market efficiency benefits of the discrete dispatch functionality described in PS9 depend on implementation of the enhancements in PS7 and PS8, so CDWR-SWP is placing PS9 in the secondary priority category. Implementing discrete dispatch functionality is an enhancement to PL participation in the RTM and so should be addressed in CAISO’s phased approach to enabling full demand-side participation.

Anticipated Benefits

CDWR-SWP’s problem statements collectively offer the best benefit-to-effort ratio among the studied options. The DMM’s Demand Response Issues and Performance 2024 report identifies persistent shortcomings in traditional DR programs, as not that many DR resources routinely bid significantly below their RA credits in real-time conditions and often underperform when dispatched[2]. Because CDWR-SWP’s Participating Load resources already possess telemetry, proven operational responsiveness, and integrated scheduling capabilities, enabling RTLB yields measurable real-time reliability and efficiency benefits without the baseline uncertainties and performance risks associated with traditional DR[3].

The November 26 Discussion Paper acknowledges that demand-side flexibility remains underutilized and that the existing market structures do not yet support optimal price responsiveness, creating missed opportunities for system efficiency gains and renewable integration. CDWR-SWP’s PS7 directly resolves this gap by introducing real-time bid-based elasticity from large, controllable loads.

1. CDWR-SWP’s assessment of specific benefits of its proposed problem statements

1. PS7 Produces Immediate Real-Time Operational Value:

Unlike DR, PL already meets telemetry, metering, and operational requirements, making RTLB instantly actionable.

2. PS7-9 Avoids Baseline and Performance Problems Identified in the DMM DR Report:

DMM documents underperformance in traditional DR, including DR failure to bid RA capacity and reduce availability in real-time conditions[4]. PL does not rely on baselines and offers deterministic, controllable load adjustments, making it the most reliable path to real-time flexibility.

3. PS7-8 PL-Based RTLB Provides Verifiable and Reliable RA Value:

DMM’s Demand Response Issues & Performance Report finds:

• Traditional DR often underperforms relative to RA capacity values.
• Non-utility DR averages ~54% performance vs. scheduled values[5].
• Utility DR averages ~81% performance[5].
• Some DR resources are over-accredited relative to actual real-time capability[6].

PL traditionally has a higher performance because of:

• Telemetry 
• Dispatches from bids and not baselines
• Measurable error in real-time
• Verifiable real-time meter data
• Plant/Unit responsiveness

4. PS7 Is Easily Implementable Over Other Problem Statements:

Other problem statements, particularly those involving DER baselines, settlement redesign, or new multi-entity coordination structures, require major model changes, new telemetry requirements, or stakeholder rulemaking. In contrast, PS7 uses existing PL infrastructure, requiring only a narrow RTLB extension.

5. PS7-9 Create a Direct Path to Demand-side Bidding:

The Discussion Paper acknowledges that CAISO cannot yet implement full demand-side bidding due to the need for new safeguards, metering rules, and market design elements. CDWR-SWP’s approach is the path supported by DMM. DMM states that evolving DR toward PL-like participation should begin with RTLB pilots[7], with incremental enhancements as performance and design lessons accumulate. As discussed above, CDWR-SWP’s Participating Load resources already possess telemetry, proven operational responsiveness, and integrated scheduling capabilities necessary to engage in RTLB piloting.

6. PS8 RTLB Adds Slope to the Demand Curve, Improving Market Efficiency:

DMM has repeatedly emphasized that introducing price-responsive demand through RTLB adds a measurable slope to the demand curves, which reduces volatility and produces more efficient market-clearing outcomes. When loads can reduce demand economically in real-time, the market responds with fewer price spikes and more efficient dispatch of supply resources[8]. This is a core market benefit highlighted in the Discussion Paper.

7. PS7-9 and Demand- Side Bidding Reduces Reliance on High-Cost Marginal Units:

DMM has consistently said that the lack of real-time DR resources results in the CAISO having to dispatch additional high-cost marginal units when loads are unable to reduce consumption in response to market conditions⁹.

RTLB accomplishes:

• Allowing load to self-curtail rather than forcing expensive peaker plants to come online.
• Reducing the volume of high-cost units needed to meet RT-load.
• More efficient dispatch of resources

This is the kind of efficiency and competition that the DDEMI Working Group process directed stakeholders to prioritize.

8. PS7-9 and Demand-Side Bidding Reduces Renewable Curtailments:

DMM has consistently found that allowing demand to respond in real time reduces renewable curtailments by shifting load into times of oversupply. CDWR-SWP PL facilities are positioned to:

• Increase consumption in surplus intervals
• Decrease consumption in tight intervals

2. Stakeholder feedback strongly reinforces CDWR-SWP’s problem statements.

1. DMM: explicitly supports RTLB and recommends piloting[9].
2. WEIM/EDAM Participants emphasize that the current PEM and PDR framework has become too rigid to accommodate demand-side bidding, and they encourage the CAISO to modernize these structures to support broader DR/DER participation across WEIM and EDAM Balancing Authorities[10].
3. Vote Solar: emphasizes the importance of enabling both upward and downward bids in the real-time market.[11]

Collectively, the benefits of and stakeholder support for Problem Statements 7-9 demonstrate that they should be prioritized before other less mature or less beneficial problems statements in the Discussion Paper.

[1] California Independent System Operator. Discussion Paper: Demand and Distributed Energy Market Integration. 26 Nov. 2025, p. 11.

[2] CAISO Department of Market Monitoring, Demand Response Issues and Performance 2024 (Revised March 14, 2025), pgs. 13-14.

[3] CAISO Department of Market Monitoring, Demand Response Issues and Performance 2024 (Revised March 14, 2025), pgs. 7 and 14-15.

[4]. CAISO Department of Market Monitoring, Demand Response Issues and Performance 2024 (Revised March 14, 2025), pgs. 13-14.

[5] CAISO Department of Market Monitoring, Demand Response Issues and Performance 2024 (Revised March 14, 2025), pg. 3.

[6] CAISO Department of Market Monitoring, Demand Response Issues and Performance 2024 (Revised March 14, 2025), pg. 4.

[7] CAISO Department of Market Monitoring, Comments for the October 16, 2025 DDEMI Working Group Session, Response to Question 1 (Section Real-time load bidding).

[8] CAISO Department of Market Monitoring Comments for the February 5, 2025 DDEMI Working Group Session, Response to Question 1 (Section - DMM Supports enhancements to real-time load bidding functionality).

[9] CAISO Department of Market Monitoring Comments for the October 16, 2025 DDEMI Working Group Session, Response to Question 1 (Section Real-time load bidding).

[10] WEIM/EDAM Participants, Comments for the October 16, 2025 DDEMI Working Group Session, Response to Question 2.

[11] Vote Solar, Comments for the October 16, 2025 DDEMI Working Group Session, Response to Question 3.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

The California Efficiency + Demand Management Council (Council) appreciates this opportunity to provide feedback on the Demand and Distributed Energy Market Integration (DDEMI) Final Discussion Paper (Discussion Paper). The Council greatly appreciates the effort put in by CAISO staff in moving this process forward, especially with regard to their level-setting sessions whereby they would provide background on specific issues or market products to ensure a baseline understanding among market participants.

Overall, the Discussion Paper accurately captures the DDEMI Working Group (Working Group) process, principle, and themes. The problem statements reflect the diverse priorities of the market participants. As discussed in greater detail below, the problem statement assessments are highly informative because they provide an indication of the CAISO’s thinking regarding the overall feasibility of addressing each problem statement.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

The problem statement assessments were extremely useful from the perspective of a participant in the Working Group because it reflected the CAISO’s own applied operational and market expertise, identified dependencies with Local Regulatory Authorities, and broader CAISO market impacts. From the Council’s perspective, all of the information provided in these assessments was an important factor in selecting and sequencing its top five problem statements.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

At a high level, the Council recommends that the CAISO address problem statements that have the greatest likelihood of success and deliver the most “bang for the buck”. More specifically, the Council recommends the CAISO consider which problem statements to pursue based on the five qualitative criteria listed below (in no particular order).

- Applicability: How many market participants are affected? All else being equal, the more market participants that would benefit by addressing a problem statement, the better.

- Market Impacts: How much will the CAISO market benefit from this? Any investment of the CAISO’s time and resources should result in more available resources and/or more efficient market operations, both of which will improve CAISO market efficiency.

- Strategic: How does this support State goals? Ideally, any problem statements that are addressed should align with State policy goals to the greatest extent possible.

- Regulatory Alignment: Does this require coordination with the CPUC? This criterion is less a requirement than a consideration in what time frame would be most appropriate to address the problem statement. For example, the Demand Response rulemaking is currently underway so to the extent that addressing a particular problem statement requires a related policy under CPUC jurisdiction, it might be most efficient for that problem statement to be addressed in the short term.

- Feasibility: How feasible is this in terms of cost and regulatory hurdles? This criterion is highly important as well because the CAISO’s time and resources are finite; selecting high feasibility problem statements will leave resources available to address other problem statements.

With these criteria as a general framework, the Council recommends the following problem statements be addressed:

Performance Evaluation Methodology

2) Existing PEMs, such as the commonly used 5-in-10 and 10-in-10 approaches, are not well suited for emerging DR participation (inclusive of all technology types such as Behind-the-meter batteries, aggregations, Electric Vehicle charging, etc.) whose frequent dispatching distorts baseline calculations. Short Term

Addressing this problem statement would impact any entity that provides DR in the CAISO market. By enabling DR to dispatch more frequently with less risk of depressed load impacts, the market efficiency would be improved. There are no clear statewide policies that would be directly supported by addressing this problem statement but coordination with the CPUC’s DR rulemaking would be helpful to ensure baseline consistency across the retail and wholesale spaces. Implementation requirements would be low, according to the CAISO’s assessment.

3) BTM device-level measurement is not recognized for use in developing baselines for PEM options. Performance evaluations depend on energy measurement (load and generation) and don’t recognize non-energy metered technologies contributions to load reduction calculation equivalents. Medium Term

Addressing this problem statement would require also addressing Problem Statement 6 which states, “Requirement for registration of locations to be at the service account level prevents aggregators from developing resources at the level of the customer’s device.” If this combined problem statement was addressed, it would impact any entity that provides DR whose customers own multiple devices that are equipped with performance measurement technology. Market impacts could be substantial because, pending certain policies being adopted by the CPUC, it could enable all devices of each DR participant to provide DR, potentially through different programs and during different times of the day. This would support the California Energy Commission’s (CEC) Load Shift Goal (LSG), and potentially Load Management Standards (LMS) goals and large-scale deployment of dynamic rates. Coordination with the CPUC would be necessary to achieve performance measurement at the device level to ensure consistency across the wholesale and retail markets. Implementation costs would be high but it would enable access to all DR participants’ devices to provide load curtailment, regardless of time (i.e., slice) of day, DR provider, or DR program.

5) Requirement for control group end users to be registered in the Demand Response System limits use of non-participating end users within a control group and is in conflict with consumer data privacy rules. Short Term

Addressing this problem statement could impact all entities that provide DR in the CAISO market that would like to use control groups. More accurate performance measurement would improve market efficiency and overall confidence in the performance measurement process. There are no clear statewide policies that would be directly supported by addressing this problem statement but coordination with the CPUC’s DR rulemaking could be supportive of universal control groups if this issue is included in the proceeding. The implementation requirements would not be small but the more accurate performance measurement would facilitate improved confidence in DR performance.

Economic Demand Response Participation

1) While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market. Short Term

Addressing this problem statement would benefit all DR providers whose customers possess BTM energy storage, and release large amounts of additional capacity to the CAISO market by enabling export-capable BTM energy storage to augment the load curtailment capability of DR participants. This would directly support the LSG. Coordination with the CPUC’s DR rulemaking would be necessary to develop a Qualifying Capacity counting methodology in order to bring this additional capacity to the market. The CAISO has indicated that implementation requirements would be relatively low.

Expanding Demand-Side Bidding Options

Electricity markets have yet to fully unlock the potential of demand-side resources, leaving price signals less effective, innovative load management strategies underutilized, and system efficiency gains unrealized. Demand-Side Bidding provides a pathway to expand participation, strengthen price responsiveness, and enable new approaches to load management, all while preserving market integrity and reliability. Medium Term

Addressing this problem statement could benefit the largest number of market participants because it could impact all load-serving entities (LSE), and DR providers that currently operate both inside and outside the CAISO market. If done correctly, large quantities of price response demand could moderate the daily load curve and free up dispatchable resources for ramping. This would support the LSG and Load Management Standards, and would align with the CPUC’s policy of dynamic rate deployment. Deployment would require a substantial amount of effort but be worthwhile if the estimated benefits are substantial enough.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

The California Large Energy Consumers Association (CLECA) appreciates CAISO’s publication of the final Demand and Distributed Energy Market Integration (D-DEMI) discussion paper and the opportunity to provide feedback. The paper effectively summarizes stakeholder input from the D-DEMI Working Group and clearly articulates problem statements requiring further policy consideration. It offers a strong foundation for prioritizing future policy development by framing key issues around market efficiency, operational feasibility, and reliability. CLECA supports CAISO’s continued collaborative approach as the initiative advances into the policy development and implementation phases.  

