Please provide a summary of your organization’s general comments on the Draft Final Proposal and Tariff language and presentation for this initiative.
Middle River Power LLC (“MRP”) offers these comments on the proposals within the CAISO’s January 19, 2023 Draft Final Proposal (“DFP”) to (1) modify the Shift Factor Threshold (“SFT”) for Trading Hubs (THs)”and Default Load Aggregation Points (“DLAPs”) and (2) implement tariff language to allow the CAISO to temporarily change scheduling run market parameters without first making a Federal Power Act Section 205 filing or notifying market participants.
Modifying SFT for THs and DLAPs
The CAISO proposes to reduce the SFT for THs and DLAPS from 2% to 0.2% while leaving the 2% SFT in place for all other nodes. The CAISO asserts this change is necessary because the SFTs used in the CAISO market network model but not in the Congestion Revenue Rights (“CRR”) network model creates situations in which the differences between the two models results in CRR deficits, including situations in which some CRR settlements actually reverse – from the CRR paying out to the holder of the CRR having to pay – because of aggregated node flow effects that are not captured in the market network model because of the use of the 2% SFT for those aggregated nodes in the market network model. The SFTs prevent the market model from inc-ing or dec-ing resources that have small impacts on the flow on network constraints, but also fail to account for meaningful flow impacts that result from large aggregations of resources (i.e., THs and DLAPs). The CAISO does not want to lower the SFTs for non-aggregated nodes because it believes doing so would result in the network model inefficiently trying to move individual generators that have small flow impacts, affecting the solution time and unduly impacting nodal prices. The CAISO views lowering the SFTs for THs and DLAPs but not for individual nodes as a compromise that helps address CRR deficits but does not degrade market solution times or unduly affect price formation.
In its earlier comments, MRP suggested that, instead of changing SFTs for some but not all nodes in the market model, the CAISO implement a 2% SFT in the CRR model. The CAISO responded that it cannot do that because of the way that aggregated pricing locations are represented in the CRR model (CRRs based on DLAPs and THs are represented in the CRR model by individual source-sink locations)..
For MRP, the problem the CAISO seeks to address arises because of differences between the CRR network model and the market network model. The CAISO accepts differences between these models for things such as changes in topology that arise in the market network model in real time, but now wants to change SFTs for some but not all nodes to address CRR deficits that the CAISO says arise from the application of the SFTs in the market model.
While the CAISO refers to this as a necessary compromise, MRP is not yet convinced that this non-uniform change to SFTs for some but not all nodes is not undue discrimination. The CAISO offers that, based on analysis for a single, or, at most, two trade days, the impact of the proposed change on the marginal congestion component (“MCC”) is not significant. MRP disagrees. The graphs in DFP Figures 15 and 17 show what MRP considers to be significant changes in the MCC for the DLAPs in some hours. For example, the MCCs in the SDG&E DLAP appear to be $5-10/MWh different for hours 9-17 on April 19, 2022; to MRP, such price differences are not "not significant". Moreover, this analysis is only for two trade days. From this relatively limited analysis, MRP cannot conclude that the proposed change in SFTs applied to some but not all nodes is not unduly discriminatory. MRP respectfully urges the CAISO to conduct and present additional analysis, over a much wider set of pricing nodes and for more and different times, to support its conclusion that this change is neither significant nor unduly discriminatory.
Implementing Tariff Provisions to Allow the CAISO to Temporarily Change Scheduling Run Market Parameters
The CAISO asserts that other ISOs have the authority to change scheduling run parameters without first filing at FERC or notifying market participants that the CAISO now seeks. MRP has not independently verified that assertion, but requests that the CAISO point its market participants to the relevant governing documents that establish this authority for the other ISOs.
MRP appreciates that the CAISO has sought to build some “guardrails” in this tariff provisions providing the CAISO with the authority to change scheduling run parameters without filing at FERC or notifying market participants. These parameters unquestionably affect CAISO market prices and any authority granted to the CAISO to change them without a Section 205 filing or without notice to market participants should be carefully and narrowly defined. MRP believes, however, that the CAISO has not yet adequately defined the circumstances under which the CAISO can change scheduling run parameters without a FERC filing or without notifying market participants.
The proposed tariff language is:
31.4.1 Temporary Changes to Scheduling Run Parameter Values
If the CAISO determines it is necessary to modify the scheduling run parameter values in sections 31.4, 34.12.1, or 34.12.2 to ensure the market clearing solution is feasible or avoid operational or reliability problems the resolution of which would otherwise require recurring operator intervention outside normal scheduling and market procedures, it may temporarily modify the value for a period up to ninety days, provided however CAISO will file such change with FERC under Section 205 of the Federal Power Act within thirty days of such modification. If circumstances reasonably allow, CAISO will consult with FERC and the CAISO’s Market Monitoring Unit before implementing such modification. In all circumstances, the CAISO will (i) consult with those entities as soon as reasonably possible after implementing a temporary modification, and (ii) notify Market Participants within three business days after the change of any temporary modification and explain the reasons for the change. This section does not authorize the CAISO to change the scheduling run parameter values in a manner that changes the relative scheduling run priorities specified in sections 31.4, 34.12.1, and 34.12.2.”
MRP is specifically concerned about two aspects of this language.
First, MRP in concerned that the phrase “to ensure the market clearing solution is feasible” is too ambiguous and does not sufficiently narrow the CAISO’s authority to make unnoticed and unfiled changes to scheduling run parameters. MRP questions whether this proposed language could be applied to the current situation, in which the CAISO is changing SFTs because of CRR deficits. These CRR deficits do not exist because the CAISO’s current market clearing solution is “infeasible”. These deficits exist because of systemic differences between the CAISO CRR network model and the CAISO’s market network model. The CAISO is proposing to correct some of these differences by making non-uniform changes to SFTs in its market model, but some of the differences, such as those due to unanticipated changes in network topology,cannot reasonably be corrected. As a result, MRP is concerned that describing the market clearing solution as “infeasible” does not properly capture the nature of the problem that the CAISO is trying to correct with a change that MRP does not believe the CAISO has fully demonstrated to not be unduly discriminatory. MRP encourages the CAISO to propose different, more precise language under which the CAISO can make unnoticed and unfiled changes to market parameters that better narrows and focuses the authority the CAISO is seeking.
Second, MRP believes that the CAISO can and should provide notice to the market of any parameter changes more quickly than within three business days. The notice to the market of any changes need not be complex, and MRP believes this notice can and should be provided within a single business day.
 DFP at pages 7-8.
 DFP at page 35.