Comments on Comments for Storage Design and Modeling meeting on 6/30

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

AES appreciates CAISO's efforts to address critical storage and hybrid resource market design issues through the Storage Design and Modeling initiative. As an independent power producer operating more than 5 GW of combined Solar, wind, storage, and thermal assets across the CAISO grid—including standalone BESS and hybrid solar+storage—AES has extensive operational experience with the challenges discussed in the June 30 meeting.

We commend CAISO for developing, publishing, and discussing various issues, as well as soliciting stakeholder feedback on these complex topics.

Key themes in AES's comments:

• Process Enhancement: Support for robust stakeholder engagement processes with clear problem statements, straw proposals, and iterative feedback related to the "follow DOT" flag for VER's co-located with storage assets.
• Operational Clarity: The need for clear rules and guidance on SOC management, dynamic limit usage, and distributed resource operations.
• Market Efficiency: Support for bid cost recovery mechanisms that reflect operational realities while maintaining competitive market structures

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

 AES supports the implementation of appropriate bid cost recovery mechanisms for storage resources. We recognize that storage resources have unique operational characteristics that differentiate them from traditional generation resources, particularly in terms of opportunity costs and state-of-charge management.

AES's Position:

Support BCR Implementation: Storage resources face legitimate operational constraints and opportunity costs that warrant consideration for uplift.

Operational Reality: The 11% frequency of out-of-market (OOM) dispatch observed by NextEra reflects real operational challenges that justify compensation mechanisms.

Storage resources provide critical grid services and should be compensated appropriately when dispatched out-of-market due to system needs or market design limitations.

3. Provide your organization’s comments on DMM’s presentation:

 AES acknowledges DMM's analysis regarding battery BCR payments and the concerns raised about potential gaming opportunities. However, DMM's perspective requires additional context regarding the operational realities of storage.

Key Points:

• Opportunity Cost Recognition: While DMM notes that storage bids reflect opportunity costs rather than production costs, this is an inherent characteristic of storage technology.
• Market Design Balance: Any BCR reforms must balance the need to prevent gaming with the legitimate operational needs of storage resources

AES supports efforts to refine BCR mechanisms while ensuring CAISO continue to recognize the unique operational constraints and value propositions of storage resources

4. Provide your organization’s comments on Terra-Gen’s presentation:

AES strongly agrees with Terra-Gen's identification of operational challenges related to hybrid resources, particularly regarding ancillary services certification, outage management, and market mitigation concerns.

Areas of Agreement:

• Dynamic Limits for SOC Management: AES echoes Terra-Gen's concern about the lack of explicit provisions for using dynamic limits to manage SOC in hybrid resources. AES would like to reiterate that in the LSER model, CAISO manages the state of charge, which has been enhanced over the years of experience. CAISO's presentation lists various constraints to manage SOC https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-design-and-modeling-Jan-23-2025.pdf. In contrast, Hybrid resources with a storage component must manage these constraints by offering and dynamically adjusting limits.
• Outage Management Improvements: The current 35-45 minute time lag for outage reflection in market processes significantly impacts hybrid resource efficiency.
• Certification Clarity: Need for standardized and transparent ancillary services certification requirements for hybrid resources

Specific Support for Terra-Gen's Recommendations:

• Enable sub-resource component-level outage submissions in OMS
• Establish clear guidelines for dynamic limits usage in SOC management
• Address the time-lag issues in outage processing for hybrid resources

5. Provide your organization’s comments on NextEra’s presentation:

AES supports NextEra's submissions, particularly the standalone make-whole payment proposal for BESS and the concerns regarding co-located BESS and VER "follow DOT" flag implementation.

Additional Comments: AES emphasizes the need for CAISO to engage in comprehensive stakeholder processes before implementing significant policy changes affecting storage and hybrid resources, as highlighted by NextEra's experience with the follow DOT flag. Based on CAISO’s comments during the call, we request CAISO bring forth an issue statement that explains the operational need to issue “Follow-Dot” for VERs when co-located with Solar. In addition, we urge CAISO to consider different solutions to address the operational need and solicit stakeholder feedback on the proposed solution and consider other solutions provided by stakeholders.

CAISO's current implementation of the "Follow-Dot" flag for VER resources co-located with storage is resulting in renewable curtailment. These renewable curtailments are directly impacting the state's ability to meet its RPS goals and resulting in off-takers purchasing additional RECs, thereby directly affecting California ratepayers. We urge CAISO to balance the operational needs with current implementation which is directly impacting state’s ability to meet its RPS goals.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

No Comments

7. Provide your organization’s comments on High Sustainable Limit

No Comments

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

AES supports the development of appropriate market power mitigation frameworks for hybrid resources while ensuring they account for the unique operational characteristics of these assets.

Key Positions:

• Component-Based Approach: DEB formulations should recognize the different cost structures and operational characteristics of individual hybrid components
• Dynamic Considerations: Any mitigation framework must account for the dynamic nature of hybrid resource operations, including SOC management and grid charging restrictions
• Operational Flexibility: Mitigation measures should not unduly restrict operational flexibility needed for efficient hybrid resource management

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

 No Comments

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

 No Comments

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

 No Comments

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

 We recommend CAISO prioritize addressing the “Follow DOT Flag” issue in addition to other storage BCR, OMS, and SOC management topics.

13. Please provide any additional comments:

No Comments

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO’s) Mixed Fuels and Distribution-Level Resources Discussion Paper (Discussion Paper) and the June 30, 2025, Working Group Meeting. In summary, the CAISO should:

• Establish the following principle when determining which drivers of bid cost recovery (BCR) warrant uplift payments to storage resources: (1) if the resource did not recover its costs due to scheduling coordinator (SC) action, uplift payments are not warranted; and (2) if the resource did not recover its costs due to CAISO market action, uplift payments are warranted.
• Continue monitoring the proposed revision request (PRR) 1627 changes to ensure no unintended consequences arise during the challenging summer months;
• Provide direct guidance on high-sustainable limit (HSL) formulation to ensure high-quality HSL data submittal to ensure the CAISO has accurate estimates of instantaneous generating capacity of variable energy resources;
• Develop a fair default energy bid (DEB) for hybrid resources given the underlying resource component characteristics and cost structures;
• Seek to provide operational certainty and reduce the administrative burden of dynamic limit tool use;
• Obtain additional transparency on distribution-level storage and their charging constraints using a Master File flag as a first step; and
• Request that the Department of Market Monitoring (DMM) monitor the use of distribution-level storage charging and discharging constraints to ensure the distribution provider is allocating these constraints in an equitable manner.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

The CAISO identified seven drivers for storage BCR and asks stakeholders to opine on whether these drivers warrant an uplift payment. When determining which drivers warrant uplift, the CAISO should establish the following principle: (1) if the resource did not recover its costs due to SC action, uplift payments are not warranted; and (2) if the resource did not recover its costs due to CAISO market intervention, uplift payments are warranted.

Therefore, if the current storage BCR design results in uplift payments because of SC action (e.g., self-scheduling, uninstructed deviation, bidding behavior), then these uplift payments are likely not warranted and the CAISO should consider how to prevent them in the new storage BCR design. If the current BCR design results in uplift payments because of CAISO intervention in the market (e.g., some instances of market power mitigation,[1] CAISO market intervention, other things outside the SC’s control), then uplift payments are likely warranted and should be retained in the new storage BCR design. The CAISO should also seek to develop a storage BCR design that mirrors the treatment of other similarly situated resources, such as multi-stage generators, to the extent feasible.

The CAISO and stakeholders will need to identify the circumstances that define a CAISO market intervention warranting BCR. For example, the multi-interval optimization could dispatch a resource based upon non-binding prices in a way that makes the resource worse off. Does this constitute a CAISO market intervention where BCR is warranted? Or is it a product of market optimization, for which generators are at risk for profit maximization?

The CAISO should also provide data on whether the current multi-interval optimization generally benefits or harms battery storage resources. This is important in determining whether SCs can rely upon the optimization without BCR or if the optimization is expected to result in lost revenues that necessitate BCR.

[1]            Market power mitigation will be a difficult topic as the bid may be from a storage resource to preserve its output until a later time while complying with a must-offer obligation through RA but may also be rightfully mitigated to avoid the abuse of market power. If it is the abuse of market power that makes the difference between being profitable and taking a loss, BCR would not be warranted.

3. Provide your organization’s comments on DMM’s presentation:

CalCCA has no comments on DMM’s presentation at this time.

4. Provide your organization’s comments on Terra-Gen’s presentation:

CalCCA has no comments on Terra-Gen’s presentation at this time.

5. Provide your organization’s comments on NextEra’s presentation:

CalCCA has no comments on NextEra’s presentation at this time.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

CalCCA appreciates the CAISO’s efforts to enhance the state-of-charge calculation to consider flexible ramping product awards to prevent negative price formation and reliability outcomes. CalCCA also supports continued monitoring of the PRR 1627 changes to ensure no unintended consequences arise during the challenging summer months.

7. Provide your organization’s comments on High Sustainable Limit

CalCCA supports the CAISO providing direct guidance on HSL formulation to ensure high-quality HSL data submittal to ensure the CAISO has accurate estimates of instantaneous generating capacity of variable energy resources.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

CalCCA supports developing a DEB for hybrid resources such that they can be subject to market power mitigation like other resources and CAISO’s stated objective of developing a fair hybrid DEB given the underlying resource component characteristics and cost structures.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

CalCCA supports the CAISO’s goal of providing operational certainty and reducing the administrative burden of dynamic limit tool use.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

Because distribution provider-imposed charging and discharging restrictions on distribution-level storage may impact the CAISO’s ability to dispatch them, the CAISO needs additional transparency on these resources and their constraints. A Master File flag identifying distribution-level storage, as the CAISO proposes, is a good first step in providing this transparency.

In addition, the DMM should monitor the use of distribution-level storage charging and discharging constraints to ensure the distribution provider is allocating these constraints in an equitable manner. DMM could accomplish this by assessing which SC’s distributed resources are affected and unaffected by constraints and at what frequency to ensure they are comparable across SCs.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

CalCCA has no comments at this time.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

CalCCA has no comments at this time.