Recognizing that these topics are complex, we also encourage a timely process for policy development and implementation. Many of these policy statements were prioritized by market participants during the 2024 Catalog process and identified even earlier. The problem statements identified in this final discussion paper represent meaningful opportunities for market improvement and should be developed and implemented as quickly as possible.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

The ISO’s assessment of the DER problem statements accurately reflects the complex, interdependent nature of the issues identified through the D-DEMI working group process. CLECA acknowledges that many of these problem statements span policy, regulatory, and implementation considerations, and values the ISO’s effort to clearly synthesize these issues and highlight the need for coordination across agencies and market functions. 

At the same time, CLECA notes that additional detail and quantification on certain implementation considerations, specifically the assessment of Reliability Demand Response Resource (RDRR) minimum on time, could further assist stakeholders as policy development moves forward. 

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

CLECA focuses on select elements of Problem Statement 3 (Reliability-Based Demand Response Participation) and Problem Statement 4 (Economic Demand Response Participation). CLECA identifies the following sub-problem statements as policy priorities: 

• Problem Statement 3: 

• 3.1: Inclusion of startup costs for RDRRs. 

• 3.2: Revision of the RDRR minimum on time requirement. 

• 3.4: Alignment of startup time across 5-, 15-, and 60-minute bid options. 

• 3.5: Ability of demand response resources to reflect partial outages. 

• Problem Statement 4: 

• 4.1: Treatment of behind-the-meter (BTM) storage under the Proxy Demand Resource (PDR) model. 

CLECA’s prioritization is informed by the extent to which these issues improve dispatch accuracy, reflect actual resource availability, and support sustained participation of demand-side resources in CAISO markets. Several of the prioritized problem statements are closely related and are best considered together, as they address common objectives and produce overlapping benefits to market efficiency and system reliability. 

Accurate and Predictable Economic Dispatch for RDRRs (Problem Statements 3.1, 3.2, and 3.4) 

CLECA supports near-term reforms that improve the accuracy and predictability of economic dispatch for RDRRs, including the treatment of startup costs, minimum on time (MOT), and the consistent use of registered startup parameters across bid options. Together, these issues address a common concern for RDRR participants, namely, uncertainty regarding the predictability, frequency and duration of dispatch when market rules regarding dispatch do not reflect actual cost and operational constraints. Failure to account for startup costs and appropriate MOT can result in inefficient dispatch outcomes and increased operational risk for participating customers, which in turn may discourage participation. 

Addressing these issues would provide operational value to CAISO by enhancing the accuracy of dispatch. CAISO has acknowledged in its most recent Working Group Session that a more accurate representation of resources’ MOTs would be “operationally valuable to the ISO.”¹ Additionally, aligning the application of registered startup parameters across the 5-, 15-, and 60-minute bid options would ensure that dispatch instructions reflect actual resource capabilities, thereby improving dispatch precision and transparency. 

Together, these reforms would allow CAISO’s market optimization to more accurately reflect the true costs and operational constraints of RDRRs, leading to more efficient commitment and dispatch outcomes. By reducing inefficient dispatch and uncertainty around dispatch frequency and duration, these changes would alleviate participating customer uncertainty while improving CAISO’s operational efficiency and system reliability. 

Reflecting Partial Availability of Demand Response Resources (Problem Statement 3.5) 

CLECA supports reforms that allow demand response resources to reflect partial outages and limited availability in CAISO market systems. Under current rules, when only a portion of demand response resources are temporarily unavailable (e.g., utilized for region-specific distribution system operational needs), the reduced remaining available capacity cannot be accurately updated or reflected in the market. 

This limitation creates challenges in representing actual MW availability, which can result in inefficient dispatch decisions and reduced situational awareness for system operators.  

Enabling Full Utilization of Behind-the-Meter Storage Under the PDR Model (Problem Statement 4.1) 

CLECA supports reforms to the PDR model that allow BTM storage resources to reflect measured exports when evaluating performance. Under current rules, PDR participation is limited to load reduction, preventing BTM storage aggregations from offering full operational capability and resulting in unused capacity during market events. 

This limitation reduces market efficiency by excluding available capacity that could otherwise support system reliability. It also constrains participation from resources that are already interconnected at existing sites. Allowing PDR exports would increase available resources without requiring new transmission upgrades. 

Removal of these export limitations could help expand access to flexible resources, improve utilization of distributed assets, and enhance affordability while maintaining appropriate performance measurement and settlement integrity. 

Proposed Sequencing of Prioritized Issues 

CLECA recommends that CAISO prioritize policy development in the near-term timeframe (2026-2027) on reforms addressing Problem Statements 3.1, 3.2, and 3.4. Because these issues are closely related and affect dispatch parameters, addressing them in the near term would likely yield improvements to dispatch accuracy and operational benefits and restore needed confidence in market participants. 

With respect to Problem Statement 3.1, CLECA reiterates its position that verification challenges should not preclude the establishment of a wholesale tariff mechanism for RDRR startup cost dispatch consideration. CAISO’s existing framework for generator startup costs provides a proven model that can be adapted for RDRRs, in which the tariff framework is established in the near term and more detailed resource-specific cost validation is developed through a subsequent process. 

Similarly, for Problem Statement 3.2, CLECA recognizes that reforms to the RDRR MOT may warrant a phased implementation. CAISO may consider near-term improvements aligned with the Real-Time Pre-Dispatch (RTPD) horizon, followed by longer-term alignment with the Short-Term Unit Commitment (STUC) horizon as implementation complexity is addressed. 

For the mid-term period (2028-2030), CLECA recommends that CAISO address Problem Statement 3.5, concerning the ability of demand response resources to reflect partial outages and limited availability. Over the longer term (2030+), CLECA supports continued policy development to address Problem Statement 4.1, aiming to enable expanded utilization of BTM storage under the PDR model. 

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Energy Division staff (ED staff or staff) of the California Public Utilities Commission (CPUC) develops and administers energy policy and programs to serve the public interest, advises the CPUC, and ensures compliance with CPUC decisions and statutory mandates. ED staff provides objective and expert analyses that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California. 

ED staff appreciates CAISO’s thorough examination of demand-side resource participation in the CAISO energy markets and agrees the discussion paper represents the range of problem statements raised through the working group process.  

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

ED staff supports CAISO’s consideration of improvements to the Demand Response (DR) market models and processes to enhance the performance, reliability and integration of DR resources in CAISO markets. ED staff looks forward to working closely with CAISO, as coordination between the two agencies is essential to addressing several of the issues raised in the working group.? 

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

ED staff will provide future comments on prioritization of problem statements presented in this discussion paper since a new CPUC DR proceeding was launched and these issues may touch on issues scoped into this new proceeding.  

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

CALSSA appreciates the opportunity to provide feedback on the final discussion paper. We also appreciate the effort undertaken by CAISO staff to give the stakeholders in the Demand and Distributed Energy Market Integration (DDEMI) working group the opportunity to articulate and discuss challenges in several areas of demand response and distributed energy resource (DER) market participation. The working group process resulted in many problem statements being identified, showing that there is significant interest in working through issues and improve the ability to participate in CAISO markets.

Notably, the 2026-2028 Final Policy Initiatives Roadmap released on December 12, sharing stakeholder survey results, shows that the DDEMI initiative has strong support among the CAISO stakeholder community. The broad support for the DDEMI policy work merits devoting additional resources to support policy development in the short term, to enable working through problem statements that different types of DDEMI stakeholders prioritize, rather than postponing a large amount of needed work to future years.

We recommend that the CAISO consider creating different tracks for the policy development phase so that work can proceed on different sets of issues at the same time, allowing different groups of stakeholders to focus on issues of the greatest relevance to their market participation, and enabling the policy development phase to move more quickly on multiple fronts than would be possible otherwise.

The discussion paper discusses the working group’s work on issues around DR and DER market participation through six thematic areas. We appreciate the use of themes to organize thoughts and discussion. We also appreciate staff’s recognition—in the discussion paper’s appendix—that the problem statements are deeply interconnected and interdependent, with a need for greater flexibility in metering, registration, and dispatch rules sitting at the center of many issues.

This is precisely the case for behind-the-meter (BTM) storage being able to more effectively participate in CAISO markets. The issues that need to be addressed to achieve that end cross multiple themes identified in the working group: Performance Evaluation Methodology, Economic Demand Response Participation, and Distributed Energy Resource Participation. And while some of these issues map neatly to specific market participation models—Proxy Demand Resource (PDR) and Distributed Energy Resource Aggregation (DERA)—some cross and apply to more than one model. Because of these intersecting and cross-cutting issues, it can be challenging to identify specific, discrete top-priority problem statements—as discussed further below under Question 3. 

That said, most of the issues relevant to enabling BTM storage to more successfully access CAISO markets center on the question of allowing performance inclusive of energy exported beyond site load. Providing greater pathways for participating with exporting resources involves addressing dispatch rules and allowing for flexibility in registration, metering, and measurement.

Working to address these interconnected issues will further the DDEMI working group’s guiding principles. First, enabling exporting BTM storage participation will increase efficiency because increasing the use of existing resources optimizes market utilization at lower cost. Second, it will allow for competition by providing greater market access for smaller-scale, flexible demand resources. Also, better enabling storage—including storage charged from solar—to participate in CAISO markets will promote state policies for clean energy and decarbonization. Finally, it is feasible to develop and implement the needed changes within a short timeframe, by modifying the PDR model.

As we have said throughout the working group process, reforming the PDR model to include exports and addressing metering requirements are top priorities for CALSSA and member companies, along with related PEM changes.

During the working group, we have also identified a number of obstacles to using the DERA model. While those challenges are complex, the working group should also tackle these issues during the policy development phase to enable that model to be a useful pathway for market participation.

Because the theme of distributed energy resource participation was discussed last in the working group scoping process, the process of finalizing the problem statements and providing an initial assessment of them was not completed before the final discussion paper was produced. 

While the discussion paper says that the problem statements for that theme were finalized in the working group’s Session 10, in fact, stakeholders agreed that some changes should be made to some of the problem statements. These changes should be incorporated into these problem statements before beginning policy development, to reflect the working group’s understanding.

Theme 5 (Distributed Energy Resource Participation), Problem Statement 3: “There is currently no pathway for DER aggregations (DERAs) to qualify for resource adequacy, and this is a multi-agency issue needing the CAISO’s attention because the CAISO would need to address or help resolve some issues (including deliverability determination and visibility) before the CPUC would develop a Qualifying Capacity methodology, as well as because the CAISO needs to develop Net Qualifying Capacity methodologies.”

In the October 16 meeting, stakeholders expressed concern that the problem statement may imply that the CPUC must wait for the CAISO to resolve issues before the CPUC can develop a Qualifying Capacity methodology or take other steps to enable exporting DERs to receive RA credit. Additionally, CALSSA commented that, while this is an issue for the DERA participation model, it is not limited to that model. 

For those reasons, we continue to recommend making changes to the problem statement as follows:

“There is currently no pathway for exporting DERs in aggregations (including those participating through the DERA model) to qualify for resource adequacy, and this is a multi-agency issue needing the CAISO’s attention because the CAISO may need to address or help resolve some issues (including deliverability determination and visibility) to support the CPUC’s work in developing a Qualifying Capacity methodology, as well as because the CAISO needs to develop Net Qualifying Capacity methodologies for DERA.”

Theme 5 (Distributed Energy Resource Participation), Problem Statement 6: “Device-level registration behind a single utility meter. Where separate resources at a single site participate in separate aggregations, such as a battery participating in a DER aggregation while the whole home using smart thermostat and heat pump water heater participates in a PDR, utilities may be concerned that the battery operation for DERA participation impacts the other program.”

During the October 16 meeting, stakeholders were unsure what challenge this problem statement seeks to address, and stakeholders and CAISO staff agreed that it should be clarified. CALSSA has suggested the following rewording to clarify that this problem statement addresses the challenge that current rules do not allow for separate participation of individual devices at a customer site. Importantly, this issue is not limited to participation through the DERA model, and instead cuts across models. 

Our suggested revision is as follows:

“CAISO site-level registration does not allow separate resources at a single site to participate in different aggregations for separate compensation from those services, such as a battery participating in a DER aggregation or a PDR resource while a smart thermostat at the same customer site participates in a separate PDR aggregation.”

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

We appreciate the CAISO staff’s initial assessment of the problem statements. CALSSA previously provided feedback on that assessment on November 6 for Economic-based Demand Response Participation Model Problem Statements 1 and 2 and Performance Evaluation Methodology Problem Statement 6. In addition to the feedback we provided in those comments, we offer the following thoughts.

(1) All problem statements related to enabling exporting behind-the-meter resources to fully participate in PDR fleets should be considered early in the policy development process. CAISO staff and stakeholders should be open to reconceptualizing the PDR model to encompass net exports across a PDR aggregation.

At the same time, the CAISO DDEMI working group should undertake what is needed to change CAISO policies and practices to enable these exporting resources to receive Resource Adequacy (RA) credit for exports. While RA is not primarily in the CAISO’s jurisdiction, it plays an important role in enabling RA credit. This is extremely important to unlocking the potential for BTM exporting resources for CAISO market participation because RA capacity market participation is a major source of value that will incentivize greater participation in both markets.

(2) For Economic Demand Response Participation Problem Statement 1 (including export of energy for PDR), CALSSA refers CAISO staff to our November 6 comments. In particular, we wish to highlight the importance of this issue and to emphasize that it should be included early in the DDEMI policy development work. 

Some stakeholders have expressed concern that the staff assessment included stating that the “problem” of PDR not including measured energy export may be out of scope of the demand response/load curtailment model. We understand that observation not to mean that the working group should not consider the issue, and instead, it signals the need for broadening the demand response/load curtailment model so that it encompasses this dispatch behavior. 

(3) For Economic Demand Response Participation Problem Statement 2 (barriers created by current metering requirements), again, we refer to our November 6 comments, and wish to emphasize that the CAISO should pursue changing the current policy approach of deferring to the CPUC, and consider setting a standard for metering in coordination with the CPUC.

(4) For Performance Evaluation Methodology Problem Statement 2 (existing PEMs not being well-suited for BTM batteries and similar technologies), the staff’s assessment comments suggest that addressing this issue will not be difficult. Doing so should be prioritized for early resolution.

(5) For Performance Evaluation Methodology Problem Statement 3 (BTM device-level measurement), CALSSA appreciates the CAISO staff observing that solving this issue may require PEMs customized for specific technologies, and we are ready to provide input into the development of such PEMs for BTM storage aggregations. Device-level measurement is an important modification to update CAISO processes to reflect current technological capabilities.

We also wish to note that earlier in the DDEMI process (see CALSSA comments submitted on May 1, 2025), we expressed concern that as worded this problem statement does not fully address important aspects of the issues around device-level measurement. We suggested that the problem statement be modified to include the issue that performance evaluations that depend on premises-level measurement and verification using utility-meter data reduce the ability for participants to measure performance at the device level and take advantage of the efficiencies of that approach. We look forward to continuing to discuss and address the issue during policy development.

(6) For Performance Evaluation Methodology Problem Statement 6 (device-level registration), as we noted on November 6, although the staff assessment states that this would require a high implementation effort, it is a high priority issue that should be prioritized in the policy development process.

Problem statements for Distributed Energy Resource Participation were not included in the preview of the CAISO initial assessment of problem statements during the October 15 DDEMI meeting. This is our first opportunity to give feedback on the assessment for this theme.

(7) Problem Statements 1 (WDAT required), 2 (NEM/NBT resources prohibited), and 6 (device-level registration/dual participation) are important issues that have inhibited the usefulness of the DERA model. We agree with the staff assessment about the need to coordinate with UDCs. That should happen through the DDEMI policy development process in later 2026 or in 2027.

(8) Also, Problem Statement 6 overlaps with Performance Evaluation Methodology Problem Statement 6 (device-level registration), and as for that problem statement, this is a high-priority issue that will make it much easier for useful resources to access CAISO markets. With revisions as suggested in response to Question 1, it should be prioritized for policy development even if it entails high implementation challenges.

(9) Problem Statement 3 (no pathway for RA qualification) is a major obstacle to the DERA pathway succeeding as a CAISO market participation model. We appreciate CAISO staff’s willingness to work collaboratively with the CPUC to develop a qualifying capacity methodology.

(10) For Problem Statement 4 (DERA 1 MW size limit), CAISO staff didn’t raise any regulatory or implementation considerations indicating  obstacles, suggesting that raising this limit should be straightforward. Therefore, it should be done during the DDEMI policy development process, so that these resources can provide benefits once other issues that have hampered the DERA model’s usefulness are addressed.

(11) For Problem Statement 5 (BTM batteries must manage retail rates 24/7), the staff assessment comment related to policy restates the problem statement in different terms, and is consistent with our understanding of the challenge that led to us proposing the problem statement for policy development. We would like to take this up as part of the DERA suite of issues to unlock the potential of this currently underutilized market participation model.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Anticipated benefits

CALSSA estimates that if exporting BTM storage is enabled to fully participate in the CAISO market, a substantial portion of the installed capacity would participate in market-integrated programs. According to the CEC, as of 2025, California already has over 3,000 MW of installed customer-sited storage (https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/california-energy-storage-system-survey). According to the California Distributed Generation Statistics website (https://www.californiadgstats.ca.gov/charts/), in the IOU territories, additions to distributed storage have been accelerating in recent years: 220 MW was installed in 2022, over 290 MW in 2023, 695 MW in 2024, and 830 MW through October 2025, with an anticipated 1,000 MW installed by the end of the year in IOU territories. Even if this trend were to stall and new installation remains flat, we can expect 1,000 MW of new installations each year in 2026 through 2028, or a total of over 6,000 MW installed by the end of 2028.

CALSSA and members believe that with the right market structures and policies in place, over half of the installed systems could be enrolled in market-integrated programs, or over 3,000 MW.

Moreover, the amount of energy available to the market from these resources is expected to increase markedly over the status quo if performance including exports is enabled. This is due in part to currently unused energy stored in existing batteries being activated, not only enabling exports beyond site load to be dispatched, but also avoiding the need to base performance on estimates of what site load will be—which by necessity are low to be conservative.

We also expect that many new storage systems will be sized larger, because the increased value of participating with exports included will incentivize larger systems. Such new capacity will be designed for market participation.

Prioritization

The 2026-2028 Final Policy Initiatives Roadmap includes DDEMI policy development work being completed in two phases, one in Q1-Q2 2026, and another in Q1-Q2 2027. It does not include DDEMI work extending into 2028. CALSSA supports the roadmap schedule for DDEMI policy development. As we observed at the top of these comments, stakeholder support for the DDEMI initiative is high, and this is a signal that CAISO leadership should provide additional resources for the DDEMI work as needed to enable significant progress in the 2026-2027 timeframe.

The overarching theme of BTM battery storage (and other exporting resources) participation in wholesale markets is a high priority for many stakeholders. This overarching theme encompasses a number of issues, which have been articulated as multiple related DDEMI problem statements. This means that there is no easy way to limit our priority issues to five problem statements. That said, the problem statements of concern to us have significant overlap, and can be addressed together rather than as independent issues each requiring separate consideration.

These are problem statement groupings, or topics, that CALSSA supports for CAISO prioritization.

1. Enabling exports from BTM resources to be included and measured

The lead issue for this topic, reforming the PDR model to enable exporting resources to participate fully, is captured by:

• Economic Demand Response Participation Problem Statement 1 (including export of energy for PDR).

Aspects of the related issue of how to meter and measure performance of BTM storage inclusive of exports are captured in the following problem statements:

• Economic Demand Response Participation Problem Statement 2 (barriers created by current metering requirements)
• Performance Evaluation Methodology Problem Statement 2 (existing PEMs not being well-suited for BTM batteries and similar technologies)
• Performance Evaluation Methodology Problem Statement 3 (BTM device-level measurement)

CALSSA urges the CAISO to include this topic’s related problem statements as highest, first-priority actions for the DDEMI policy development process.

2. Enabling device-level CAISO participation

Technology has changed since CAISO models for demand-reducing resources were developed and that it now very feasible to have separate individual devices at a single customer site participate in different CAISO resources. This topic speaks to the need for changes that will enable that participation. The related problem statements are:

• Performance Evaluation Methodology Problem Statement 6 (device-level registration),
• Distributed Energy Resource Participation Problem Statement 6 (device-level registration/dual participation)

CALSSA urges the CAISO to include work on this topic early in the 2026 policy development phase, particularly as related to use for exporting PDR resources.

3. Reforming the DERA model to make it used and useful for the CAISO markets

The CAISO’s FERC Order No. 2222–complaint participation model has been in place for a number of years with minimal uptake. Under the overall topic of addressing the DERA model’s challenges, there are a number of related, subsidiary issues that should be addressed to better realize the intent and goals of the DERA model and to make it a pathway to engage significant resources for the CAISO system.

Some of these issues will need to be addressed in coordination with the CPUC, and that process should happen in a holistic way, rather than addressing individual problem statements in isolation.

• Distributed Energy Resource Participation Problem Statement 3 (no pathway for RA qualification)
• Distributed Energy Resource Participation Problem Statement 1 (WDAT required)
• Distributed Energy Resource Participation Problem Statement 2 (NEM/NBT resources prohibited)
• Distributed Energy Resource Participation Problem Statement 4 (DERA 1 MW size limit)
• Distributed Energy Resource Participation Problem Statement 5 (BTM batteries must manage retail rates 24/7)

CALSSA believes the work on this topic should happen after solving issues for PDR, either later in the 2026 policy development phase or in the 2027 policy development phase.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

CPower thanks the CAISO for an excellent stakeholder process thus far and for the opportunity to provide comments. CPower’s top problem statements to prioritize are as follows:

Short Term (2026-2027)

1. Problem Statement 1. Performance Evaluation Methodology #2: Existing PEMs, such as the commonly used 5-in-10 and 10-in-10 approaches, are not well suited for emerging DR participation (inclusive of all technology types such as Behind-the-meter batteries, aggregations, Electric Vehicle charging, etc.) whose frequent dispatching distorts baseline calculations.
2. Problem Statement 1. Performance Evaluation Methodology #3: BTM device-level measurement is not recognized for use in developing baselines for PEM options. Performance evaluations depend on energy measurement (load and generation) and don’t recognize non-energy metered technologies contributions to load reduction calculation equivalents.
3. Problem Statement 4. Economic Demand Response Participation #1: While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market.

Mid-Term (2028-2030)

4. Problem Statement 5. Distributed Energy Resource Participation #1: There is currently no pathway for DER aggregations (DERAs) to qualify for resource adequacy, and this is a multi-agency issue needing CAISO’s attention because CAISO would need to address or help resolve some issues (including deliverability determination and visibility) before the CPUC would develop a Qualifying Capacity methodology, as well as because CAISO needs to develop Net Qualifying Capacity methodologies.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

We appreciate the broad stakeholder engagement and the well-coordinated working group process throughout this initiative. CAISO has demonstrated a willingness to adapt and respond to issues as they were raised in discussions. We appreciate CAISO taking this initiative, as it represents an important step in unifying behind-the-meter participation mechanisms. This is critical for unlocking the full resource potential within the distribution grid.

Derapi’s primary interest is focused in two areas:

• Providing a mechanism for exporting DERs to participate in CAISO markets (Problem Statements 4 and 5)

• Creating measurement methodologies appropriate to BTM energy storage (Problem Statement 1.2), and methodologies to enable multiple resources behind the same meter to participate in CAISO markets (Problem Statements 1.3 and 1.6)

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

We appreciate CAISO’s work to provide these initial assessments. We encourage CAISO to consider the interdependent nature of several of these problem statements, in particular the issues raised in Problem Statement 4 (Economic Demand Response Participation) and Problem Statement 5 (DER participation) and work to develop policies for these areas in a coordinated fashion rather than addressing them separately. For cross-jurisdictional matters, CAISO should begin work on the aspects within its jurisdiction while initiating conversations with other agencies.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

We recommend prioritizing Problem Statements 1, 4, and 5 to unlock substantial existing capacity enabled by battery storage. These should be addressed early in the policy making process and done with an integrated approach. These three problem statements are interconnected: device-level measurement and registration (Problem Statements 1.3, 1.6) addresses fundamental functions needed for any participation mechanism. Problem Statements related to recognizing exports from PDR participants (Problem Statements 4.1,4.2) and increasing DERA participation (Problem Statements 5.1, 5.6) address similar resource types and capabilities (specifically energy storage) and should be addressed together. As discussed in Working Group Sessions 3, 7, and 9, isolated implementation could result in a number of undesired outcomes, including: PDR rules that conflict with later registration reforms, incompatible precedents from independently developed DERA requirements, and performance methodologies that prove inadequate across different models. 

We suggest launching all three initiatives simultaneously in 2026 under an integrated framework. Groups working on all three areas should maintain regular coordination throughout the policy development phase. We acknowledge that certain issues such as RA and DERA reforms involve multi-agency efforts requiring longer timelines than device-level reforms. An integrated  approach balances short-term and long-term objectives, implementing meaningful near-term reforms while longer-term solutions are addressed. For example, addressing the more straightforward aspects of Problem Statements 1 and 4 could increase participation quickly, while simultaneously advancing the more complex PDR and DERA reforms simultaneously ensures we build toward a coherent long-term solution.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Leap appreciates the CAISO’s effort to represent stakeholder engagement in its DDEMI working groups in the most recent discussion paper. Developing a single document to reflect the numerous threads and conversations that have occurred over the working group sessions is no easy task, and by and large, the latest version of the discussion paper succeeds in accomplishing it. However, there are some areas where the discussion paper could be edited to better capture feedback provided by stakeholders during the working group process. 

For example, page 3 of the paper states that “stakeholders discussed and formalized the guiding principles with which the working group will consider how problem statements relate to market design principles.” However, the paper does not go into detail about those discussions, instead going on to list out the final guiding principles, which are the same principles that were initially proposed by the CAISO. This does not provide sufficient attention to the content of stakeholder discussions about these principles and their corresponding objectives, including feedback that stakeholders provided on whether the list was appropriate or complete.