13. Please provide any additional comments:

 CalCCA has no additional comments at this time.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

Comments on Storage Design and Modeling

Working Group Presentation on June 30, 2025

Department of Market Monitoring

July 16, 2025

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Storage Design and Modeling working group presentation on June 30, 2025.[1] DMM continues to encourage the ISO to address the storage bid cost recovery (BCR) issues as a top priority, particularly real-time BCR resulting from uneconomic buyback of infeasible day-ahead schedules.[2] The battery BCR design changes developed by the ISO in fall 2024 mitigated some gaming opportunities, but do not address the issue of battery operators not being properly incentivized to bid their true real-time intraday opportunity costs.[3]

In these comments, DMM also provides recommendations on these other key issues:

• Multi-interval optimization. Before embarking on the development of any changes to uplift related to multi-interval optimization (MIO), DMM recommends the ISO conduct analysis of the losses and benefits that may accrue to storage resources as the result of MIO. DMM acknowledges that there may be instances when a resource incurs losses due to MIO. However, there are also instances when the same resource may earn more through MIO than it would if the optimization only considered the economics of the binding interval. Until both the losses and benefits due to MIO have been quantified in a systematic way, it is unclear that the MIO results in net losses for batteries in a manner that would warrant a new BCR paradigm.
• Mitigation of hybrid resources. DMM continues to place high priority on subjecting hybrid resources to local market power mitigation.[4] This first requires developing a default energy bid (DEB) for hybrid resources. DMM is not opposed to using the current storage DEB in the interim for hybrid resources with a storage component. While the current storage DEB will overstate costs of hybrid resources at times, it could be an easily implementable solution that would allow the current fleet of hybrid resources to quickly become subject to local market power mitigation. Future work on a hybrid DEB would be appropriate to refine the estimate of marginal cost.
• Hybrid dynamic limits. DMM supports the ISO providing additional clarity on the appropriate usage of hybrid dynamic limits. DMM reiterates that resources using dynamic limits should be ineligible for real-time bid cost recovery for intervals in which the dynamic limit impacts the resource’s dispatch.[5] DMM recommends the ISO clearly establish that hybrid resources are responsible for ensuring deliverability of awarded ancillary services as described in the tariff, and that dynamic limits may not be used to limit deliverability of awarded ancillary services for economic reasons.
• Distribution-level charging constraints. DMM supports flagging resources with distribution-level charging constraints in Master File, and clarifying the impact of distribution-level constraints on the ability of these resources to provide resource adequacy and ancillary services. Further, if regular use of outage cards is the preferred way to manage distribution-level constraints, DMM recommends that the ISO create a distribution constraint outage card type for storage resources that is not exempt from the resource adequacy availability incentive mechanism (RAAIM).

Comments

Storage BCR/uplift

DMM continues to encourage the ISO to address storage BCR design as the top priority of this initiative. The current BCR rules remove the exposure to real-time prices for storage resources with day-ahead schedules, which incentivize these resources to submit real-time bids that are inconsistent with their real-time intraday opportunity costs. While the ISO developed a tariff amendment to mitigate some gaming concerns, the underlying incentive issue will continue to result in inefficient dispatch of storage resources in the real-time market.

The policy change developed in fall 2024 lessens the potential benefit of buying back infeasible day-ahead schedules, such that resources may only be indifferent to buying back an infeasible day-ahead schedule. However, even if battery operators are merely indifferent between providing or buying back their day-ahead schedule, there remains no incentive to submit real-time bids that reflect expectations of future real-time prices during hours of day-ahead awards.

This indifference does not incentivize battery operators to develop more sophisticated bidding strategies that reflect how real-time opportunity costs vary within a day, which would lead to real-time schedules that align with real-time price and system conditions. Such bidding strategies would support preservation of day-ahead awards, assuming these hours remain the most valuable hours of the day and real-time system conditions do not suggest batteries should operate differently. DMM recognizes that estimating these costs is challenging. However, this is the most efficient way for the market to schedule batteries, and efficient market design should incentivize bids based on the most accurate possible estimates of marginal (or opportunity) costs.

During the working group meeting, some stakeholders suggested that the elimination of BCR associated with buy-back of infeasible day-ahead schedules would create significant new risk, and questioned whether this risk could be appropriately mitigated by submitting $1,000/MWh bids for all hours of the day. DMM believes such extreme bids would often not be supported by realistic expectations of real-time prices. Therefore, in the majority of hours, this bidding strategy would likely be inconsistent with real-time costs and over-estimate any additional risk.

Further, the availability of additional charging or discharging opportunities over the course of the day will often not support an estimated opportunity cost of $1,000/MWh in all hours. In general, DMM notes that the best practice way for storage resources to participate is to estimate hourly opportunity cost throughout the day and bid accordingly. DMM believes such bidding would be better incentivized by eliminating real-time BCR associated with buy-backs of infeasible day-ahead schedules due to insufficient state-of-charge.  

Current BCR rules were designed for conventional generation resources without consideration of energy storage resource characteristics. Therefore, DMM continues to recommend a default starting position of no BCR eligibility for batteries, and then only establishing eligibility for BCR under specific situations where deemed appropriate. While there may be some instances where BCR is appropriate for storage resources, these circumstances should be specifically carved out to avoid over-extending BCR to storage resources and distorting their bidding incentives. DMM believes addressing the distorted real-time bidding incentives due to BCR, and other BCR issues that have already been identified (e.g., day-ahead BCR resulting from unintended interactions between battery bid parameters and the optimization), should be the main focus of the changes to uplift design for storage resources.

Before determining any changes to uplift related to multi-interval optimization (MIO), DMM recommends the ISO conduct analysis of both losses and benefits that may accrue to storage resources as the result of MIO. While MIO may dispatch batteries in ways that may end up being uneconomic in some intervals, MIO is designed to dispatch batteries in ways that provide higher profits and more efficient market outcomes than would be achieved with a model that only considered the economics of the binding interval. DMM believes more thorough research needs to be conducted on the costs and benefits to battery resources being dispatched through a multi-interval optimization before determining whether this is a substantial concern that warrants additional uplift.

Further, DMM notes that there would be a number of potential challenges around designing appropriate uplift related to MIO. For example, while the MIO may drive an uneconomic dispatch, any uplift design needs to also consider and separate the impact of any actions taken by the battery scheduling coordinator that lead to the dispatch. The ISO’s energy storage model currently provides battery operators with the ability to set and change a wide range of resource constraints dynamically in real-time, and the ISO is considering adding even more dynamically configurable constraints as part of this initiative.[6] These constraints provide battery operators with a very high degree of control over how batteries are dispatched in the real-time market, and can also result in significant BCR in ways that can be very difficult to directly identify, especially due to the MIO incorporated in the real-time market software. DMM believes it is reasonable to err on the side of not paying BCR when these constraints are utilized. Any uplift design must be able to identify when use of these constraints impact the dispatch of batteries in real-time, and clearly exclude such instances from BCR eligibility.

Hybrid mitigation and default energy bid (DEB)

DMM continues to place a high priority on subjecting hybrid resources to local market power mitigation. This requires first developing a default energy bid (DEB) for hybrid resources. While DMM recommends developing a DEB specific to hybrid resources, DMM does not oppose using the storage DEB in the interim for hybrid resources that have a storage component. Although likely to overstate hybrid resource costs in some intervals, using the N^th highest priced hour in the day as an estimate for the intraday opportunity cost of the storage component of a hybrid resource with N hours of discharge capability seems a decent interim proxy. However, all limitations of the storage DEB would still apply. DMM continues to recommend improvements to the storage DEB, and similar recommendations would apply to a hybrid DEB. In particular, DMM has long stated that the storage DEB should vary throughout the day to reflect the varying intraday opportunity costs, and this logic should apply to a hybrid DEB as well.[7]

DMM acknowledges that the current storage DEB is an imperfect representation of the opportunity costs for hybrid resources. Hybrid resources operate differently than storage resources, and these characteristics should be reflected in DEB calculations more specific to hybrids. For instance, during the intervals where the storage component is fully charged and the non-storage component is providing the output, the current storage DEB would likely overstate the marginal cost of production—particularly the current storage DEB that is static throughout the day.

DMM supports using the storage DEB in the interim to subject hybrid resources to some degree of mitigation. However, DMM recommends stakeholders discuss potential issues with using the storage DEB for hybrid resources, and consider these issues in the ongoing refinements of a DEB for hybrid resources in the future.

Finally, for completeness in the development of mitigation rules for hybrid resources, DMM notes that the ISO would also need to establish a DEB for hybrid resources that do not contain a storage component. The storage DEB would not be an appropriate proxy in these cases. While DMM is not aware of any such resources currently, nothing precludes their future development, and a DEB would be required should hybrid resources become subject to mitigation.

Hybrid dynamic limit issues

The ISO describes that hybrid dynamic limits are to be used to reflect ambient or renewable generation unavailability, a lack of state-of-charge (SOC), or to manage onsite charging. Stakeholders are requesting further clarification of the use of the dynamic limit as it relates to the tariff, and whether the tool may be used for more general management of SOC, e.g., to preserve stored energy for future intervals. DMM supports the ISO further clarifying the appropriate use of the dynamic limit, and cautions against too broad of a definition that could lead to increased opacity of the use of the dynamic limits, and further complicate monitoring through added complexity.

DMM recommends the ISO not allow use of dynamic limits for general SOC management (e.g., for economic reasons). All co-located and standalone storage resources must manage SOC through bids, and DMM believes this should be the same for hybrids with a storage component. Like storage resources, hybrid resource operators should be incentivized to bid in a manner that reflects the opportunity cost value of the storage component of the resource that would make the resource indifferent between dispatching at that bid price or holding their SOC to a later period.

DMM understands there is complexity to hybrid resources, such as the resource is comprised of multiple technology types, including storage. DMM further understands that the ISO does not model SOC constraints for hybrid resources as it does for storage resources. The dynamic limit tool is appropriate for reflecting physical limitations deriving from SOC constraints. However, DMM maintains the resource ought to be able to manage economic considerations of the asset through bids.

To manage the multiple hybrid components that constitute a hybrid resource, the ISO allows for incremental bidding up to ten bid segments. Resources can use these multiple bid segments to reflect costs of all components of the hybrid resource.

DMM continues to recommend that resources should be ineligible for real-time bid cost recovery for intervals in which the dynamic limit impacts the resource’s dispatch. BCR for day-ahead buybacks due to usage of dynamic limits would be easily gameable and—similar to the storage day-ahead buyback issue—it would distort the bidding incentives of hybrid resource operators, as they would be indifferent between providing or buying back their day-ahead schedules. In general, dynamic limits reflect actions taken or limitations imposed by the resource operator and therefore dispatches driven by dynamic limits should not be eligible for bid cost recovery.

Dynamic limit and ancillary services

As discussed above, DMM believes that hybrid resources should generally manage their SOC through bids, and not dynamic limits. However, ancillary service awards impose additional deliverability requirements on resources such that a minimum or maximum SOC may be required to be maintained through the duration of the ancillary service award. This may not be possible to achieve with real-time economic bids that are required to be submitted 75 minutes before the operating hour, and an SOC that could be constantly impacted within the hour by ancillary services deployment. For standalone storage resources, the ISO observes SOC through telemetry and manages this issue through the ancillary services state-of-charge constraint (ASSOC). However, hybrid resources’ SOC is not visible to the ISO for market operation purposes, and these resources do not have SOC managed by the ASSOC. Therefore, hybrid resources may need to manage SOC within the hour of an ancillary services award using dynamic limits to ensure sufficient SOC to meet ancillary service deliverability requirements under the tariff. 