Specifically, several stakeholders (i.e. Voltus, Joint DR parties) suggested in comments that the list be expanded to include principles related to increasing DER utilization. Tesla also proposed that the “simplicity” principle add an objective stating that “programs and tariffs should be designed in such a way that enrollment, telemetry, performance measurement and other features are as simple and straightforward for customers as possible.” To Leap’s knowledge, these ideas were not controversial, and while the CAISO may have ultimately decided not to incorporate them into its final list of guiding principles, it would still be beneficial to include a section in the discussion paper noting that these principles/objectives were proposed so that the stakeholders’ efforts to raise attention to them are captured. 

Similarly, Leap would like to repeat its suggestion from its last set of comments that the CAISO add two additional problem statements:

• DERAs currently require utility distribution company (UDC) review every time the composition of the aggregation changes, which is administratively infeasible because customers are added and removed from aggregations monthly as customers are recruited or churn.

• Currently, the IOUs’ ShareMyData platform is the primary pathway for customers to authorize data sharing with third-party DR providers. This limits the options that DR providers have in streamlining the data authorization process and prevents them from implementing more modernized and customer-friendly authorization methods that can verify a customer’s identity without requiring utility-specific login or account information.

The former problem statement was brought up in the October 16 working group and received no objections, while the latter has also been a subject of discussion in the past. If the CAISO declines to add one (or both) to the final discussion paper, it should at least note that problem statements connected to data access and UDC authorization of DERA meters were proposed so that this concern is recorded.

Finally, Leap suggests that PS 1.1 (on the number of baseline methodologies) be adjusted to clarify how having a large number of underutilized baselines “raises concerns on efficiency and accuracy in performance evaluation.” This wasn’t made clear in any of the working group presentations or discussions, making it difficult to know how to prioritize this issue. If this problem statement is to be retained in the final discussion paper, it should be rewritten to specify what the concerns are.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

The CAISO’s effort to provide an initial evaluation of the different problem statements is welcome and will help guide the prioritization effort going forward. The CAISO was also correct to emphasize that this assessment is preliminary, as there are several areas that leave room for further refinement. As this assessment is refined, Leap recommends that the Implementation sections be updated to include guidance on both the steps that will be required to implement a particular solution, as well as the relative difficulty to implement that solution. Currently, many problem statement assessments include one of these two components, but not all include both.   

In addition, Leap offers the following feedback on the specific problem statement assessments provided in the November 26 discussion paper:

Problem Statement 1.6 (Service-account vs. device-level registration): 

The Regulatory assessment for this problem statement indicates that it would require collaboration to revise requirements for UDC data access, which is not necessarily correct. Registration of resources at the device level should actually obviate the need for DRPs to access utility data at all. Instead, it would allow DRPs to participate devices directly using data pulled from on-board metering technology in the devices themselves. If there is a requirement for DRPs to use UDC data, then that requirement would indeed need to be revisited. However, beyond that, requirements connected to UDC data should not matter, because this data would not need to be accessed if resources are registered at the device level. As such, if the CAISO is not referring to a general requirement that DRPs use UDC data, then this part of the assessment should be removed.

In addition, the Implementation assessment of this problem statement identifies that the level of effort to implement this would be "high," but "potentially low" if the DRPs are handling aggregation of device-level data, as they currently do for meter data. To Leap’s knowledge, no stakeholder suggested that moving to device-level registration would change the current paradigm in which DRPs handle and submit data to CAISO, and there's no reason why such a change would be needed. As such, the CAISO should assume that DRPs will continue to provide this function to reduce complexity, and rank this problem statement effort as “potentially low.” 

Problem Statement 4.1 (DER Exports)

In this problem statement, CAISO states that an energy market solution would be relatively simple to implement, but it does not provide more context on what might be required outside of an energy market solution. To help stakeholders better understand the full range of potential solutions and their feasibility, the CAISO should specify what other solutions might be needed what they would require. In addition, the CAISO should make it clear that this problem statement is in scope for DDEMI by identifying and taking the “considerations” it references that are needed to scope it appropriately. 

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Properly prioritizing policy development should take into account the relative benefits of addressing each problem statement, but Leap recognizes that a full accounting of the different benefits is difficult to do at this time. However, in lieu of this analysis, determining which problem statements received the most attention from DDEMI participants can provide an alternative way of assessing their relative benefits, as it provides insights into which problem statements are most important to CAISO’s stakeholders. In addition, looking at the different types of stakeholders that have supported something (rather than the overall number) can show how widespread the benefits of addressing a particular issue would be.

Several problem statements listed in the discussion paper have received substantial support from stakeholders, indicating that they should be prioritized for implementation. A number of these problem statements were also considered by the CAISO to have a low implementation burden. These are ideal options for short-term implementation becuase they are relatively easy to address but would have a large beneficial impact once in place.

Based on these criteria, Leap recommends that CAISO prioritize addressing the following three problem statements:

• PS 4.1: “ While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market”

• PS 1.5: “Requirement for control group end users to be registered in the Demand Response System limits use of non-participating end users within a control group and is in conflict with consumer data privacy rules.”

• PS 1.6: “Requirement for registration of locations to be at the service account level prevents aggregators from developing resources at the level of the customer’s device.”

The current lack of compensation for DER exports, which is addressed by PS 4.1, was listed as a major problem in the most recent set of comments by numerous stakeholders from different parts of the industry, including utilities (PG&E), trade associations (CALSSA, AEU, VGIC) third-party providers (Leap, Tesla, Sunrun, Voltus), and non-profits (Vote Solar). Its implementation burden was also assessed as “low” (at least for an energy-only solution), indicating that it could be a “low-hanging fruit” opportunity, i.e. a policy development that would not be overly difficult but that would solve problems for a diverse group of stakeholders.

In the case of PS 4.1, the direct benefits that this change could provide can be meaured. In their presentation in the July 29 working group, Leap, CEDMC, and Renew Home identified that a lack of export compensation causes battery owners to reduce their market nominations by more than half. This equates to over 800 MW of “hidden” capacity in 2025 and, based on the CEC growth forecasts presented by CALSSA, Sunrun, and Tesla, more than 3 MW by 2040 (although Leap predicts that, if bidirectional EVs are included, the amount of “hidden” capacity could exceed 5 MW by 2030). This is a significant amount of capacity that could support system reliability in California for years to come if the CAISO is able to address this critical barrier. 

PS 1.5 (on control groups) was also prioritized by a broad range of stakeholders, including load-serving entities (PG&E, MCE), third-party providers (Renew Home), and the DMM. PS 1.6 (on device-level registration) was primarily supported by representatives of third-party providers, but almost all stakeholders in this category supported it (CALSSA, Leap, Tesla, Sunrun, Renew Home, Voltus). PS 1.6 also had a “potentially low” implementation burden if DRPs continued to handle data aggregation, which, as Leap stated above, would likely be the case. In addition, as CEDMC stated in their presentation on March 7, allowing device-level registration would increase participation in market-integrated DR by making it easier for customers to share data with third-party providers, further enhancing market efficiency and providing more resources to support system reliability.

Not only did these three problem statements receive significant support, but by Leap’s accounting, they received far and away the highest amount of support by stakeholders in the most recent set of comments. As such, Leap suggests that all three of these be prioritized for short-term implementation. This is prudent not just because they have been identified as important, but also because they require similar changes. Specifically, the Implementation assessment for PS 1.5 and PS 1.6 stated that both would likely require adjustments to the CAISO’s DR registration system, so it makes sense to enact them in parallel. 

In addition, implementing solutions to PS 1.5 would simultaneously address PS 1.2, which was connected to the failure of day matching baselines to accommodate resources that can dispatch frequently. The control group baselines referenced in PS 1.5 don’t have this issue, so if control groups were more easily accessible, DRPs would have a workable alternative for frequently-dispatching resources. However, Leap would like to emphasize that any efforts to address PS 1.5 should also provide a solution for third-party providers to more easily use control groups, as the CAISO suggested in its assessment. If not, then PS 1.2 will still be unresolved. If making control groups available to both utilities and third-parties is administratively difficult, then the prescriptive baseline approach proposed by Leap in the March 3 working group could provide a potentially more feasible option. 

The other two problem statements in Leap’s “top five” include the following:

• PS 4.2: “Current metering requirements for PDR restrict the ability to use device-level metering. Requiring revenue-grade meters (with ANSI C12 metering standards) on each individual resource within an aggregation creates significant administrative and cost barriers.”

• PS 1.3: “BTM device-level measurement is not recognized for use in developing baselines for PEM options. Performance evaluations depend on energy measurement (load and generation) and don’t recognize non-energy metered technologies contributions to load reduction calculation equivalents.”

Both of these problem statements are connected to the ability for DRPs to use device-level data for market settlement, so they would be in the same category of issues supported by multiple stakeholders. Solutions to PS 4.2 could also be extremely easy to implement in the short term. The CPUC has already developed alternative accuracy standards for EV supply equipment (EVSE) that the CAISO could reference for its EVSE baseline, per the guidance in its tariff. The CAISO could potentially also use these standards for batteries using its Metered Generator Output (MGO), given the similarity in these technologies, or work with the CPUC and/or CEC to develop a similar set of alternative standards for battery technologies.

Leap recognizes that not all stakeholders will agree with these priorities. The DDEMI problem statements are organized in distinct categories that are relevant to different stakeholder groups, so naturally, individual stakeholders will prefer that the CAISO address the issues most important to them first. The most effective way to address this would be for the CAISO to create separate tracks in the policy development phase, with each track addressing the problem statements relevant to specific stakeholder communities. 

Broadly speaking, the problem statements could be organized by DR market product (i.e. PDRs, RDRRs, Participating Load, WEIM resources, and DERAs), with the PEMs section being most appropriately addressed alongside PDRs. Ideally, the CAISO would run separate parallel tracks for these different products, allowing each stakeholder group's issues to be addressed without delay. However, if bandwidth constraints prevent the CAISO from taking this approach, Leap recommends that PDRs/PEMs be addressed first, as the volume of comments and overall stakeholder participation on these problem statements indicates that they are more urgent to a larger majority of CAISO participants. 

Regardless of what approach the CAISO takes, problem statements connected to DERAs (i.e. PS 5.1 - 5.6) should be addressed over the long term. Stakeholders identified a number of issues related to DERAs, all of which will need to be solved for DERA to be an effective market product. Solving all of these problems will likely take a substantial amount of time, and efforts to address them should not take precedence over similar reforms that could allow DR resources to more easily receive export compensation as PDRs (i.e. PS 4.1). Similarly, PS 6 (on demand-side bidding) is valuable but still in the early stages of development, and it should be considered a longer-term reform as well.

To summarize, Leap suggested the following sequence for policy implementation:

Short Term (2026-27)

• PS 4.1

• PS 4.2 (esp. for EVs)

• PS 1.5 / PS 1.2

• PS 1.6

Medium Term (2028-30)

• PS 1.3

• PS 1.4

• PS 4.3

(Problem statements categorized under PS 2 and 3 should be moved into separate tracks, or addressed in the medium term)

Long Term (2030+)

• PS 5.1 through 5.6

• PS 6

Finally, the implementation of solutions to these problem statements should be delayed by separate initiatives that the CAISO is working on (e.g. EDAM). In past surveys where stakeholders were asked to rank the relative importance of different initiatives, DDEMI was consistently among the highest ranked (if not the highest ranked) of the initiatives considered. In addition, the CAISO staff that would be implementing many of these solutions (e.g. changes to the DR registration system) would likely not be the same as those working on other initiatives. The attention and staff resources that the CAISO has dedicated to these issues up to now has been a boon for efforts to better integrated the state's substantial demand-side resources into CAISO's market, and Leap urges the CAISO to continue prioritizing it in the future.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Marin Clean Energy (MCE) appreciates the opportunity to comment on the Final Discussion Paper (Discussion Paper). MCE thanks the California Independent System Operator (CAISO) for launching and prioritizing the Demand and Distributed Energy Market Integration (DDEMI) working group, and for giving stakeholders the opportunity to help shape the policy vision on how demand and distributed energy resources can participate in the market.

Overall, the Discussion Paper successfully captures the working group’s efforts and the stakeholder-identified problem statements. As this initiative moves forward, MCE recommends the CAISO:

• Provide greater specificity in the Issue Paper to help stakeholders meaningfully engage during policy development, including clear objectives, market design considerations, and the potential policy pathways forward.
• Prioritize targeted reforms to the proxy demand resource (PDR) model and performance evaluation methodologies (PEMs) in the near-term, while advancing demand-side bidding as the longer-term policy direction.
• Implement near-term pilots with independent measurement and verification to demonstrate the efficacy of modified PDR and PEM proposals and include the necessary details in the Issue Paper.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

Many of the Distributed Energy Resource Aggregation (DERA) problem statements reflect structural challenges with the current participation model, rather than distinct issues that can be addressed through incremental or near-term reforms. Resolving these challenges comprehensively requires a fundamental reworking of the DERA model. This effort would consume significant stakeholder and CAISO resources, with unclear outcomes. Given the DDEMI initiative’s scope and timeline, MCE encourages the CAISO to prioritize targeted policy development opportunities in the near-term (including PDR and PEM reforms), while advancing demand-side bidding as the longer-term policy direction.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

MCE recommends that the CAISO prioritize the following PDR and PEM problem statements for policy development:

1. Problem Statement 4.1 – Short-term Priority

While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market.

2. Problem Statement 1.5 – Short-term Priority

Registration Requirement for control group end users to be registered in the Demand Response System limits use of non-participating end users within a control group and is in conflict with consumer data privacy rules.

3. Problem Statement 1.2 – Short-term Priority

Existing PEMs, such as the commonly used 5-in-10 and 10-in-10 approaches, are not well suited for emerging DR participation (inclusive of all technology types such as Behind-the-meter batteries, aggregations, Electric Vehicle charging, etc.) whose frequent dispatching distorts baseline calculations.

4. Problem Statement 4.2 – Mid-term Priority

Current metering requirements for PDR restrict the ability to use device-level metering. Requiring revenue-grade meters (with ANSI C12) on each individual resource within an aggregation creates significant administrative and cost barriers.

5. Problem Statement 4.3 – Long-term Priority

Current bidding rules prevent PDR from being able to reflect costs in the market when the costs are greater than the soft energy bid cap of $1,000/MWh. This results in inefficient use of the PDR resources and does not provide equitable treatment relative to all other resources that are able to reflect costs greater than $1,000/MWh.

PDR Problem Statements – 4.1, 4.2, and 4.3

MCE encourages the CAISO to prioritize the PDR problem statements in a sequential manner that reflects both reform feasibility and overall system value.

Problem Statement 4.1 should be prioritized in the short term because, as the CAISO’s initial assessment notes, reforms could be straightforward in terms of policy considerations and relatively low in terms of implementation needs. Resolving the export limitation in the near term would improve market efficiency by allowing PDR resources to more accurately reflect their full operational capabilities. Enabling more complete utilization of existing BTM storage resources would also strengthen reliability given the broader pool of flexible resources that would be capable of responding to grid conditions.

Problem Statement 4.2 should be prioritized in the mid-term because, as the CAISO’s initial assessment notes, metering accuracy standards for PDR are aligned with local regulatory authority (LRA) requirements, so reforms will require LRA coordination. While coordination requires sufficient time, DER participation in CAISO markets is currently limited by strict metering accuracy standards. Working to enable alternative accuracy standards would improve market efficiency by allowing aggregations to scale more efficiently.

MCE also encourages the CAISO to reframe Problem Statement 4.2 to state:

“Current metering accuracy standards and utility meter data latency create significant administrative and cost barriers and constrain DER participation in CAISO markets.”

Problem Statement 4.3 should be prioritized in the long-term because, as the CAISO’s initial assessment notes, this issue raises more complex challenges including the need for standardized opportunity cost definitions, more data visibility, and new verification and settlement structures. However, eventually addressing these issues would ultimately improve market efficiency by allowing PDR resources to more accurately reflect their costs.

MCE encourages the CAISO to implement pilots with independent measurement and verification to demonstrate the efficacy of modified PDR proposals before formal tariff or BPM changes, and to include the necessary details in the Issue Paper.

PEM Problem Statements – 1.2 and 1.5

Problem Statements 1.2 and 1.5 should be prioritized in the short term. Existing PEMs need refinement to support emerging DER deployment and strategies. Reducing barriers for emerging DERs is critical for improving market efficiency, and for unlocking broader DER participation in CAISO markets. The control group methodology can yield more accurate outputs and reduce exogenous distortions to customer baseline calculations, but its use is constrained by the requirement to register non-participant accounts for “matched” control groups. Together, these reforms can be addressed in the short term, which would provide a strong foundation for exploring more complex demand-side market reforms.

MCE encourages the CAISO to implement pilots with independent measurement and verification to demonstrate the efficacy of proposals for new or modified PEMs before formal tariff or BPM changes, and to include the necessary details in the Issue Paper.

Topic 6 - Expanding Demand-Side Bidding

In addition to the ranked statements listed above, MCE strongly encourages the ISO to explicitly prioritize Expanding Demand-Side Bidding as a strategic guidepost informing all future policy design and development under the DDEMI initiative.

While MCE recognizes that the introduction of demand-side bidding is a complex undertaking, prioritizing this concept now will help ensure that more immediate DDEMI reforms are aimed towards transforming the market to reflect a balanced, two-sided system. Exploring demand-side bidding in parallel with the above problem statements would help direct the right incremental solutions to both PEMs and the PDR models.

As the CAISO's initial assessment notes, demand-side bidding can expand DER participation, enhance system efficiency, and enable innovative load management strategies. For DER aggregations, the ability to optimize both import and export in response to price signals and system conditions is foundational to scaling cost-effective demand flexibility. Enabling bidirectional capability would also strengthen system reliability by allowing DER portfolios to dynamically respond to grid conditions.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Nostromo Energy appreciates the CAISO publishing the DDEMI final discussion paper and feel that it captures the details of the DDEMI stakeholder workshop discussions accurately and effectively.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

N/A

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

The continued identification of specific technological processes and opportunities is of considerable value to the market. Nostromo has found that the existing PEM methodologies are of limited use in establishing the accurate performance of Thermal Energy Storage installations in general including its existing installation and are concerned that other new installations and/or developing technologies will also experience similar difficulties unless addressed, possibly preventing GWs of dispatchable resources from integrating with the market quickly and effectively. The key is to establish a PEM that measures the resource directly.

For purposes of efficiency Nostromo believes that it is important to include the improvement of PEMs for new technologies (Problem Statement 1, subtopic 2), including thermal resources, as a short-term priority in order to help the CAISO markets in integrating new Demand Response technologies towards meeting the objectives of California Senate Bill 846 to bring 7 GW of “shift” resources into the market by 2030.

Likewise, Nostromo also believes that the development of a process whereby behind-the-meter device level measurement can be used in the calculation of load reduction equivalents (Problem Statement 1, subtopic 3) should also be included as a short-term priority.

Lastly, Nostromo recognizes that problem statements 1.5, 1.6, and 4.1 would also be very important to accomplish, but due to the implementation complexities of these issues Nostromo supports these efforts as medium-term priorities.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

PG&E appreciates the opportunity to offer comments on the final Discussion Paper. The Discussion Paper provided a straightforward summary of the background, content, and outputs of the DDEMI initiative, which is valuable given the transitions that have occurred throughout the DDEMI initiative. PG&E also appreciates the opportunity to provide input on the prioritization of the problem statements as the DDEMI initiative transitions to the policy development phase. PG&E provides that input in #3 below. 

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

PG&E concurs with CAISO's assessment of the DER problem statements which accurately captures the drawbacks of the DERA model for the widespread participation of demand and distributed energy resources in the CAISO markets.  As reflected in the prioritizations below, PG&E believes that DDEMI policy development should focus on improvements to Performance Evaluation Methodologies and the PDR model in the short term. 

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Problem Statements Sequenced in the Short-Term (2026-2027) 

First Priority: Performance Evaluation Methodology Problem Statement 1.5: Requirement for control group end users to be registered in the Demand Response Registration System limits use of non-participating end users within a control group and is in conflict with consumer data privacy rules. 

PG&E Rationale: PG&E presented the revision proposal on using controls groups for wholesale settlement to the working group and received stakeholder support in comments throughout the initiative. PG&E appreciates that, in the Discussion Paper, CAISO expresses interest in expanding the use of control groups due to their robust statistical methodology. PG&E acknowledges the time and monetary investment necessary to implement this change. Also, to address consumer data privacy concern, CAISO is encouraged to consider alternatives to requiring registration of non-participants (e.g., using aggregated data for settlement calculation and only requiring customer level data in an anonymous format in an audit). PG&E has established various benefits that would justify the required investments to implementation, including enhancing performance measurement accuracy and encouraging broader Demand Response Provider entry. Overall, expanding the use of control groups fosters innovation in the demand flexibility space, in line with the evolving California energy landscape. 

Second Priority: Economic Demand Response Participation Problem Statement 4.1: While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market. 

PG&E Rationale: This problem statement is a high priority for California, as it will unlock the full capability of export through demand response. PG&E recognizes that this problem statement around the CAISO market needs to be addressed together with the CPUC policy, to capture the true value of exported energy from BTM-interconnected storage, where the issues include: (1) a CAISO tariff change through proxy demand resource (PDR) or a new product, (2) a Resource Adequacy policy change wherein exports qualify as Resource Adequacy credits, and (3) Demand Response tariff changes wherein exports qualify for retail settlement. Although CPUC policy is outside the jurisdiction of CAISO, the availability of the CAISO market is an essential component of the solution. PG&E appreciates CAISO’s assessment that reforms on the CAISO side could be straightforward, which, when implemented, would make the market available to realize BTM storage's full capability. To drive the change in the CPUC policy, PG&E has expressed support to address this problem statement in two current CPUC proceedings: (1) Resource Adequacy OIR (R.25-10-003) and (2) Enhanced Demand Response OIR (EDROIR) (R.25-09-004). 

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Problem Statements Sequenced in the Mid-Term (2028-2030) 

Third Priority: Reliability-based Demand Response Participation Problem Statement 3.3: CAISO limits RDRR to a discrete dispatch limit of 100MW even if the resource is larger than 100MW, with exception criteria, which may be too limiting to represent the programs. 

PG&E Rationale: PG&E reiterates support expressed through comments submitted on November 6, 2025. PG&E supports revisiting the exception criteria to the RDRR discrete dispatch limit of 100 MW. PG&E agrees that it is not practical to disaggregate thousands of customers into sub-resources to remain under 100 MW. PG&E is also mindful of the potential for significantly large resources to participate in RDRR, wherein a single location could exceed the 100 MW resource limit. 

Fourth Priority: Performance Evaluation Methodology Problem Statement 1.6: Requirement for registration of locations to be at the service account level prevents aggregators from developing resources at the level of the customer’s device. 

PG&E Rationale: Prioritizing this issue in the DDEMI initiative is consistent with PG&E's support in EDROIR (R.25-09-004) reply comments (PG&E Reply Comments, p.14): "PG&E agrees that this topic should be in scope. As the proliferation of connected smart home devices and DER technologies reaches saturation point, revised dual participation rules that permit device-level enrollments could increase per-customer DR potential, and make DR programs more cost-effective, by allowing customers with multiple technology resources to participate in different DR programs." 
 
 

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Renew Home appreciates the opportunity to comment on the DDEMI final discussion paper and thanks the CAISO for their efforts. 

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

Renew Home provides no comment at this time.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Renew Home advocates for the following five problem statements for policy development, ordered from short- to long-term:

1. Performance Evaluation Methodology Problem Statement 2 (Short): Existing PEMs, such as the commonly used 5-in-10 and 10-in-10 approaches, are not well suited for emerging DR participation (inclusive of all technology types such as Behind-the-meter batteries, aggregations, Electric Vehicle charging, etc.) whose frequent dispatching distorts baseline calculations.
   
   Renew Home agrees that commonly used day-matching PEMs are not suited for emerging DR participation. However, we note that frequent dispatch is only one possible source of baseline distortions. Weather sensitivity is another such source, particularly for residential and HVAC loads, and we hope to address weather sensitivity as a baseline distortion as well. 
    
2. Performance Evaluation Methodology Problem Statement 3 (Short): Requirement for control group end users to be registered in the Demand Response System limits use of non-participating end users within a control group and is in conflict with consumer data privacy rules.
   
   In concert with reevaluation of PEMs (above), Renew Home looks forward to supporting improvements to the control group methodology. However, we do not find the "requirement for control group end users to be registered in the [DRRS]" to be a barrier per se, but the requirement to define, validate, and hold constant a control group for each resource ahead of each month to be the barrier to true, randomized controlled trials. Additionally, the minimum control group size is prohibitive, particularly for new resources. 
    
3. Economic Demand Response Problem Statement 1 (Short): While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market.
   
   Renew Home supports efforts to accredit and compensate BTM resources, such as batteries, for exports. 
    
4. Demand-Side Bidding Problem Statement (Medium): Electricity markets have yet to fully unlock the potential of demand-side resources, leaving price signals less effective, innovative load management strategies underutilized, and system efficiency gains unrealized. Demand-Side Bidding provides a pathway to expand participation, strengthen price responsiveness, and enable new approaches to load management, all while preserving market integrity and reliability. 
   
   Renew Home is keenly interested to explore a Demand-Side Bidding pathway for DR or load flexibility. While many details will need to be determined, Demand-Side Bidding may offer a middle path between supply-side DR and load modification that better reflect's DR's status as a demand-side resource. 
    
5. Performance Evaluation Methodology Problem Statement 3 (Long): BTM device-level measurement is not recognized for use in developing baselines for PEM options. Performance evaluations depend on energy measurement (load and generation) and don’t recognize non-energy metered technologies contributions to load reduction calculation equivalents. 
   
   Renew Home's primary load flexibility resource, smart thermostats, offer significant capacity but typically cannot measure the load "behind the thermostat" directly. As a result of needing to tie this resource to a customer account and meter, much of this capability is stranded and inaccessible to CAISO. Opening DR markets to device-level metering, particularly for non-energy metered technologies like smart thermostats, has significant potential to growth the market for economic load flexibility. Renew Home notes that PEM problem statement 6 regarding registration at the service account level could also be addressed by the policy development effort for this problem statement. 