DMM recommends that the ISO clarify that dynamic limits may be used by hybrid resources to ensure deliverability of awarded ancillary services as required by the tariff. DMM further recommends the ISO clarify that uneconomic dispatches driven by dynamic limits and the need to manage SOC for ancillary services deliverability purposes would not be eligible for BCR. This would be consistent with BCR rules that do not allow BCR for batteries when the ASSOC is binding.

DMM further recommends the ISO clarify it is not acceptable to use the dynamic limit to restrict the deliverability of ancillary services for economic reasons when it is physically possible for a hybrid resource to deliver their ancillary services schedule.

Distribution-level charging constraints

DMM continues to recommend that the ISO include a flag in Master File to identify distribution-level storage resources. Further, DMM recommends the ISO develop a transparent approach to reflect charging limits imposed on distribution-level resources by distribution system operator (DSO) tariffs. This could potentially be achieved through the use of dynamic limits by distribution-level resources, but only if they are registered in Master File as distribution-level resources, and only if there is sufficient data available for monitoring the use of such limits.[8]

Further, if dynamic limits were to be used for this purpose, the ISO would need to ensure that RAAIM penalties would apply when use of the dynamic limit prevents full deliverability of resource adequacy (RA) capacity, since these limitations would be known when the RA capacity was sold. The interaction of dynamic limits with RAAIM is currently unknown since hybrid resources are not subject to RAAIM. The ISO should further clarify how RAAIM might apply for all types of RA when the ability of an RA resource to charge is impacted. To the extent that limitations in charging capability result in undeliverability of RA, these circumstances should be subject to RAAIM.

The limits on distribution-connected resources may impede a resource’s ability to provide their resource adequacy capacity, and their full operating range for ancillary services. The general limitation on resources will be known by the scheduling coordinator ahead of time, and DMM asks the ISO to clarify the rules for distribution-level resources for the sale of RA and the certification to provide ancillary services. DMM recommends the ISO clarify the ability for these resources to provide RA and certify to provide ancillary services under conditions that may limit their ability to provide these services behind the distribution system.

Lastly, the limitations imposed by the distribution system upon distribution-level resources are currently incorporated into the market software through the outage management system (OMS). While the ISO is developing new outages for storage resources, DMM suggests the ISO consider developing an outage type related to distribution-level resources.[9] Since limitations are generally known at the point of interconnection, the ISO should not make the outage type exempt from the RA availability incentive mechanism. Doing so should incentivize these resources to only provide RA capacity that is likely to be deliverable and not impacted by distribution constraints.

[1] Working Group on Uplift & DEB, Mixed-Fuel & Distribution-Level Resources, and SOC Management presentation, California ISO, June 30, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-StorageDesignandModeling-Jun30-2025.pdf

[2] Comments on Storage Design and Modeling May 28, 2025 Presentation, Department of Market Monitoring, June 11, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-may-28-2025-presentation-jun-11-2025.pdf

[3] Tariff Amendment to Prevent Unwarranted Bid Cost Recovery Payments to Storage Resources, and Request for

Effective Date on Shortened Notice, California ISO, November 26, 2024: https://www.caiso.com/documents/nov-26-2024-tariff-amendment-bid-cost-recovery-to-storage-resources-er25-576.pdf

[4] Comments on Storage Design and Modeling Working Group Session 2 and 3, Department of Market Monitoring, March 7, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-working-group-sessions-2-and-3-mar-07-2025.pdf

[5] Comments on Storage Design and Modeling Issue Paper and Straw Proposal on Outage Management, Nonlinearity, and SOC Clarification, Department of Market Monitoring, May 23, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-issue-paper-and-straw-proposal-on-outage-management-nonlinearity-and-soc-clarification-may-23-2025.pdf   

[6]  These constraints include minimum and maximum state-of-charge levels at the end of each hour, as well as minimum and maximum state-of-charge levels for operating day. Others include the initial day-ahead state-of-charge, and SOC and charging limitations imposed through use of outage cards. As part of the current initiative, the ISO is also considering the addition of even more operating constraints that can be dynamically set and changed by battery operators in real-time.

[7] Comments on Storage Bid Cost Recovery and Default Energy Bids July 8, 2024 Workshop, Department of Market Monitoring, July 18, 2024: https://www.caiso.com/documents/dmm-comments-on-storage-bcr-and-default-energy-bids-july-8-2024-workshop-jul-18-2024.pdf

[8] Comments on Storage Design and Modeling Working Group Session 2 and 3, Department of Market Monitoring, March 7, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-working-group-sessions-2-and-3-mar-07-2025.pdf

[9] Storage Design and Modeling Issue Paper & Straw Proposal on Outage Management, Nonlinearity, and SOC, California ISO, March 27, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/2025-03-27-SDM-Outage-Management-Nonlinearity-SOC-Definition-Issue-Paper-Straw-Proposal-FINAL.pdf

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

3. Provide your organization’s comments on DMM’s presentation:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

4. Provide your organization’s comments on Terra-Gen’s presentation:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

5. Provide your organization’s comments on NextEra’s presentation:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

7. Provide your organization’s comments on High Sustainable Limit

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

13. Please provide any additional comments:

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) provides the following comments on the California Independent System Operator Corporation’s (CAISO) June 30, 2025 meeting on CAISO’s Storage Design and Modeling initiative on Bid Cost Recovery (BCR), Default Energy Bids (DEB), and the Outage Management System (OMS).[1]

Cal Advocates provides the following recommendations and responses:

• The CAISO should presume that storage resources are ineligible for BCR uplift payments in general but the CAISO should continue discussions to add BCR uplift payment eligibility for specific cases related to exceptional dispatch, market power mitigation, and multi-interval optimization (MIO) market mechanisms.
• Cal Advocates supports the Department of Market Monitoring’s (DMM) recommendations and prioritization for storage BCR adjustments.
• The CAISO should provide more information on how its current Tariff language fails to provide accurate data regarding the High Sustainable Limit (HSL) mechanism.
• CAISO’s guiding principles for designing a market power mitigation system and DEB design for hybrid resources should not presume the need to bid beyond the soft offer cap.

[1] CAISO’s Storage Design and Modeling initiative started November 25, 2024.  Initiative information and materials for the June 30, 2025 working group are available at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

At the June 30 Workshop, the CAISO discussed drivers of storage uplift.[1]  Cal Advocates appreciates the additional information concerning uplift payments to storage resources and looks forward to additional discussion.  At this time, Cal Advocates recommends that the CAISO presume storage resources are ineligible for BCR uplift payments in general but consider adding eligibility for specific cases related to exceptional dispatch, mitigation, and MIO market mechanisms.[2]

[1] CAISO, Storage Design and Modeling: Working Group on Uplift & DEB, Mixed-Fuel & Distribution-Level Resources, and SOC Management, June 30, 2025 (June 30 Workshop Slides) at 9-16.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-StorageDesignandModeling-Jun30-2025.pdf.

[2] Cal Advocates previously made this recommendation, consistent with recommendations from the DMM.  The CAISO should enable continued discussions to develop the specific cases where uplift payment eligibility is reasonable and consider those cases in the September 12, 2025 Straw Proposal Comments of the Public Advocates Office on May 28 Storage Design and Modeling Meeting, June 11, 2025 at Section 3.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/8376a4bc-545d-4583-b452-4d67bc29d7ea#org-69c70847-7a39-4c56-adc0-954ae5493a40.

3. Provide your organization’s comments on DMM’s presentation:

Cal Advocates supports DMM’s prioritization of storage BCR issues.[1]  BCR was designed for non-storage resources and largely does not contemplate SOC-related issues.[2]  BCR design can, as DMM states, lead to unwarranted and/or inefficient BCR payments that in turn cause market dispatch inefficiencies and unwarranted ratepayer costs.[3]

The DMM recommends that the CAISO consider elimination of day-ahead BCR for storage unless stakeholders can identify a scenario in which a day-ahead BCR payment is warranted.[4]  Cal Advocates supports this recommendation. DMM previously made the same recommendation when it was unable to identify a warranted day-ahead storage BCR payment scenario.[5]  Cal Advocates also supports DMM’s recommendation to redesign BCR rules to assume batteries are not eligible for uplift payments, except under specific limited situations.[6]  The limited application of BCR to storage is appropriate, given that BCR design does not consider many of the various forms of uplift presented by the CAISO.[7]

[1] DMM, Storage Design and Modeling: Storage Bid Cost Recovery, June 30, 2025 at 2-3 (DMM Presentation).  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/DMM%20Presentation%20-%20Battery%20BCR%20Discussion%20-%20Jun%2030%202025.pdf.

[2] The CAISO’s presentation also highlights that many drivers of BCR uplift for storage resources are due to SOC-related issues.  June 30 Workshop Slides at 9-14.

[3] DMM Presentation at 2.

[4] DMM Presentation at 10.

[5] DMM, Comments of the DMM on Working Group Session 1, January 8, 2025.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/2b83f24a-ad3a-4c29-aae1-b3997d81b383#org-cd0cba90-b130-4bc7-ac97-f4358b8cd1e2.

[6] DMM Presentation at 10.

[7] June 30 Workshop Slides at 9-16. 

4. Provide your organization’s comments on Terra-Gen’s presentation:

Cal Advocates does not provide comments on this topic at this time.

5. Provide your organization’s comments on NextEra’s presentation:

Cal Advocates does not provide comments on this topic at this time.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

Cal Advocates does not provide comments on this topic at this time.

7. Provide your organization’s comments on High Sustainable Limit

The CAISO should provide more information regarding how the current CAISO Tariff language fails to provide for an accurate HSL.  This information would help inform the CAISO’s and stakeholders’ efforts to modify Tariff language to provide the higher quality HSL data that the CAISO determined is necessary.[1]

[1] CAISO, Storage Design and Modeling: Discussion Paper: Mixed-Fuel and Distribution-Level Resources, June 2, 2025 (Discussion Paper) at 11.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/DiscussionPaper-Mixed-FuelsandDistribution-LevelResources-Jun03-2025.pdf.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

Cal Advocates agrees with the CAISO’s statements that a market power mitigation measure is necessary for hybrid resources.[1]  The Discussion Paper suggests that market power mitigation for hybrid resources should support the ability for hybrid resources to bid above the soft offer cap.[2]  Cal Advocates remains concerned[3] that allowing resources to bid above the soft offer cap weakens the integrity of the market and eliminates a key ratepayer protection measure, since the soft offer cap functions as an important form of market power mitigation.[4]  The current ability for storage resources to bid above the soft offer cap is also applied to all hours of the day, which is an inefficiency identified by the DMM[5] and that inefficiency should not be expanded to include hybrid resources.  The CAISO’s guiding principles should not allow hybrid resources to bid beyond the soft offer cap.  Rather, the guiding principles should take a more general form to accurately apply market power mitigation and a DEB design to hybrid resources without presuming the need to allow those resources to bid beyond the soft offer cap.

[1] Discussion Paper at 13-14.

[2] “Without a hybrid DEB, the ISO cannot subject hybrid resources to market power mitigation, nor can hybrid resources bid above the soft offer cap.”  Discussion Paper at 14.

[3] Cal Advocates, Comments of the Public Advocates Office on the Price Formation Enhancements Phase 1 Draft Final Proposal, May 8, 2024 at Sections 1-2.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/d405b244-40dd-4c38-a402-536fe4676879#org-6ef142cc-d005-4628-bce2-0d1e99b3179b.

[4] The Federal Energy Regulatory Commission (FERC) stated: “Our decision to establish a $250/MWh bid cap together with the other mitigation measures is a careful balance of the need to provide incentive for market entry by new generation investment with the need to protect markets from the potential of market power abuse.” 100 FERC ¶ 61,060, Order on the California Comprehensive Market Redesign Proposal, July 17, 2002 at paragraph 51.  See also FERC Docket RM16-5-000 Final Rule, November 17, 2016 (FERC Order 831), paragraphs 83, 87, and 193. 

[5] DMM, Comments on Storage Bid Cost Recovery and Default Energy Bids, July 18, 2024 at 5-6.  Available at: https://stakeholdercenter.caiso.com/Common/DownloadFile/6a07fe60-f791-489c-8100-64e2f7b55118.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

Cal Advocates does not provide comments on this topic at this time.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

Cal Advocates does not provide comments on this topic at this time.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

Cal Advocates does not provide comments on this topic at this time.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

Cal Advocates does not provide comments on this topic at this time.

13. Please provide any additional comments:

Cal Advocates provides no additional comments at this time.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

The California Energy Storage Alliance (CESA) appreciates the opportunity to comment on the June 30, 2025 working group meeting. The dispatch flexibility of storage resources is crucial to meeting California’s environmental policy goals. Make-whole payments are a key feature of wholesale market design to provide incentives to participate in the real-time market and follow dispatch instructions. A poorly designed real-time make-whole settlement will create disincentives for storage resources to participate voluntarily in the real-time market where storage resources are the primary resource needed to reliably balance supply and demand.   

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

CESA looks forward to continuing discussion on a holistic review of day-ahead and real-time bid cost recovery (BCR) applicability to storage resources. As CAISO has highlighted, BCR payments are low in the day-ahead market because the full 24-hour market horizon is financially binding in a single market optimization run. However, the real-time market horizon is limited and only a single interval in the optimization is financially binding for each market run. As a result, BCR may be necessary when energy buy-backs or sell-backs outside the storage resource’s scheduling coordinator’s (SC) control result in the resource not fully recovering its costs.

CAISO and the Department of Market Monitoring (DMM) have been focused in both the prior storage BCR initiative and this initiative on “forced” buy-backs and sell-backs for day-ahead energy schedules in the real-time market. This initiative must seek to differentiate who caused the forced buy-back or sell-back. If the forced buy-back or sell-back is caused by the storage resource or its SC, then those shortfalls are the responsibility of the SC and should not receive a make-whole payment. However, if the forced buy-back or sell-back is caused by CAISO actions or market design shortcomings, the storage SC should be eligible for a make-whole payment in the event the storage resource’s costs are not covered over the operating day.

In addition, during last year’s Storage BCR and Default Energy Bid Enhancements initiative, CESA along with PG&E, Vistra and WPTF proposed a settlement rule to prevent real-time energy bids from inflating bid cost shortfalls in intervals where there was a high likelihood of a forced buy-back or sell-back. In the final proposal, CAISO inappropriately applied the settlement rule in all intervals regardless of if a potential forced buy-back or sell-back could occur. As part of a holistic review of the real-time market make-whole payments design for storage resources, the CAISO’s final proposal should be re-evaluated to ensure that the correct cost is used in the calculation of hourly shortfalls and surpluses.

CESA provides below a conceptional framework for storage make-whole payments for the real-time market. If a forced buy-back or sell-back is the result of the actions of the SC or storage resource performance, the storage resource would not be eligible for a make-whole payment in the event that their daily costs exceeded daily revenues in the real-time market. If the forced buy-back or sell-back of is the result of the CAISO, the storage resource would remain eligible for a make-whole payment in the event that their daily costs exceeded daily revenues in the real-time market.      

CESA appreciated the discussion on current uplift drivers of storage resources as the issues discussed can be clearly differentiated between being caused by the storage resource or caused by CAISO. For simplicity, the discussion below is focused on SC bidding for energy. However, CESA believes rules should also be developed for outages and uninstructed deviations which CESA considers as caused by the storage resource and not the CAISO. CESA comments on each of the issues discussed during the working group.

Issue 1 – In day-ahead market an hourly self-schedule could cause prior hourly economically bid schedule to clear inconsistent with bid cost

This issue can result in day-ahead BCR. CESA does agree that a self-schedule that causes an out-of-merit energy schedule in day-ahead should not be eligible for a make-whole payment because this submission of the self-schedule is fully within the control of the storage SC.

Issue 2 – Storage does not have incentive to reflect expected energy bid prices

It is initially unclear if this issue is caused by the storage resource or the CAISO. The real-time default energy bid (DEB) does estimate future opportunity costs of a forced buy-back or sell-back of the day-ahead schedule. The real-time DEB is the best estimate of a storage resource’s marginal cost as determined by the CAISO and DMM. If a storage resource’s energy bid to discharge is equal to or above its DEB, the storage SC is bidding to reflect energy bid prices consistent with the CAISO calculation of expected energy bid prices. If the storage resource is dispatched to discharge prior to its day-ahead discharge schedule, the storage resource should be eligible for a make-whole payment in the event its day-ahead discharge schedule is infeasible and must be bought back. This is not a forced buy-back because the storage resource was dispatched consistent with CAISO’s expectation of the resource’s real-time cost, including opportunity costs. If the storage resource was bidding less than its DEB to discharge, the SC is seeking to arbitrage intra-day prices with the expectation that the storage resource can still meet a future day-ahead discharge schedule. If the day-ahead schedule must be bought back, it can be argued this is a forced buy-back because the storage resource was dispatched inconsistent with CAISO’s expected energy bid prices. If CAISO does not believe the real-time DEB sufficiently reflects expected energy bid prices, CAISO should increase the real-time DEB and notify storage resource SC prior to the real-time bid submission deadline. Similar logic can be applied to the charging schedules.

Issue 3 – Integrated Forward Market (IFM) initial state-of-charge (SOC) not reflective of actual SOC

This is an inherent issue with the timing of the IFM and is outside the control of both the SC and CAISO. The SC can submit the IFM initial SOC through its day-ahead bids. If no value is submitted by the SC, the CAISO enters the prior IFM results. If there are no prior IFM results, the CAISO enters zero. During the working group, the CAISO stated that a significant portion of BCR is caused when the IFM initial SOC is set to zero. Since using a zero SOC is a CAISO policy decision, the storage resource should be eligible for a real-time make-whole payment. CAISO should consider a policy decision not to use zero as the IFM initial SOC.

Issue 4 – Resources are mitigated to DEB and dispatched earlier to than IFM schedules

During the working group, CAISO stated that this is a small overall driver of BCR, but at a resource level can be significant. Since the real-time market horizon does not extend to the end of the day, using the resource’s DEB can result in an early discharge that upon perfect hindsight should not have been made to prevent a forced buy-back. The market horizon limitation is not the result of a storage resource’s actions. As discussed above regarding issue 2, this should be eligible for make-whole payment because CAISO has determined that the real-time DEB is the resource’s cost, including the opportunity cost from forgoing future dispatch. 

Issue 5 – Uninstructed deviation prior to IFM schedule

As mentioned briefly above, CESA agrees that uninstructed deviations resulting in a forced buy-back should not be eligible for a make-whole payment. CESA recommends developing a deviation threshold. A deviation beyond the threshold would be considered the same as receiving a dispatch instruction to discharge/charge using a bid that is inconsistent with the discharge/charge DEB and not be eligible for make-whole as discussed in the conceptual framework below.

Issue 6 – Derate of resource with AS awards causes energy dispatch to maintain ancillary services (AS) award

The CAISO should reevaluate the implementation of the ancillary services state of charge (ASSOC) constraint. The primary intent of the ASSOC is to prevent incremental AS awards that cannot be supported by the underlying SOC. However, the current implementation has had many unintended consequences by forcing energy dispatches of storage resources. If a conventional resource cannot meet its day-ahead ancillary services award, the resource is considered unavailable and subject to no-pay rules. However, storage resources are required to discharge or charge at any cost to maintain their day-ahead AS award. If this remains CAISO policy, it is appropriate to provide a real-time make whole payment to storage resources. If the CAISO modified the ASSOC constraint to identify unavailable AS, the storage resource would be subject to no pay rules for being unavailable. Since the ASSOC constraint would then no longer cause an energy dispatch, there is no make-whole payment needed. Similar to a conventional resource that is unavailable, the CAISO will procure the AS requirement from other resources in the fifteen-minute market (FMM).

Conceptual Real-Time Market Make-Whole Framework for Storage Resources

Upon consideration of the issues identified above, CESA provides a conceptional real-time market make-whole framework for storage resources. As DMM discussed in their working group presentation, DMM is concerned about “revenue” losses and bid cost losses. The ability to inflate bid cost losses was addressed with the settlement rules in the prior storage BCR initiative. CESA’s proposal attempts to remove the revenue losses associated with a forced buy-back or sell-back when it is caused by the storage resource’s actions. Revenue losses would still be eligible for make-whole payments for hours with a forced buy-back or sell-back caused by CAISO. The key elements of the conceptional real-time market make-whole framework for storage resources are as follows:

• Real-time make-whole payments net hours with a surplus against hours with a shortfall over a 24-hour period
• Real-time DEB, as calculated by the CAISO, is an accurate representation of real-time opportunity costs.
  • A discharge bid at or above the discharge DEB reflects real-time conditions
  • A charge bid at or below the charge DEB reflects real-time conditions
• If the storage resource bid is consistent with its DEB, the storage resource is eligible for a make-whole payment in the event of a forced buy-back or sell-back
• A storage resource is not required to bid consistent with the DEB, however not doing so may result in the storage resource being ineligible for a make-whole payment in the event of a forced buy-back or sell-back
• If the storage resource SC bids below the discharge DEB in an hour AND is incrementally scheduled to discharge, the hour with the highest forced buy-back shortfall hour is removed from the daily netting
  • If the condition above is met for two hours, the top two forced buy-back shortfall hours are removed from daily netting
• If the storage resource SC bids above the charge DEB in an hour AND is incrementally scheduled to charge, the hour with the highest forced sell-back shortfall hour is removed from the daily netting
  • If the condition above is met for two hours, the top two forced sell-back shortfall hours are removed from daily netting
• Similar logic needs to be developed to include outages and uninstructed deviations

CESA also recommends that CAISO publish every 5 minutes the system-wide state of charge in absolute MWh and as a percentage of online capability. This will inform storage resource SCs of the risk that a forced buy-back or sell-back may occur if it chooses to bid inconsistent with the DEB threshold. In addition, CAISO should develop a formulate process that automatically updates the storage DEB to ensure the real-time storage DEB reflects expected real-time prices. The updated DEB should be published two hours prior to the operating hour to allow storage resources to modify their energy bids as desired. The updated DEB would be used in the above make-whole logic.