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

San Diego Gas & Electric (“SDG&E”) appreciates the opportunity to provide feedback on the Demand and Distributed Energy Market Integration (“DDEMI”) Discussion Paper. SDG&E supports the ISO’s commitment to evolving grid participation models that better reflect today’s operational realities. We agree that this initiative should adhere to the key principles identified in the paper, specifically Efficiency, Competition, Feasibility, Simplicity, Reliability/Compliance, and State Policy Alignment. Adhering to these principles is crucial for fostering a competitive market that adapts to technological advancements while maintaining system reliability and ultimately best supports ratepayer affordability via increased participation in CAISO markets.

As outlined below, SDG&E recommends that the ISO prioritize problem statements that address immediate reliability risks and operational feasibility for existing resources. Our feedback emphasizes the need to remove artificial barriers for large-scale Reliability Demand Response Resources (“RDRRs”) and clearly define resource eligibility and operational requirements.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

SDG&E will offer more detailed feedback during the forthcoming policy development process. However, at this time, SDG&E provides the following comments regarding the assessment of specific resource constraints and market rules. This is an initial assessment of the underlying issues and does not represent an exhaustive list of SDG&E policy positions or planned advocacy during this initiative:

RDRR Operational Feasibility: The current RDRR dispatch limits potentially impose an operational infeasibility by fragmenting resource aggregations due to participation caps and RDRR size limits. Artificially requiring potential participants to divide these resources into smaller blocks increases administrative complexity without providing additional value.

False Scarcity in RDRR: The assessment should recognize that current “all-or-nothing” rules for RDRR create false scarcity. When a minor localized outage occurs, RDRR operators may be forced to withhold the entire aggregated resource to avoid penalties, causing the ISO to lose access to hundreds of MWs of available capacity. This problem amplifies what is potentially a minor issue into a major one solely because of market rules, not any underlying operational reality.

Participating Load Assessment: The assessment of Participating Load must address the misalignment between linear market optimization and discrete “on/off” assets. Current assumptions result in “uninstructed deviation” penalties for assets that are operating as designed but cannot physically follow a linear ramp. This misalignment potentially imposes additional costs on ratepayers due to model and bidding misalignment rather than real-world non-performance.

Interconnection Barriers: The assessment correctly identifies barriers for Distributed Energy Resource Aggregations. The conflict between State Rule 21 and Federal WDAT interconnection requirements remains a prohibitive barrier to entry for Virtual Power Plants.

Potential Impacts on Scarcity Pricing: The DDEMI initiative is also related to the concurrent policy discussions taking place in the Price Formation Enhancements initiative. DDEMI is intended to further enhance the market participation of demand, demand response, and distributed energy resources. This enhanced participation may then help to mitigate potential scarcity events.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

SDG&E urges the ISO to adopt a “Reliability First” approach. We have identified the following five problem statements as the highest priority, followed by our proposed sequencing timeline.

Top Five Priority Problem Statements (In Numerical Order):

Problem Statement 2.9: Participating Load Discrete Ops: Current linear dispatch assumptions penalize discrete resources for “uninstructed deviation” when they are operating as designed.

Problem Statement 3.3: RDRR Discrete Dispatch Limit: The 100 MW limit is operationally infeasible for mass-market IOU aggregations and risks stranding viable emergency capacity.

Problem Statement 3.5: RDRR Partial Outages: The lack of partial outage functionality forces efficient resources to be withheld entirely due to minor local distribution constraints.

Problem Statement 5.1: DERP Interconnection: The conflict between Rule 21 (State) and WDAT (Federal) interconnection is a key barrier to the formation and efficient operation of Virtual Power Plants.

Problem Statement 5.2: NEM/NBT Eligibility: Clear rules are needed to maximize participation while preventing double-dipping, ensuring ratepayer equity between retail and wholesale participation, and protecting affordability.

Proposed Sequencing:

Short Term (2026–2027): Focus on RDRR and Participating Load enhancements (Priorities 1, 2, and 3). These are, relatively speaking, simple fixes for existing resources that yield immediate reliability dividends by removing barriers that currently limit the effectiveness of California’s reliability portfolio.

Mid-Term (2028–2030): Address DERP Interconnection / NEM Eligibility (Priorities 4 and 5). These initiatives require complex interagency regulatory coordination with the CPUC and should follow the immediate operational fixes.

Long Term (2030+): Explore broader market redesigns beyond the stated priority items.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Six Cities Comments:  The Six Cities appreciate the CAISO’s continued efforts to work with stakeholders on the development of the problem statements for the Demand and Distributed Energy Market Integration (“DDEMI”) stakeholder initiative.  At this time, the Six Cities do not have further comments on the problem statements.  The Six Cities encourage the CAISO to continue to engage with the stakeholders as this initiative moves forward towards policy development and implementation.  To that end, the Six Cities understand that the Price Formation Enhancements (“PFE”) stakeholder initiative has referenced this DDEMI initiative as a forum for addressing certain issues relevant to the PFE initiative.  To the extent that the PFE initiative intends to rely on the work of this DDEMI stakeholder process, the Six Cities encourage stronger, clearer coordination between the initiatives, including identification of cross-over topics and assignment of responsibilities between the groups. 

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

  The Six Cities have no additional comments at this time.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

  The Six Cities have no additional comments at this time.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Southern California Edison (SCE) appreciates CAISO’s efforts to address the complexities of integrating demand and distributed energy resources into the market. While the discussion paper identifies important challenges, SCE remains concerned about the market’s ability to accurately model the operating capabilities and dispatch of Reliability Demand Response Resources (RDRRs). 

SCE believes that all RDRR-related problem statements that SCE submitted (e.g., removal of discrete dispatch limit of 100 MW, utilizing start-up instructions listed in the Masterfile, allowing for partial outages when RDRRs are used for distribution emergencies ) should be prioritized above other topic areas due to their significant impact and alignment with the DDEMI Working Group Principles—Efficiency, Competition, Feasibility, Simplicity, and Reliability. These issues have persisted for more than a decade, and CAISO must ensure they receive the highest priority moving forward. 

SCE has collaborated extensively with CAISO to outline the ongoing problems with RDRR modeling and utilization. Current inaccuracies create reliability risks, as RDRRs are not being deployed appropriately during declared grid emergencies. Addressing these concerns is essential to maintaining system reliability and market integrity. 

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

SCE generally agrees with CAISO’s assessment of the problem statements listed under the Distributed Energy Resources section of the discussion paper. Below are SCE’s specific comments on selected problem statements:  

1. Problem Statement: 
DERP does not allow Net Energy Metering (NEM)/Net Billing Tariff (NBT) 1 resources to participate, and because most BTM batteries are interconnected through Rule 21 as NEM/NBT resources, they are ineligible to participate in DER aggregations. 

SCE Comment: 
SCE agrees with CAISO’s initial assessment regarding concerns about allowing Net Energy Metering/Net Billing Tariff resources to aggregate under DERP.  These resources already receive retail credits for exported energy; however, if CPUC policies allow for additional compensation, SCE would support CAISO in aligning market rules accordingly.   

2. Problem Statement: 
DERP does not allow individual batteries sized greater than 1 MW to participate in an aggregation, but resources larger than 1 MW can provide benefits and should be allowed to participate. 

SCE Comment: 
SCE does not support aggregating individual DER batteries that are greater than 1 MW, as these aggregations could create significant challenges for CAISO in terms of monitoring, control, and reliability, especially if these resources do not have telemetry requirements.  Resources larger than 1 MW could have a substantial impact on the grid and should therefore be required to bid directly into the market with direct telemetry to ensure real-time visibility. 

3. Problem Statement: 
Device-level registration behind a single utility meter: Where separate resources at a single site participate in separate aggregations, such as a battery participating in a DER aggregation while the whole home using smart thermostat and heat pump water heater participates in a PDR, utilities may be concerned that the battery operation for DERA participation impacts the other program. 

SCE Comment: 
SCE acknowledges that device-level measurement could improve DERP accuracy and help distinguish performance among multiple devices participating in different programs. However, device-level registration does not align with the working group’s core principle of simplicity. 
Implementing this approach would require new infrastructure and processes for storing, monitoring, validating, and verifying device-level performance data. Questions regarding funding for this infrastructure and these processes must be addressed. If pursued, CAISO should ensure that responsibilities for storing, monitoring, validating, and retrieving data rest with aggregators and CAISO—not utilities. 

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

In the short term, CAISO should consider prioritizing RDRR problem statements. SCE remains neutral on the prioritization of all other mid-term problem statements. However, SCE will continue to actively participate in this initiative and provide feedback as needed.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

The State Water Contractors (SWC) would like to thank CAISO staff for organizing and engaging with stakeholders in the Demand and Distributed Energy Market Integration working group. We appreciate the process in which these issues are being developed by ISO staff. SWC supports CAISOs efforts to facilitate wholesale market participation of flexible load resources and its commitment to enable reliable, efficient, and seamless utilization of demand response into market operations.

SWC supports incorporating the original six guiding principles in the final DDEMI Discussion Paper and urges staff to advance policy concepts that are easier to implement and can serve as a foundational element of expanding demand and DER integration policies in the market.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

N/A

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

SWC’s comments are focused on Problem Statement 2 – Enhancing Demand Flexibility Market Operations and Problem Statement 6 – Expanding Demand-Side Bidding options.

SWC supports efforts to expand real-time load bidding and recommends the CAISO move forward with concepts that are “shovel ready” to establish a steppingstone approach from which ISO staff and stakeholders can work towards broader market changes.  

SWC suggests prioritizing development of policies in the following order:

1. Full participation for PL Resources (Short-Term) As noted in the analysis, PL resources cannot currently submit energy bids into the real-time market to decrease/increase consumption. Allowing full participation of PL to bid up or down in the real-time market would recognize the flexibility of these PL in responding to market conditions and continue the evolution towards a more complete model.
2. Real-time load bidding (Short-term): Allow participating loads (PL) to submit upward downward real-time market energy bids using existing participating load tools. SWC supports real time load bidding as it creates real-time flexibility and enables loads to reduce consumption when economically efficient. It also is a foundational piece needed to build out a greater system of demand flexibility which is the overarching goal of the DDEMI Working Group and policies being pursued in California.
3. SWC appreciates the inclusion of and is supportive of Problem Statement 6- Demand-Side Bidding (DSB) (Long-term). SWC agrees with staff’s assessment that there needs to be significant stakeholder engagement and market design enhancement prior to tariff changes. For example, the California Department of Water Resources (CDWR) must balance demands on the State Water Project between the environment, water deliveries, power generation, and recreation in the face of California’s boom or bust hydrological cycles.
   1. In the past, SWC member agencies have worked with CDWR to shift water deliveries (load) for hours or days when grid stressing conditions have occurred. For our members this flexibility can change on a daily or weekly basis depending on several factors, including but not limited to - how much water is available for delivery, demand, weather, quality and quantity of local supplies, how the water is used (e.g. irrigating crops vs. municipal uses) and their own storage capacity or lack thereof. 
4. Discrete PL enhancements (Mid-term): SWC supports pursuing policies that increase opportunities for PL with on/off operations to provide accurate bidding and reduce deviation costs. SWC recognizes that this policy requires additional development and should be prioritized after implementation of allowing PL to submit upward and downward energy bids and full participation for PL resources. 

While complicated, we look forward to working CAISO staff to advance policies that increase demand and distributed energy resource participation. SWC supports moving forward with development of policies to allow real-time load bidding, allowing participating load resources to bid up or down in the real time market, and discrete participating load enhancements as we believe they are the more easily implementable over other potential initiatives. Putting these policies into place first will be a significant step forward in building a market that reflects both supply and demand flexibility.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Sunrun appreciates CAISO staff’s work on the discussion paper and believes that it accurately summarizes the discussion that the DDEMI working group has had to date. Sunrun appreciates this opportunity to recommend additional modifications to further clarify the problem statements. To that end, we also recommend referring back to Sunrun’s comments submitted on November 6th for additional details.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

Sunrun appreciates the ISO assessment on the problem statements. In the assessment, CAISO states that problem statement 4.1 on improving Economic Demand Response for BTM battery storage might require discussions of deliverability. 

Problem statement 4.1 reads:  “While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market.”

In the problem statement assessment, CAISO states, “Determining deliverability under a reformed PDR model that addresses this problem may require additional analysis and policy development efforts” and that “This highlights a “problem” that may be out of scope of the demand response/load curtailment model, but with certain considerations, could be scoped appropriately.”

Sunrun believes that Problem Statement 4.1 should remain in scope for this initiative and prioritized by CAISO, which we discuss further below. We understand concerns that deliverability methodologies are out of scope for this effort, but problem statement 4.1 does not directly discuss deliverability and CAISO could modify PDR to be inclusive of exports without changes to the deliverability methodologies at this time. We therefore recommend that this assessment be removed from the final discussion paper.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Sunrun recommends that the CAISO focus on developing a viable market participation pathway to compensate for battery export and to enable device level participation from BTM battery storage devices to provide over 1,000 MW of capacity to the CAISO wholesale market. 

To achieve that outcome, following problem statements will be prioritized for implementation in the short-term, 2026-2027 timeframe. 

• Problem Statement 1: Performance Evaluation Methodology

• Problem Statement 4: Economic Demand Response Participation

• Problem Statement 5: Distributed Energy Resource Participation

We have identified more than five problem statements to Performance Evaluation Methodology, Economic Demand Response Participation and Distributed Energy Resource Participation because many of these problem statements are related and should be worked on together.