CESA acknowledges that there are additional details that need to be developed to move from a conceptual framework to an actual proposal. One area that will need additional discussion is how to implement the framework under the current daily settlement rules. For example, a charge bid in HE 20 of the prior operating day could result in a forced sell-back during the next operating day, but if the 24-hour netting was only performed between HE 01 to HE 24 for each operating day, this “across days” impact would not be captured. A potential solution would be to settle with daily settling initially and then resettle monthly using a rolling 24-hour period.

CESA looks forward to other market participants input on the conceptual framework.

3. Provide your organization’s comments on DMM’s presentation:

CESA appreciates DMM continued concerns regarding efficiency, reliability, and gaming concerns the current paradigm for storage BCR may create. However, CESA continues to be frustrated by DMM’s continued recommendation to redesign “the BCR rules to assume no eligibility for batteries and add eligibility only under specific situations where BCR is warranted.” This continues to fail to recognize that there are many market design and policy shortcomings that will be very difficult to determine where or when BCR is warranted. These include:

• FMM and RTD market horizons do not extend to the end of the operating day
• FMM does not re-optimize ancillary services and there is no AS procurement in RTD 
• Multi-interval optimization can lead to out-of-merit dispatches, and it is impractical to financially settle all FMM and RTD intervals

CESA looks forward to working with DMM on the conceptual framework outlined in section 2.

4. Provide your organization’s comments on Terra-Gen’s presentation:

CESA notes that Terra-Gen has clearly articulated previously their concerns regarding hybrid resource dynamic limits, lack of clear guidance on ancillary services regarding certification and market participation, difficulty in calculating a DEB, and the inappropriate prohibition of hybrid resources bidding above $1,000/MWh during high priced conditions. CESA requests that CAISO develop a straw proposal to address the concerns raised by Terra-Gen.

5. Provide your organization’s comments on NextEra’s presentation:

CESA believes it is appropriate to include within scope of this initiative the two issues NextEra requested consideration of in the 2025 Policy Catalog. CESA appreciates CAISO including these issues in the working group and NextEra presenting to the broader stakeholder community.

CESA reviewed NextEra’s request for a new make-whole payment to address issues with the multi-interval optimization. CESA would appreciate additional information from CAISO on the magnitude and frequency of out-of-merit schedules/dispatches in the financially binding interval needed to meet advisory interval schedules/dispatches in the real-time market. CESA believes evaluating why advisory schedules/dispatches do or do not materialize is needed to assess the effectiveness of the multi-interval optimization. If the multi-interval optimization systematically results in advisory intervals not materializing, this points to market design shortcomings that need to be addressed.

CESA requests CAISO confirm how the follow dispatch operating target (DOT) quantity is determined to ensure that it is not overly restrictive as NextEra’s presentation highlighted. For example, if the point of interconnection limit is 100 MW and a storage resource has an AS award for 20 MW, the variable energy resources (VER) should be able to generate up to 80 MW. If the forecast used dispatch the VER was 75 MW, the VER should not receive instruction to follow DOT; rather the VER should be instructed to generate as capable up to 80 MW. CESA looks forward to a straw proposal that ensures the follow DOT quantity is not overly restrictive.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

CESA recognizes that it is not appropriate to draw conclusions from only 20 days of operation data.  However, since including FRP in the SOC constraint very little change has been observed in the resource mix providing FRP or prevalence of $0.00/MWh FRU prices. Given there was a slight decrease in FRU procured in CAISO and slight increase outside of CAISO, this could be evidence that the market optimization is continuing to find undeliverable resources to award FRU since the resource has a zero-dollar opportunity cost because it cannot be dispatched for energy due to congestion. CAISO’s decision to postpone the enforcement of contingency constraints in FMM deployment scenarios will have a significant impact on FRP effectiveness and pricing. 

7. Provide your organization’s comments on High Sustainable Limit

While CESA appreciates the CAISO’s examination of the High Sustainable Limit (HSL) submission process and supports efforts to improve resource forecasting, CESA does not have specific comments on the HSL submission process at this time.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

CESA supports the CAISO allowing hybrid resources to bid above $1,000/MWh during high priced conditions when the bid cap is raised to $2,000/MWh. CESA does not believe hybrid resources should need a DEB to allow this rule change. That being said, CESA would support discussing potential default energy bids for hybrid resource, but recognizes the complexity in doing so as highlighted by Terra-Gen. Also, as discussed in the response to question 2 above, the real-time DEB for all storage related resources must ensure that storage is positioned appropriately in the energy bid stack to ensure these resources can reflect expected real-time prices. 

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

As noted above, CESA requests that CAISO develop a straw proposal to address the concerns raised by Terra-Gen, including the use of dynamic limits to communicate ancillary service availability.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

CESA supports improved modeling of distribution-level charging constraints in the market optimization to accurately represent normal resource operating criteria. CESA does not support continued use of outage cards to manage unmodeled operational constraints. As discussed in CESA’s comments on PRR1634, CAISO’s definition of Plant Trouble nature of work may inappropriately expose WDAT storage resources to RAAIM penalties.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

No additional comments 

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

No additional comments 

13. Please provide any additional comments:

No additional comments 

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

NextEra Energy Resources, LLC (NEER) supports CAISO’s holistic reexamination of Bid Cost Recovery (BCR) for energy storage resources and continued exploration of potential enhancements related to ancillary services and hybrid resources. NEER’s comments expand upon the two issues introduced by NEER in the most recent working group meeting and offer support for hybrid resource and ancillary service-related topics.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

No comments.

3. Provide your organization’s comments on DMM’s presentation:

No comments.

4. Provide your organization’s comments on Terra-Gen’s presentation:

NEER broadly agrees with Terra-Gen’s suggested enhancements related to hybrid resources and dynamic resources. NEER discusses these topics below in more detail.

5. Provide your organization’s comments on NextEra’s presentation:

NEER appreciates the opportunity to present two concepts it previously submitted and presented to the CAISO’s 2025 Annual Initiatives Roadmap Process. In that initiative, several stakeholders commented that NEER's submittals would be appropriately scoped into this Storage Design and Modeling Initiative for further review.

OOM Dispatch

NEER’s presentation highlights an example of a NEER energy storage resource being forced into paying to discharge during negative real-time prices rather than being paid to charge. NEER explained that while it is impossible for a market participant to assign causation, this dispatch was likely attributable to CAISO’s multi-interval optimization (MIO) process. NEER’s reasoning in the example was derived from the following facts: the resource was not carrying Flexible Ramp Product awards in the affected intervals nor ancillary service awards in upcoming intervals (both of which NEER understands can similarly result in resources being dispatched out of economic merit order). NEER requests that CAISO explore ways to make MIO dispatch more detectable and transparent to market participants. Potential solutions could include the provision of example case studies using real operational data, new indicators in the CAISO market portal to identify affected dispatch intervals, and/or the publication of CAISO’s advisory price forecast.

In addition, NEER clarifies that the purpose of its proposal is not to automatically make storage resources whole to the revenues they would have received under an ideal, profit-maximizing dispatch. In NEER’s view, energy storage resources should be held harmless to the negative financial impacts of sub-optimal MIO dispatch because (1) this dispatch is largely beyond the resource’s control; (2) this dispatch uniquely impacts energy-limited resources; and (3) Bid Cost Recovery (BCR) is not awarded if the resource realizes a reduced-yet-still-positive profit for the trade date due to sub-optimal MIO dispatch. Indeed, CAISO’s presentation noted a variety of other scenarios in which an energy storage resource may incur financial losses that would similarly only be remedied by BCR to the extent the resource realized a net loss for the trade date. While NEER’s proposal focuses on the need for financial relief related to sub-optimal MIO dispatch, NEER suggests CAISO’s holistic reevaluation of BCR for energy storage resources should broadly consider whether it is reasonable to continue requiring such resources to realize net market losses before receiving BCR in instances where the BCR driver is beyond the resource’s control. Arguably, this condition makes more sense in the original context of BCR, i.e., ensuring that thermal resources (1) do not operate at a loss after incurring “lumpy” start-up and minimum-load costs and (2) are not otherwise incentivized to reflect these costs in their offers via risk premiums that distort short-run marginal cost pricing. Moreover, were implementation of NEER’s proposal to reveal significant losses stemming from sub-optimal MIO dispatch, this would be a valuable indicator of a market externality that should be internalized. Regardless, NEER believes energy storage resources should not be held harmless - either under the current BCR construct or NEER’s proposal - to reduced profits caused by elements within their control.

Follow DOT

NEER appreciates the robust discussion of its proposal to revisit this requirement. Based on this discussion, it is NEER’s tentative understanding that the Follow DOT requirement was intended to ensure that the sum of all energy and upward ancillary service awards at co-located sites does not exceed the point of interconnection (POI) limit. NEER respectfully requests CAISO confirm this interpretation and elaborate on the underlying policy rationale.

Assuming this interpretation is accurate, NEER further requests continued discussion of the various scenarios in which the Follow DOT may or not be needed. NEER submits the following straw positions to guide this discussion:

• An energy storage resource should be able to clear Regulation Down on its charging side without affecting the energy dispatch of a co-located Variable Energy Resource (VER).
• If the sum of a VER’s nameplate capacity and a co-located energy storage resource’s upward ancillary service awards does not exceed the POI limit, there should be no need to trigger the Follow DOT flag.

Based on backcast simulations by NEER Analytics, NEER estimates that an energy storage resource participating in Regulation Up/Down in the Day-Ahead market reduces the co-located VER’s real-time energy market revenues by approximately one to three percent due to the Follow DOT flag. NEER acknowledges that the incremental revenues associated with the battery’s participation in ancillary services may outweigh these energy losses associated with the Follow DOT flag on the VER. However, NEER emphasizes that these revenue losses can be non-trivial in aggregate. Further, NEER’s presentation highlighted that this upside does not exist for a Scheduling Coordinator that only has control over the VER and not the co-located energy storage resource.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

No comments.

7. Provide your organization’s comments on High Sustainable Limit

NEER appreciates the nuanced explanation provided by CAISO regarding the degree to which HSL telemetry informs CAISO’s VER forecast. While a higher quality VER forecast may somewhat reduce the amount of curtailment that occurs when VERs are instructed to follow DOT, to the extent the improved VER forecast tracks more closely with actual VER production, NEER reiterates that the current Follow DOT rules are unnecessarily broad and should be holistically reexamined regardless of future enhancements to the provision of HSL telemetry.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

NEER supports CAISO’s proposal to use the standalone Storage Default Energy Bid (DEB) as the starting point for determining a reasonable DEB for hybrid resources. However, NEER cautions that hybrid resources may not always behave the same, nor have the same variable costs, as standalone or co-located energy storage resources. Accordingly, NEER believes CAISO should take time to carefully develop a DEB methodology for hybrid resources that considers the key types of hybrid resource behavior, particularly absent concrete evidence that hybrid resources are significantly exercising market power today.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

Dynamic Limits

NEER supports further exploration of enhancements to allow CAISO’s Automatic Generation Control (AGC) algorithm to consider a hybrid resource’s submitted dynamic limit when determining how much of the resource’s Regulation award is available for deployment as energy. The CAISO Tariff provides that dynamic limits “should reflect resource availability based on operating capabilities such as State of Charge and forecasted output from the variable component of a Hybrid Resource” (Tariff § 30.5.6.2). Accordingly, NEER believes that if a hybrid resource submits a dynamic limit reflecting this reduced availability, there should ideally be no need to additionally submit outage cards (the processing of which introduces significant lag) to ensure that the AGC algorithm has proper visibility into the resource’s reduced availability.

Ancillary Services

It is NEER’s understanding that when an energy storage resource experiences a derate or rerate after receiving an ancillary service award in the Day-Ahead Market, the Real-Time Ancillary Service State of Charge constraint may force an energy award in the Fifteen-Minute Market to protect the portion of the awarded ancillary service capacity associated with the derated/rerated capacity. NEER believes settling this derated/rerated ancillary service capacity as No-Pay would be more appropriate than forcing an energy award, consistent with the settlement rules for resources that experience full outages when carrying ancillary service awards.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

No comments.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

NEER reiterates that the Follow DOT requirement is a key market rule affecting the participation of co-located resources that should be included in future CAISO working papers on this topic.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

Subject to confirmation from CAISO that NEER’s Follow DOT proposal will be properly included in the Mixed-Fuel and Distribution-Level Resource track and that NEER’s OOM Dispatch proposal will be properly included in the Uplift and DEB track, NEER prefers that CAISO prioritize these two tracks before turning to the Outage Management and SOC Management tracks.

13. Please provide any additional comments:

No comments.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

The principle based on which we will provide PG&E’s perspective on each of the drivers identified is that negative revenues attributable to bidder behavior should be treated as self-scheduling and hence not be eligible for BCR, when negative revenues attributable to either the market algorithms or CAISO operator actions should be eligible for BCR.  We consider each of the issues presented by CAISO in the workshop, but note that there may be other borderline cases where it will be necessary to make a rule that doesn’t perfectly align with this principle.  As an example, it may not always be clear whether a battery had the opportunity to charge economically, after early discharge, in order to avoid buyback of day ahead discharge awards, and in such cases the rule might be to allow BCR (see issue E, below) even though the battery might in fact have been able to avoid its losses.

1. Issue: Self-schedules, DA optimization, and initial SOC

In the day)ahead market, self-scheduling of a battery in any one hour can affect revenues in any other: hence, self-scheduling in any hour should in general remove a battery from BCR eligibility.  Initial SOC, upper SOC limit, and lower SOC limit may be special cases of self-scheduling when they force uneconomic charge or discharge, but it’s clear that these parameters are required by CAISO market systems that appear to be unable to calculate reasonable values automatically.  If there were reasonable automatic calculation of defaults, then any upper or lower SOC limit differing from master file values, and any initial SOC differing from the CAISO determined initial SOC, should make the battery ineligible for day-ahead BCR.  In the absence of such capabilities, PG&E suggests that at least in the case of initial SOC, CAISO should define a threshold for variance between bid in and actual initial SOC, and test day-ahead and real-time solutions for this variance.  Solutions with variance above threshold level would not be eligible for BCR, while those below the threshold would be eligible.

It's important to point out that day ahead BCR calculations may change substantially when battery solutions include imbalance reserve awards after the DAME activation in 2026, and that the issue of day ahead BCR should be revisited holistically after that implementation.

2. Issue: BCR design for real-time buyback of battery day-ahead discharge awards

The hard case that has driven all the previous discussions of this issue is that it is possible in the current bidding framework that a battery will be forced to bid to provide discharge in advance of its day-ahead discharge awards, and then find itself with unhedged exposure to real-time buyback of the day-ahead awards.  This is clearly an exposure not experienced by other resource types.  If batteries could simply not bid to discharge in cases where their opportunity cost of buyback exceeded recoverable bid costs, there would be no need to consider BCR eligibility in this case; but because batteries with RA are required to bid in all hours, PG&E believes the exposure to be a special case.

One approach to attributing responsibility for buyback has been proposed by CESA, and sounds like a good starting point for quickly defining and implementing BCR rules to address this issue: if a battery bids to discharge economically in the hours prior to day)ahead awards, it should be considered responsible for its losses and these losses should not be included in the calculation of net losses for the day; and an easy threshold for presuming economic bidding would be any discharge bids below the DEB value set by CAISO.  CESA has also proposed a one-for-one matching of hours with buyback losses and hours with economic discharge value; this approach, or variations to it, would all be simple calculations for settlements.  Any bids at or above the DEB would be considered “uneconomic,” and losses due to discharge and unhedged buyback would be covered by BCR on the principle that CAISO would be responsible for these losses, due either to its real)time scheduling horizon or its underestimate of the true real)time discharge opportunity costs.

3. Issue: SOC difference for IFM vs RTM

This issue appears to be a variation on the issue of forced buyback due to previous discharge.  If the difference between day-ahead and real-time SOC can be attributed to the battery, there should be no BCR for the amount of buyback attributable to that difference (which again, could be matched in energy terms to the losses in buyback periods).  PG&E suggests two approaches to assessing the SOC difference: the simpler would be to set a threshold and rule that differences outside of that threshold reduce losses included in the BCR calculation.  The second would be to calculate an initial SOC value based on day-ahead energy awards and net regulation energy awards imputed by the attenuation factors, and consider any differences in initial SOC below that level (in the case of discharge) to be ineligible for BCR.  Here it is assumed that excess SOC, although it may require buyback of charge awards, should prima facie not create eligibility for BCR, but the same calculation could be applied if day-ahead charging awards were eligible.

4. Issue: Day-ahead Initial State of Charge (ISOC) and BCR

This issue had to do with CAISO’s using a default zero value for initial SOC when DA-ISOC is not submitted.  First, PG&E assumes that the language in this discussion should be corrected from “zero” to “minimum SOC”, since a battery cannot be optimized from a value outside of its master file SOC range.  Second, PG&E believes there are simple approaches to calculating initial SOC that should be used to improve the default value used and remove this case from consideration for BCR: 1) Calculate initial SOC based on the previous day’s telemetry at the beginning of hour 8 or 9, day-ahead awards through the end of the day, and imputed regulation take based on the attenuation factors through the end of the day; 2) Calculate using current telemetry at the beginning of hour 8 or 9, and pretend that the net effect of all day-ahead and real-time awards is zero.

5. Issue: Storage BCR due to mitigation

Based on the methodology proposed in B above, PG&E believes day-ahead buyback losses due to mitigation should be eligible for BCR.  This appears to have been a minimal problem to date, but it could certainly increase in the future, and PG&E believes another issue that should be considered in relation to this one is the use of a dynamic DEB, as proposed previously by DMM and the CPUC, that would in hours prior to day-ahead awards be set at a level consistent with increases in the bid cap and any announced scarcity pricing.

6. Issue: DA buyback BCR after uninstructed deviation

Based on the methodology proposed in B above, uninstructed deviation (outside of some threshold level, of course) should result in ineligibility for BCR to the same extent (up to and including ineligibility for the entire day’s real-time (RT) BCR) that self-scheduling would, along with any other performance penalties incurred for such deviations.

7. Issue: BCR for RT derated storage resources providing AS

PG&E agrees in principle that batteries should not receive new energy awards in real time in order to maintain AS awards upon reporting a derate, unless they have indicated a specific willingness to do so.  Since it may be difficult to indicate such willingness through bids alone, PG&E believes OMS should be enhanced to allow batteries to report derates of AS capacity commensurate with derated charge or discharge capacity, always noting that batteries could of course receive exceptional dispatch instructions to charge or discharge in order to maintain AS awards (this situation would be interpreted in settlements as buying back the day-ahead AS awards due to the derate, and then receiving an incremental AS instruction effectively reversing the buyback, but not directly connected to it in the market systems, with the energy instruction subject to exceptional dispatch BCR).

3. Provide your organization’s comments on DMM’s presentation:

 Considering each of DMM’s recommendations:

1. PG&E is agnostic regarding elimination of day-ahead BCR for batteries.  The amounts of BCR received for day-ahead bid losses appear to be small by DMM’s and CAISO’s own analysis.  Moreover, PG&E believes there should always be consideration of bid cost recovery when dispatch is uneconomic with respect to bids, and there are no apparent market constraints driving the losses.  These losses can occur due to flaws in price formation as well as convergence issues in CAISO market systems and should always be compensated on principle.
2. DMM advocates eliminating most RT BCR, and in particular revenue losses due to buyback of day-ahead awards, without making a convincing case that these losses can be feasibly hedged.  The burden should be on DMM to demonstrate that such hedging opportunities exist, unless it explicitly wishes to also exclude batteries from providing RA unless they are indifferent to such losses.
3. PG&E agrees with the elimination of BCR associated with OMS limitations on SOC, in general.

4. Provide your organization’s comments on Terra-Gen’s presentation:

PG&E has supported Terra-Gen’s belief that the Dynamic Limit Tool should be available to hybrid resources for dynamic management of SOC, at least in cases where the battery component of a hybrid is within some tolerance of hitting its SOC limits.  Such cases are readily audited, and while some resources would be required to either do such an audit manually or set up an automated system to validate dynamic limits versus telemetry and other registered constraints, PG&E believes this is the direction CAISO should pursue in this enhancements initiative, to set the EDAM and WEM markets up for future success.

PG&E believes default energy bids based on the battery component’s discharge opportunity costs are appropriate for hybrids, just as they are for standalone batteries.  The issue of battery DEBs has been muddied by consideration of DEBs based on charging costs,.  Charging opportunity costs are driven not only by enerrgy prices, or co-located solar availability, during charging hours, but by opportunity costs of potential losses due to later buyback of discharge awards, and hence should probably not be mitigated below the level required to make a battery whole to its day ahead awards. PG&E advocates that CAISO commit to  a reasonable method for assessing real-time opportunity costs of discharge in calculating DEBs, especially if modified to consider stressed conditions in which the bid cap is increased or scarcity pricing is implemented.