Over 1 GW of capacity could be added to the CAISO market by 2028 if barriers were alleviated.

Sunrun anticipates significant benefits to alleviating barriers to market participation for BTM battery storage, as CAISO can integrate existing and new storage resources into the market that are currently unable to participate. 

For example, the Demand Side Grid Support (DSGS) program has seen large amounts of BTM battery enrollment because it is a program that allows batteries to enroll at the device-level with performance evaluated by measuring battery discharge to serve both onsite load and exports.

DSGS has already seen over 700 MW of battery enrollment in 2025. An analysis by the Brattle report, which includes data from Sunrun’s residential battery fleet, estimates that program enrollment could grow to 1,300 MW in 2028 if the program remains in place and scalable. However, DSGS is a program that was not designed to last forever and is facing potential budget shortfalls as the Legislature failed to appropriate long-term funding this past session (2025). DSGS was also intended to be an emergency reliability program, not necessarily a program that contributes to day-to-day energy needs.

Furthermore, the 1,300 MW is still only a portion of the residential current and forecasted distributed battery capacity. California currently has over 2,200 MW of residential battery storage installed. The CEC has also released initial data for the 2025 Integrated Energy Policy Report (IEPR) forecasting that there will be 3,000 MW of customer-sited storage installed in California by 2028. (notes: CEC's IEPR has conservatively forecasted these amounts, and we believe they will be exceeded but they can be used as a reference point for the minimum projected growth). The CEC has estimated that 80% of customer-sited storage will be residential, meaning that there will be 2,400 MW of residential storage online in 2028 that California could leverage in wholesale markets and for grid services generally. This grows to 3,600 MW of residential storage by 2030. If there is a viable wholesale market pathway for BTM battery participation, Sunrun anticipates that more than 50% of battery resources could be integrated into the wholesale market in the long-term, as wholesale market participation is more stable than individual demand response programs. Therefore, battery aggregators are more likely to invest in the infrastructure needed to enable wholesale market participation.

Problem Statement 1: Performance Evaluation Methodology

Sunrun recommends that the CAISO focus on improving performance evaluation methodologies by allowing for device-level measurement and allowing exported energy from devices to be compensated in the wholesale market. Sunrun therefore recommends prioritizing the following problem statements in this group:

• 1.2: Existing Performance Evaluation Methodologies (PEMs), such as the commonly used 5-in-10 and 10-in-10 approaches, are not well suited for emerging DR participation (inclusive of all technology types such as behind-the-meter batteries, aggregations, electric vehicle charging, etc.) whose frequent dispatching distorts baseline calculations.

• 1.6: Requirement for registration of locations to be at the service account level prevents aggregators from developing resources at the level of the customer’s device.

These topics can be addressed together and should be prioritized by CAISO in the early stages of policy development for this initiative (2026-2027). Enabling performance evaluation for battery storage is fundamental for other elements of policy development, including work at the CPUC on improving resource adequacy valuation.

Problem Statement 4: Economic Demand Response Participation

For Proxy Demand Response (PDR), Sunrun again recommends that the CAISO focus on allowing device-level participation and enabling exports. We therefore recommend prioritizing the following problem statements:

• 4.1: While PDR is the most compatible CAISO model for BTM-interconnected storage, because it is conceptualized as load curtailment, it does not include any measured export of energy from individual locations to measure performance of the resource via any of existing PEMs—including MGO—so that BTM storage aggregations cannot offer the full resource capability, and PDR performance is artificially capped at levels reflecting conservative estimates of site load, resulting in significant energy from BTM storage that is unused during events and unavailable to the CAISO market.

• 4.2: Current metering requirements for PDR restrict the ability to use device level metering. Requiring revenue-grade meters (with ANSI C12) on each individual resource within an aggregation creates significant administrative and cost barriers.

PDR is a critical market participation pathway for behind the meter storage assets and Sunrun recommends that the CAISO focus on enabling export and its compensation in this market model. PDR has seen much more participation than the DERA model, given that the model allows for customers to participate in other retail programs and qualifies for Resource Adequacy.

Given that PDR is a functional market model, Sunrun recommends that the CAISO look to improve this market model to enable battery participation.

Problem Statement 5: Distributed Energy Resource Participation

The Distributed Energy Resource Aggregation (DERA) model faces multiple barriers to being used by wholesale market participants more broadly. While this market participation model already allows for exports to be provided to the wholesale market, DERA’s requirement to interconnect under the wholesale distribution access tariff (WDAT), disallowance of dual participation in retail programs, and lack of resource adequacy accreditation has led to a lack of participation in DERA.

Given the significant barriers to DERA participation, Sunrun recommends that the CAISO look at all the problem statements for this area. From a prioritization perspective, we encourage CAISO to address problem statements affecting both PDR and DERA during the 2026–2027 timeframe. However, if prioritization between the two market participation models is necessary within the roadmap's current plan of doing all DDEMI policy development in 2026 and 2027, we recommend that CAISO address PDR-related problem statements first.

Reference:

1. DSGS enrollment volume 2025: https://www.energy.ca.gov/event/workshop/2025-10/workshop-staffs-analysis-demand-side-grid-support-dsgs-program-performance

2. Brattle DSGS report: https://www.brattle.com/wp-content/uploads/2025/12/The-Demand-Side-Grid-Support-Program-An-Assessment-of-Scale-and-Value-December-2025-Update.pdf

3. California residential battery storage volume: https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/california-energy-storage-system-survey

4. 2025 Integrated Energy Policy Report: 

https://www.energy.ca.gov/sites/default/files/2025-11/Behind-the-Meter_Distributed_Generation_Forecast_Results_ada.pdf

https://www.energy.ca.gov/sites/default/files/2023-10/Behind-the-Meter_Distributed_Generation_Forecast_Results_ada.pdf

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Tesla appreciates the thoroughness of CAISO’s Final DDEMI Discussion Paper and the transparent effort to synthesize a year of stakeholder input into clearly articulated problem statements and an initial CAISO assessment. The paper appropriately reflects the scale, urgency, and diversity of issues affecting demand response and distributed energy resources, particularly behind-the-meter (BTM) storage.

We appreciate CAISO’s focus on prioritizing issues that are both:

• Near-term addressable, and
• High leverage for system reliability, market efficiency, and resource adequacy

In particular, the paper correctly identifies limitations in economic demand response participation models (i.e. PDR) and performance evaluation methodologies, and we encourage CAISO to recognize the immediacy and cost-effectiveness of addressing these issues relative to longer-term structural reforms. The 2026-2028 Final Policy Initiatives Roadmap, released on December 12, included DDEMI policy development being completed in two phases, the first in Q1-Q2 2026, and the second in Q1-Q2 2027, which aligns with PDR reforms to be considered within the next year. Tesla supports an expedited schedule for PDR policy development, ideally one that could be completed in the 2026 or early 2027 timeframe.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

Tesla generally agrees that the problem statements in Problem Statement 5: Distributed Energy Resource Participation appropriately capture the primary barriers that the DER Provider (DERP) / DERA framework faces for enabling behind-the-meter (BTM) storage to participate in CAISO markets. These issues include, among others, the challenges associated with wholesale interconnection requirements (WDAT) rather than Rule 21, restrictions affecting NEM/NBT-interconnected resources, the lack of a clear resource adequacy pathway for DER aggregations, and limitations related to individual resource size and device-level participation. We encourage CAISO to refine the problem statements based on the feedback CALSSA provided on November 6.

While Tesla appreciates CAISO’s initial assessment of these DER participation issues, Tesla encourages CAISO to treat the DERP/DERA barriers as an important long-term topic, but not as the primary near-term pathway for enabling scalable BTM battery participation. From Tesla’s perspective, the DERP/DERA framework faces multiple structural and jurisdictional obstacles that are unlikely to be resolved quickly, whereas PDR reforms offer a more viable and faster-to-implement pathway to unlock meaningful BTM battery value for reliability and market efficiency. Accordingly, Tesla recommends CAISO prioritize near-term solutions focused on improving PDR participation for BTM batteries, where targeted reforms can be implemented on an expedited timeline and can mobilize existing installed capacity sooner.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Tesla recommends that CAISO prioritize future policy development under the Demand and Distributed Energy Market Integration initiative based on two primary considerations:
(1) the ability to implement solutions on an expedited timeline, and
(2) the potential to deliver near-term reliability and market efficiency benefits using existing resources and participation models.

Short-Term Priorities (2026–2027)

In the near term, Tesla recommends that CAISO focus on targeted reforms to the Proxy Demand Resource (PDR) framework and related performance evaluation methodologies, where changes can be implemented relatively quickly and can quickly mobilize behind-the-meter (BTM) battery capacity that is already installed and interconnected.

1. Economic Demand Response Participation – Recognition of Exported Energy under PDR
CAISO should prioritize enabling exported energy from BTM storage to be recognized in PDR performance evaluation. This reform would allow PDR to reflect the full operational capability of BTM batteries, materially increase dispatchable capacity during grid stress events, and improve system reliability without requiring new participation models or wholesale interconnection pathways.

2. Performance Evaluation Methodology and Metering Flexibility for BTM Resources
CAISO should advance reforms that allow aggregation-level performance measurement using device-level telemetry or alternative, fit-for-purpose metering approaches for inverter-based resources. Improving performance evaluation and metering flexibility would reduce participation costs, expand resource eligibility, and improve accuracy in performance measurement while maintaining confidence in settlement outcomes.

3. Device-Level Registration Concepts to Support PDR Participation
In parallel with metering and performance evaluation reforms, CAISO should begin enabling device-level registration concepts, where feasible, to support BTM storage participation under PDR. Allowing resources to be registered and evaluated at the device level, rather than solely at the service-account level, would support more accurate performance measurement and help prepare the market for future DER use cases.  This would allow for participation of multiple DERs at a single residence, which is blocked now – potentially restricting BTM storage from enrolling if there is already another DR resource at the same location.

4. Alignment of PDR Enhancements with Resource Adequacy Considerations
As PDR participation is enhanced, CAISO should coordinate in parallel with the CPUC to ensure that exported energy from BTM resources participating through PDR can ultimately be considered in resource adequacy frameworks. Early alignment will help ensure that near-term market reforms support longer-term planning and reliability objectives and avoid the need for future rework.

Taken together, these near-term actions would quickly unlock more usable flexible capacity from existing resources, improve how accurately those resources are dispatched, and reduce the need for emergency or administrative measures when the system is under stress. On the other hand, if these barriers are unaddressed in the near-term, significant capacity will remain unnecessarily untapped in CAISO for a longer period of time, harming market efficiency.

Mid-Term Priorities

After PDR reforms are finalized, Tesla agrees that CAISO should revisit the structural challenges identified in Problem Statement 5: Distributed Energy Resource Participation. While those problem statements accurately reflect the significant barriers facing the DERP and DERA frameworks for BTM resources, they involve complex interconnection, jurisdictional, and market design issues that are unlikely to be resolved quickly. Tesla therefore views DERP-focused reforms as more appropriate for medium-term policy development, following successful implementation of near-term PDR-based solutions.

Potential Scale of BTM Storage

California already has a large and rapidly growing fleet of behind-the-meter battery storage that could be aggregated and leveraged to support CAISO market operations if participation pathways are created. California currently has more than 3,000 MW of customer-sited storage, with continued growth expected in the coming years.

This scale underscores the importance of prioritizing near-term reforms, particularly targeted improvements to the Proxy Demand Resource framework, that can unlock the value of existing and near-term BTM storage on an expedited timeline while longer-term participation model issues continue to be evaluated.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

We appreciate the care and attention CAISO put forth in arriving at the final problem statements. As we highlight below, Voltus’s primary interests lie within Problem Statement 4 focused on expanding participation in Economic Demand Response, specifically via establishing an enhanced PDR framework that measures exports as well as enhancing metering requirements to allow a wider variety and quantity of devices to participate in the market. Problem Statement 5 focuses specifically on Distributed Energy Resource Participation (DERP) which to some extent overlaps with PDR. In our view, it would be inefficient to simultaneously expend resources on improving DERP and PDR, since DERP provides a similar pathway to PDR if BTM BESS are able to get credit for exports under PDR. Our recommendation is to focus on PDR/economic DR improvements while also incorporating DERP Problem Statement 5, parts 3 and 6, which identify similar issues affecting PDRs wherein exports do not receive capacity credit nor can multiple devices participate in different programs or aggregations. 

Overall, Voltus commends CAISO for facilitating a robust and thorough working group. As a result of this effort, a considerable number of problems have been identified. CAISO’s request for stakeholders to provide feedback to help prioritize these issues and support those recommendations with anticipated market benefits is an excellent way to help identify where there will be the most impact. Recent history in the CAISO DR/DER marketplace shows that having a large quantity of participation models, baselines and/or programs does not translate into large enrollments of MW, and in fact may diminish market efficiency and DR growth (LBNL Phase 4 DR Potential Study Section 5.1.2 “Barriers to realizing DR potential”). Instead, the goal should be to streamline and simplify the most impactful pathways to improving market efficiency and system reliability; in our view PDR enhancements will accomplish this.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

We appreciated CAISO’s assessment of the problem statements. It was very helpful to have an indication of what direction the ISO is going and to gauge the level of effort that may be involved with each. We believe the robust working group participation amongst stakeholders is a sign that there is a significant opportunity across the various problem statements to improve market efficiency and reliability. Therefore we encourage the CAISO to consider working on these in parallel as much as possible via multiple tracks as opposed to sequencing, especially because several problem statements are interrelated.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Voltus strongly supports and recommends the prioritization of problem statements pertaining to (1) enhancing PDRs to give energy and capacity credit for exports, (2) revising metering standards, and (3) allowing registration and M&V of individual devices. These enhancements would enable many more customers and devices to cost-effectively participate in the market, improving market efficiency and system reliability, and as such should all be prioritized in the short-term (2026-2027) as they are inter-related and have significant synergies. We summarize our view of potential impacts of these enhancements as follows:

1. Enhancing PDR to include measurement of exported energy and credit for capacity: 3 GW incremental additional capacity over the next several (3-5) years

   1. Based on the fact that there are 3 GW of storage installed today between C+I and residential customers, we assess that to the extent another 3 GW are deployed over the coming 3-5 years, it would be economical to double the size of BESS projects if exports are allowed. 

   2. Rationale: If the marginal cost of additional BESS capacity for a project that is already economical is $200/kWh, we believe at least $100/kW-yr in wholesale capacity + energy revenues are available. With 1 kW/4 kWh of incremental  BESS capacity, this represents a 8 year simple payback that would be sufficiently attractive to developers and customers ($800 fixed cost / $100 revenue/yr). It is also important to highlight that the time-to-market for BTM resources is typically far less than FTM due to more streamlined interconnection requirements.

2. Enhancing PDR metering and device-level registration to allow device-level M&V could deliver >1 GW of additional DR capacity: 

   1. Residential: If only 50% of the 280,000 residential customers with BESS were equipped with smart thermostats, each with 1 kW of load reduction, that alone would represent 140 MW of additional load reduction potential.

   2. Commercial: C+I and small commercial sites are often equipped with on-site solar (and increasingly storage), which significantly reduces or eliminates the baselines of these sites, eroding their market value today. However, in our experience these sites are able to still incrementally curtail their facility loads. By decoupling these baseline effects with submetering of solar or with device-level M&V, the underlying load curtailment can be calculated (following provisions to do so in the Tariff). Of the 2.2M BTM solar installations in California comprising 19.3 GW, if only 5% of this solar capacity was co-located with equivalent load that is curtailable in DR, this would still represent nearly 1 GW of additional DR capacity that is not economically available to the grid today.  

In summary, Voltus’s top 5 problem statements are as follows (all of which we consider to be short-term priority in 20267-2027 that would lead to the impacts identified above):

1. Problem Statement 4.1 - enhancing PDR to include measurement of exported energy

2. Problem Statement 4.2 - enhancing PDR metering requirements to use device-level metering

3. Problem Statement 5.3 - no pathway for DER aggregations to qualify for Resource Adequacy and this is a multi-agency issue needing CAISO’s attention (this should not be limited to DERA).

4. Problem Statement 1.6 - registration of locations at service account level rather than device level prevents aggregations of similar devices (short term).

5. Problem Statement 1.3 - BTM device-level measurement is not recognized for use in developing baselines for PEM options.

Thank you for this opportunity to comment.

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

Vote Solar commends the CAISO team for its facilitation of the DDEMI working group and for the November 26, 2025 discussion paper. The collaborative stakeholder process has enabled a robust discussion of the issues that has resulted in the clear problem statements contained in the discussion paper.

Vote Solar believes that the integration of distributed energy resources (DERs) into wholesale markets should be among the highest priority activities for the CAISO over the next several years. California and the rest of the West are experiencing load growth at a pace not seen in decades.  There is a compelling need to integrate more clean power generation and flexibility resources to meet that growing load which is both widely dispersed for vehicle and building electrification and concentrated for data centers and other new large loads.

Vote Solar agrees with the six principles articulated in the discussion paper.  They can serve as an important framework for assessing and balancing trade-offs among proposed changes to the CAISO market rules and policies that require support and implementation from other California institutions.  Vote Solar strongly agrees that the CAISO and members of the working group should facilitate consideration of needed policies by various state agencies.  We believe there needs to be a sense of urgency among all of us to put statewide policies into practice that can quickly add market capacity from the large reservoir of available DERs that have been built across the State.

As in most complex processes there is a need for prioritization of future activities.  Vote Solar believes that the most impactful change that can be effectuated in the near terms is to modify and improve the proxy demand response participation model.   There is a large pool of behind-the-meter batteries that with appropriate incentive could be used more effectively to meet peak demand and provide other grid services if barriers are removed.

Vote Solar strongly agrees with the discussion paper’s characterization of the problems that impede distributed energy resources from robust participation in CAISO markets.  These problems need to be addressed with more specificity in the next phase of DDEMI.  Consumers will benefit from BTM storage aggregators being able to tap the full resource capability of BTM batteries .  We also agree that metering requirements need to be reasonable and cost effective rather than defaulting to existing revenue meters.  

Vote Solar is impressed with the innovative idea of demand-side bidding.  The CAISO’s presentation of demand-side bidding options was illuminating with potentially large economic benefits for ratepayers.  We recognize that integrating demand side bidding into the CAISO’s wholesale markets is complex and needs to be implemented in a way that improves reliability and lowers costs.  We encourage the CAISO to continue to address this problem in subsequent phases of the DDEMI working group

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

Vote Solar agrees with the characterization of the six fundamental barriers that impede DER aggregators from using the CAISO’s distributed energy resource participation (DERP) model. 

Requiring WDAT interconnection is a fundamental barrier for aggregators to use DERP as a way to market.  Deferring to the utility distribution companies (UDCs) to remove this barrier and to permit Rule 21 interconnections will not solve the problem.  Vote Solar believes that coordination with UDCs is needed but that progress in this area will depend on CAISO leadership.

Another huge impediment to participation in DERP is the lack of a clear pathway for DER aggregations to qualify for resource adequacy.  This can be seen as a chicken and egg problem between the CAISO and CPUC processes for determining qualifying capacity (QC) and net qualifying capacity (NQC) both needing to be resolved.  One agency needs to be committed to lead in the resolution of this problem.

Another barrier is the lack of clarity as to how multiple devices behind a single meter could be aggregated by companies that specialize in the management of a specific device such as smart thermostats.  This barrier also applies to the proxy demand response program.

Overall, Vote Solar believes that the barriers to DERP are so significant that stakeholders should not expect much progress in the near to medium term.  Therefore, we would advocate for this problem to receive a low priority in the next phase of the process.  DERP reform should be considered as a long-term issue to be addressed in the post 2030 time frame. 

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

Vote Solar believes it is important for the CAISO to take decisive action to advance the use of DERs in the near-term (2026-2027).  Near-term successes will enable deeper market integration over time. We are persuaded that there are four issues that are amenable to near term implementation based on information provided by the CAISO.  They are:

Problem Statement 2.4: Cumbersome Manual Load Forecast Adjustment Process

The implementation to address this problem is listed by the CAISO as being in-progress already. The CAISO has addressed this issue in developing the Extended Day-Ahead Market.  This suggests that existing work can be leveraged to enable near term correction of this problem.

Problem Statement 1.2: Baseline Calculations Distorted by Frequent Dispatch

The effort needed to address this problem is assessed by the CAISO as low. The CAISO notes that adding options to existing Performance Evaluation Measures is relatively simple. Furthermore, the CAISO suggests reviewing the Metering Generator Output baseline, which is designed to accommodate frequent dispatch, potentially offering a simpler path forward.

Problem Statement 4.1: Measured Export from BTM Storage in the Proxy Demand Response Program

The CAISO assesses that an energy market solution to enable BTM storage exports would be relatively low. However, the CAISO also notes that determining deliverability to establish Resource Adequacy (RA) would likely require additional analysis and policy efforts.  Vote Solar suggests that enabling exports in the PDR model can be addressed in the near-term while addressing the RA problem should be a high priority medium term issue.

Problem Statement 3.2: Reliability-based Demand Response Minimum On Time

Implementing a more accurate longer minimum on time in the Real Time Pre-Dispatch system is assessed by the CAISO as requiring low effort. This refinement would be operationally valuable to the ISO and should be implemented in the near-term. The CAISO notes that implementation for shorter duration resources would require a greater implementation effort and should be considered a medium-term issue.

Problem Statement 6: Expanding Demand-Side Bidding Options

Vote Solar agrees that unlocking the potential of load flexibility to enable system economic efficiencies needs to be a priority activity for the CAISO. We understand that implementation is complex and would upgrades to CAISO market systems.  Vote Solar recommends prioritizing this issue as a medium-term one.  

1. Please provide your feedback on the demand and distributed energy market integration final discussion paper.

PacifiCorp, Portland General Electric, and the Sacramento Municipal Utility District (collectively, the WEIM/EDAM Participants) appreciate the CAISO’s effort to consolidate stakeholder feedback into the Final Discussion Paper. The document captures the overall challenges facing demand response and distributed energy resources; however, several core issues remain unaddressed for WEIM and future EDAM participation.

• Need for explicit treatment of WEIM/EDAM applicability
  • The final paper appropriately summarizes a wide scope of issues but generalizes regional perspectives in aggregated problem statement formation. The WEIM/EDAM Participants believe it is important to differentiate the problem statements raised because the hurdles faced by each interested party, whether an WEIM/EDAM Balancing Authority Area (BAA) operating their distinct retail programs and regulatory environment, a load serving entity, or a distributed energy resource provider navigating the California Public Utilities Commission requirements, will have different challenges and needs in order to allow for participation of their programs. We encourage the CAISO to preserve the regional framing in future scope definition and avoid collapsing unique WEIM/EDAM concerns into BAA-neutral statements to better identify the intended audience for future working group and policy discussions. The WEIM/EDAM Participants envision various tracks or subgroup meetings to allow for deeper dives into what the challenges are and allow for more fluid conversations.
• Performance Evaluation Methodologies (PEM) held within the tariff limit the necessary flexibility for Demand Response (DR) program implementation
  • The WEIM/EDAM Participants appreciate the CAISO’s acknowledgment that tariff-level PEM codification limits emerging demand response (DR) participation. However, the paper does not meaningfully reflect the solution pathway raised in original comments – namely, the need to move PEM governance out of tariff and into a more flexible structure. The WEIM/EDAM Participants understand that the Federal Energy Regulatory Commission (FERC) has insisted on listing DR PEMs but have not required this of the CAISO. The discussion paper recognizes that reconsideration may be warranted, and these additional comments, together with prior feedback, will continue to advocate for such. Without this modernization, EDAM participants will inherit a PEM framework that cannot accommodate DR programs designed around each participant’s regional operating realities and current business practices. Consequences of unsuccessfully registering DR programs, which remain whether in WEIM and/or EDAM, will result in a limitation of real capacity that could be base/self-scheduled or dispatched if the need arises. Evolving the market based on the needs of market participation in the CAISO markets is prudent.
• Proxy Demand Resource (PDR) limitations continue to block DR participation in regional, non-CAISO BAAs
  • Although the paper notes several PDR challenges, it does not address the deeper reality that the PDR construct is operationally incompatible with many WEIM/EDAM DR and Distributed Energy Resource (DER) programs. Requirements such as 4-second telemetry (required for programs exceeding 10 MWs), revenue-grade metering for each sub resource, and load-curtailment-only design effectively preclude participation by aggregated DR programs. This structural issue needs more explicit attention. Additionally, there may be other participation models that would be suitable but have not received sufficient airtime during calls (such as the non-generator resource offered models).
• Load Forecast Adjustment (LFA) transparency remains critical for EDAM readiness
  • We appreciate the CAISO’s recognition of LFA deficiencies and the ongoing IT work to implement automation improvements. To help prepare for participation in the EDAM, additional clarity is needed on how the LFA will function in the EDAM, including timing, validation processes, and interaction with demand forecasts in the RSE. Because LFA determines how regional demand-side resources are represented in both WEIM and EDAM, transparency on this process is essential.
• Need for WEIM/EDAM–specific engagement structures
  • The Final Discussion Paper does not address the WEIM/EDAM Participants’ request for a WEIM/EDAM-focused subgroup or a companion guide to clarify requirements for external BAAs. We recognize that CAISO staff are balancing significant bandwidth and initiative commitments, yet as EDAM moves toward implementation, dedicated structures will be increasingly important to ensure regional DR/DER integration is effective.

2. Please provide your feedback on the ISO assessment on the Distributed Energy Resource (DER) problem statement assessment.

3. Please share your thoughts on how CAISO should prioritize or scope future policy development for this initiative. The ISO is interested in your top five problem statements and how they should be sequenced in the short-term (2026-2027), mid-term (2028-2030), and long-term (2030+), and to the extent possible, discuss any anticipated benefits to market efficiency or system reliability.

The WEIM/EDAM Participants prioritize the scope as follows:

• Short-term (2026-2027):
  • Performance Evaluation Methodology – problem statements 1, 2, and 4.
  • Enhancing Demand Flexibility Market Options – problem statements 3 and 4
  • Demand side bidding options
• Mid-term (2028-2030):
  • Working group session 10, exploration of what a reliability-based demand response program within the WEIM would entail.