5. Provide your organization’s comments on NextEra’s presentation:

PG&E doesn’t agree with NextEra’s assertion that batteries should be eligible for special forms of cost recovery due to imperfections in the real-time multi-interval optimization (MIO).  A better direction for consideration, even with all of the additional computation that would be required and many other complexities, would be to consider making all intervals of the MIO financially binding, so that resources such as batteries may recovery the costs of material differences between advisory and binding schedules directly. 

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

PG&E appreciates CAISO’s concerted efforts to provide quick and comprehensive data on the effectiveness of the SOC calculation changes, looks forward to working with a much larger dataset as time goes by, and believes this presentation sets a new standard for CAISO transparency in reporting on new initiatives’ success or otherwise. 

7. Provide your organization’s comments on High Sustainable Limit

PG&E appreciates CAISO’s transparency about its difficulties in implementing HSL values directly in its persistence forecasts.  We believe the use of HSL data is very important to improve forecasting and situational awareness in a world of increasing solar curtailment, both involuntary and economic (and after DAME, due to provision of downward imbalance reserves).  Without claiming to have any expertise regarding the implementation of the HSL tool, PG&E suggests that one simple direction to look toward that might make these values more readily provided and available to CAISO would be separate information about insolation (which to our knowledge is already provided by all solar resources or hybrid components) and the sparse data structure required to report on current availability of solar cells.  CAISO could certainly do the HSL calculation itself with those two data sources.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

Addressed in comments in 4, above, as well as in previous comments. 

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

Addressed in comments in 4, above, as well as in previous comments. 

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

 PG&E believes in fidelity to physical reality in the market systems.  One direction to consider on distribution-level charging constraints would be to enable distribution system operators to submit OMS cards where distribution constraints may affect market operations, making use of the same or similar protocols used by transmission system operators.  The fundamental issue appears to be whether it is appropriate for resources to be submitting such outages into OMS, and based on a concern for consistency with the treatment of transmission outages and constraints, PG&E believes the ultimate answer should probably be no.  Clearly significant development work would have to be done to enable this approach.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

PG&E suggests that it may be possible, if the principles expressed here are used, to address both BCR and storage/hybrid DEBs expeditiously, starting that effort after the implementation of DAME/EDAM.  We do not believe it is possible or necessary to delay any part of the DAME/EDAM implementation work to fit this work in, but because BCR changes will only affect settlements calculations and not market processes directly, we believe work could start based on a final proposal shortly after go-live, or after a period of observing changes if any to battery BCR after go-live.   Changes to storage and hydro DEBs may have more significant market and market software implications, but we believe it will be important to start work on addressing them in coordination with BCR changes because BCR may in some cases depend on DEBs.  We do support CAISO’s previous prioritization of work on other elements of the SDM initiative such as OMS enhancements.

13. Please provide any additional comments:

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

PGE appreciates the thoughtful dialogue reflected in the June 30 working group and the broader Mixed-Fuel and Distribution-Level Resources discussion. As an EIM entity, PGE views the refinement of hybrid and co-located resource modeling (particularly around dynamic limits, SOC visibility, and telemetry quality) as essential to ensuring efficient dispatch and price formation across the EIM and future EDAM footprint. In that context, PGE does not support the use of outage cards as a proxy for foldback behavior or dynamic operating limits, and encourages the CAISO to pursue more direct, telemetry-based solutions.

Distribution-level resource topics, while important to CAISO BAA participants, are outside the scope of PGE's engagement in this initiative. PGE is most interested in (1) continued stakeholder discussion to advance practical, durable market solutions and participation models accurately reflecting the capabilities and constraints of hybrid and storage resources for EIM entities, and (2) ongoing conversations around bid cost recovery for storage resources to better align uplift treatment with cost causation and operational feasibility.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

3. Provide your organization’s comments on DMM’s presentation:

4. Provide your organization’s comments on Terra-Gen’s presentation:

5. Provide your organization’s comments on NextEra’s presentation:

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

7. Provide your organization’s comments on High Sustainable Limit

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

13. Please provide any additional comments:

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

San Diego Gas and Electric (SDG&E) appreciates the opportunity to comment on CAISO’s June 30, 2025 workshop on the Storage Design and Modeling initiative. SDG&E thanks all the presenters for bringing their perspectives to the working group discussions. We are supportive of efforts to improve the storage participation model and re-evaluate the bid cost recovery rules as more storage resources connect and participate in CAISO’s markets. SDG&E offers the following comments for consideration.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

SDG&E appreciates CAISO’s presentation on the drivers of storage bid cost recovery (BCR), which identified some of the efficiency, gaming, and bidding incentives which result in BCR for storage resources under the current rules. While we offer several comments on when storage resources should receive BCR, SDG&E reiterates its position that enhancements to state-of-charge (SOC) management must be implemented alongside any revisions to BCR methodologies. Only proceeding with changes to the BCR rules, without improvements to SOC management, ignores the foundations of what drives many of these outcomes in the market and could result in a solution that does not meaningfully improve the efficiency and reliability of storage resources.

SDG&E agrees that the current BCR rules can have unintended consequences, and that storage resources should be incentivized to proactively manage their SOC through efficient bidding. However, aspects of scheduling and dispatch that lead to insufficient SOC to meet day-ahead awards, such as modeling limitations, multi-interval optimization (MIO), or exceptional dispatch, are outside of the control of resource operators. As a principle, SDG&E believes that resources should be eligible to receive BCR if an earlier CAISO dispatch decision that results in an infeasible SOC for a later DA award is not due to a bid or resource management decision by the resource operator.

In addition, to better inform policy development SDG&E requests CAISO to provide analysis of the impact the 2024 BCR methodology modifications had on the overall uplift payments.

3. Provide your organization’s comments on DMM’s presentation:

No comment.

4. Provide your organization’s comments on Terra-Gen’s presentation:

SDG&E supports the proposal to enable sub-resource (component) level outage and derate submissions for hybrid facilities (e.g., inverters, battery racks). This granularity is essential for accurate market forecasting and reflects true resource availability. Detailed component data is also critical to unforced capacity (UCAP) accreditation under the Resource Adequacy program. With the CPUC’s anticipated 2028 UCAP go-live and multi-year data requirements, it is prudent to consider how and when these OMS enhancements could be implemented. SDG&E recommends coordinating these OMS updates with the RA Modeling and Program Design (RAMPD) initiative and engaging stakeholders on data definitions and reporting protocols to ensure a smooth, consistent implementation.

Hybrid resources also face challenges in the ancillary service (AS) markets and certification process due to lack of explicit, hybrid specific AS guidance. Uncertainty around certification requirements, outage reporting and performance expectations makes it difficult for Scheduling Coordinators to optimize hybrid participation in AS markets. SDG&E supports opportunities to clarify guidelines in the tariff or BPM wherever it can better ensure compliance and remove ambiguity.

SDG&E supports the development of these guidelines, but given current market priorities, we suggest that CAISO maintain its focus on BCR reform and the outage management system enhancements for hybrid resources before advancing more detailed hybrid AS guidelines.

5. Provide your organization’s comments on NextEra’s presentation:

In their presentation, NextEra highlighted the challenges posed by the mandatory “Follow DOT” requirement when co-located resources receive ancillary service awards. SDG&E agrees that this flag can discourage BESS participation in ancillary services markets and create coordination issues between different asset owners.

SDG&E would appreciate a better understanding of CAISO’s policy rationale for the “Follow DOT” limitation to inform future stakeholder discussions.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

No comment.

7. Provide your organization’s comments on High Sustainable Limit

No comment.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

Hybrid resources, like other resources, should be subject to mitigation in non-competitive situations. While SDG&E recognizes that there are challenges with development of a default energy bid for hybrid resources and that current methodologies may not be workable, it is appropriate to continue exploring this topic in the scope of the initiative.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

No comment.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

SDG&E continues to support the use of outage cards to handle distribution-level charging constraints in the near-term but recognizes that the current tools in OMS do not sufficiently account for the unique characteristics of storage resources. Enhancements to support overlapping outage cards that can adjust availability, load max, max energy, and min energy on one card would be a significant improvement to OMS and would streamline the process for managing distribution-level charging constraints.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

No comment.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

SDG&E believes the Storage Design and Modeling initiative should first focus on issues that have daily impacts on Scheduling Coordinators (SC) that manage storage resources, as well as broader improvements to the energy storage participation model. To that end, we urge CAISO to continue moving the proposed enhancements to Outage Management, Nonlinearity, and SOC clarification forward. Prompt implementation of these enhancements should improve the efficiency and reliability of the storage fleet, warranting prioritization in this effort. SDG&E also supports any near-term clarifications that can be made to the Tariff, BPM, or operating procedures to improve the performance of hybrid resources.

13. Please provide any additional comments:

No comment.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

As discussed below, the Six Cities provide comments regarding select elements of the Discussion Paper and the June 30^th working group meeting.  Given the preliminary stage of this initiative, the Six Cities look forward to further development of the topics and proposals outlined within this track of the Storage Design and Modeling initiative.   As discussed below, the Six Cities provide comments regarding select elements of the Discussion Paper and the June 30^th working group meeting.  Given the preliminary stage of this initiative, the Six Cities look forward to further development of the topics and proposals outlined within this track of the Storage Design and Modeling initiative. 

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

The Six Cities concur in the concerns identified by the Department of Market Monitoring (“DMM”) and the Market Surveillance Committee regarding the potential for the current real-time bid cost recovery (“BCR”) to incent certain inefficiencies in bidding behavior by removing or limiting exposure to prices.  As a general matter, the concerns raised by DMM regarding the need for and appropriateness of Day Ahead BCR for storage merit continued consideration in this initiative.  The Six Cities remain open to understanding if there are conditions in which BCR may be warranted. 

3. Provide your organization’s comments on DMM’s presentation:

Please refer to the general comments provided above.

4. Provide your organization’s comments on Terra-Gen’s presentation:

If there are clarifications that the CAISO can provide at this time regarding the use of dynamic limits for hybrid resources that are within the scope of existing tariff authority, the Six Cities encourage the CAISO to provide such clarifications.  Similarly, if there are respects in which the tariff and Business Practice Manuals are unclear as to requirements for provision of ancillary services by hybrid resources, the Six Cities do not oppose development of changes providing more clarity.  The Six Cities do not have a position on other topics within this presentation at this time.

5. Provide your organization’s comments on NextEra’s presentation:

The Six Cities do not, at this time, support the proposal for storage resources to receive make whole payments in instances where they may be dispatched out of merit by the CAISO due to the multi-interval optimization.  The Six Cities would appreciate additional information from the CAISO regarding its assessment of the conditions NextEra identified and the “other potential solutions” that were deemed by NextEra to have consequences.  There may be other approaches to addressing the transparency issues that the presentation discussed short of creating a new uplift.  It would also be useful for the CAISO to assess the magnitude of this issue.

The Six Cities would also appreciate information on the magnitude of the issue identified by NextEra related to the “follow dispatch operating target” flag. 

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

The Six Cities acknowledge the CAISO’s update regarding initial implementation of the changes addressed in PRR 1627.  It would be useful for the CAISO to provide a further update on the impacts of this change following its implementation for additional period of time, given that the enhancement was activated in early June 2025. 

7. Provide your organization’s comments on High Sustainable Limit

The Six Cities do not have comments on this aspect of the Discussion Paper at this time.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

The Six Cities generally support development of Default Energy Bids (“DEBs”) for hybrid resources, and look forward to further discussion on the formulation of such DEBs as a part of this initiative.  The Six Cities agree with the CAISO that the guiding principles for DEB formulation include fairness in light in component characteristics and cost structure and the interaction of the DEB with high sustainable limits and dynamic limits. 

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

The Six Cities generally support consideration of issues related to the use of dynamic limits (including the topics listed at pages 12-13), and look forward to further discussion on these issues. 

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

The Six Cities acknowledge the CAISO’s need for transparency regarding the charging constraints of resources that are connected to the distribution system and are participating in CAISO markets and do not oppose the suggestion for a Master File “flag” for these resources. 

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

The Six Cities do not have additional comments at this time.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

The Six Cities do not have additional comments at this time.

13. Please provide any additional comments:

The Six Cities do not have additional comments at this time.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

Overall, SCE agrees that the CAISO must proactively address the evolving challenges associated with the participation of storage resources in the day-ahead and real-time markets. As the volume of storage resources continues to grow rapidly, these assets are introducing new and complex market dynamics.  This is especially important as storage resources exist in a variety of different applications such as hybrid, co-located, stand-alone, and distribution. The wide range of use-cases combined with the increasing reliance on storage resources to meet system needs signifies the importance of CAISO’s close monitoring and thoughtful integration of these storage resources into the market operations. 

SCE encourages the CAISO to implement changes incrementally, with a focus on stability and not pursue such broad disruptive changes that can make understanding the impacts of the changes difficult to parse and correlate to specific action(s). 

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

SCE generally agrees that batteries do not face the traditional drivers of Bid Cost Recovery (BCR) that apply to conventional resources. The majority of BCR does seem to be driven by forced buyback and sellback - some of which are driven by specific bidding behaviors, while others result from market inefficiencies.   Therefore, it is appropriate to establish clear eligibility criteria under which storage resources may receive BCR.  

SCE supports the Department of Market Monitoring’s (DMM) proposed approach of beginning with the presumption of storage resources are not eligible for BCR, and then identifying specific, limited circumstances where BCR would be justified. [1]  SCE believes the fundamental principle for providing uplifts to storage should be to help market participants recover lost revenue caused by market operator actions or issues with market optimization (e.g., exceptional dispatch, out-of-merit dispatch, or multi-interval optimization challenges). These principles will help ensure that compensation is aligned with storage operators’ efforts to manage state of charge (SOC) effectively and adhere to their day-ahead awards.  

Additionally, SCE believes it would be valuable to understand the impact of the recently FERC-approved BCR methodology on storage resources. SCE requests that CAISO provide further information on the implementation timeline for these changes, as well as data illustrating how the new methodology is affecting BCR payments to storage resources.

[1] DMM – Storage Design and Modeling Presentation, December 11, 2024 on page 4.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Department-of-Market-Monitoring-Storage-Design-and-Modeling-Dec-11-2024.pdf. 

3. Provide your organization’s comments on DMM’s presentation:

SCE understands DMM’s position that there are opportunities for storage resources to receive unwarranted BCR, intentionally or unintentionally. Therefore, SCE agrees that unless parties can identify specific instances where day-ahead BCR should be received, it can be eliminated in most scenarios. However, there are specific situations of uneconomic or exceptional dispatch where BCR should be received for storage resources, and the CAISO must not eliminate the BCR eligibility for those specific situations.  Prior to any BCR elimination, the CAISO must identify those specific instances and assure parties that worthy BCR is available.

4. Provide your organization’s comments on Terra-Gen’s presentation:

SCE agrees with Terra-Gen's that there is a lack of clarity and consistency in the permitted use of Dynamic Limits (DL) for Hybrid resources.  CAISO should provide clearer guidelines on the intended use of dynamic limits.  SCE believes CAISO should make it clear that DLs should be used only to update a resource’s overall upper and lower economic capacity limits due to changes in the variable energy resource (VER) output.  DLs should not be used to adjust limits in anticipation of higher market prices, manage state of charge (SOC) because of foldback, and hiding equipment failures.  CAISO should make it clear that limitations due to non-linear constraints and equipment failures should continue to be logged in the Outage Management System (OMS) because it provides a structured and auditable framework for communicating resource unavailability and technical limitations.  

5. Provide your organization’s comments on NextEra’s presentation:

SCE agrees with Nextera that out-of-merit (OOM) dispatch should be eligible for BCR but SCE does not agree that a make-whole payment (separate from BCR) as suggested by Nextera can be justified.   SCE believes there are too many variables driving OOM dispatches where it would be difficult to calculate the appropriate additional incentives. Thus, SCE believes the current BCR construct where uplifts are only applied when a resource realizes a net loss is appropriate.

SCE Seeks More Data from CAISO on Out-of-Merit Dispatches 

SCE agrees with Nextera that more data and transparency are needed to understand the causes of out-of-merit (OOM) dispatches.  CAISO should provide market participants with data on the following: 

• How often do OOM dispatches happen? 

• What is causing OOM dispatches to occur (e.g., MIO forecasting error, manual operator interventions, or Ancillary Service Constraints)? 

• How often are advisory prices substantially different than binding prices.  

SCE Agrees the “Follow DOT” Flag is too Restrictive 

SCE concurs with NextEra and shares similar concerns that the “Follow DOT” flag may be too restrictive for VERs when co-located energy storage is awarded Ancillary Services (AS). SCE understands that the flag may be necessary in certain situations, such as when Regulation Up is awarded to ensure compliance with Aggregate Capability Constraint (ACC) limits. However, when Regulation Down is awarded, the VER resource should be permitted to   produce freely within their ACC limits as any SOC-driven constraint could be managed through a traditional PV curtailment. 

SCE also supports the suggestion mentioned by CAISO staff during the June 30, 2025 Storage Design and Modeling meeting: the “Follow DOT” flag should not be activated for AS Spin and Non-Spin awards unless a contingency event is triggered. This approach would enable VERs to produce freely within their ACC limits. 

Overall, SCE agrees with NextEra’s recommendations and believes further discussion on these topics is warranted. 

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

SCE appreciates CAISO monitoring PRR1627 changes and requests CAISO continue to monitor the change.   SCE looks forward to seeing more analysis of the summer months.

7. Provide your organization’s comments on High Sustainable Limit

SCE generally agrees with CAISO that better quality data for HSL is needed.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

SCE does not have any comments.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

SCE does not have any comments.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

SCE does not have any comments.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

SCE believes there should be some discussions around the proper use of the Distribution Compensation Factor (DCF) for metering, telemetry, operations, and settlement purposes.  SCE looks forward to future discussions related to that matter.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

SCE does not have any comments.

13. Please provide any additional comments:

SCE does not have any comments.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

3. Provide your organization’s comments on DMM’s presentation:

4. Provide your organization’s comments on Terra-Gen’s presentation:

5. Provide your organization’s comments on NextEra’s presentation:

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

7. Provide your organization’s comments on High Sustainable Limit

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

13. Please provide any additional comments:

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

Terra-Gen respectfully urges the CAISO to promptly address critical market design flaws impacting energy storage and hybrid resources. We advocate for a comprehensive overhaul of Bid Cost Recovery (BCR) for storage, ensuring accountability for market-induced losses and eliminating unfair exclusions. Crucially, CAISO must prioritize developing clear, actionable solutions for hybrid resources, including unambiguous guidance on Dynamic Limit use for State-of-Charge (SOC) management, tailored Ancillary Services provisions, and a modernized Outage Management System (OMS) capable of component-level reporting. Furthermore, hybrids should be permitted to bid up to the system-wide soft offer cap, independent of hybrid resource Default Energy Bid (DEB) development.

Terra-Gen strongly requests the CAISO develop formal problem statements and straw proposals for these important aspects of its market design as soon as possible. We also recommend CAISO dedicate the necessary resources to implement these vital changes in a timely manner to help ensure efficient market integration and fair treatment for these key resources.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

Terra-Gen supports a comprehensive overhaul of BCR for storage resources, focusing on the real-time market. While day-ahead BCR is minimal, the real-time market's limited horizon necessitates robust make-whole payment provisions when circumstances beyond an operator's control prevent cost recovery. The guiding principle must be causality: financial responsibility for a forced buy-back or sell-back must be assigned to the entity that caused it.

Owner/Operator Responsibility: An SC should be financially responsible for losses resulting from its own actions. Eligibility for make-whole payments should not apply in these cases:

• Day-Ahead Self-Scheduling: When an SC submits a self-schedule that knowingly causes an out-of-merit dispatch.
• Uninstructed Deviations: When a resource deviates from its schedule without instruction, causing a forced buy-back.

CAISO Market Design/Optimization Responsibility: Conversely, when losses stem from CAISO actions or inherent market design flaws, the storage resource must be made whole. These situations include:

• IFM Initial State-of-Charge (SOC): Using a default zero-value for initial SOC is a flawed CAISO policy that directly causes unnecessary costs.
• Forced Ancillary Service Dispatch: The ancillary services (ASSOC) constraint can force a resource to discharge at any cost simply to maintain its AS award, a costly consequence of a CAISO rule.
• Limited Market Horizon: When the real-time market's inability to optimize over the full day leads to an early dispatch and a subsequent forced buy-back, it is a market design failure.
• Bidding At or Above DEB: If a resource bids at or above its CAISO-calculated DEB and is dispatched, any resulting schedule changes are a market outcome, not an operator fault, and must be eligible for cost recovery.

Terra-Gen recommends that CAISO start its storage BCR redesign proposal with the above considerations and principles as its starting point and primary focus.

3. Provide your organization’s comments on DMM’s presentation:

Terra-Gen appreciates the DMM's focus on efficiency, reliability, and monitoring for potential market exploitation and manipulation. However, we remain unsatisfied by the DMM’s continued recommendation to assume storage resources are ineligible for BCR. This position fails to acknowledge the numerous market design and policy shortcomings that create situations where BCR is warranted. These systemic issues are not the fault of market participants and must be addressed through a fair and comprehensive BCR framework. Terra-Gen also supports the California Energy Storage Alliance’s (CESA) feedback on this item noting the specific challenges with blanket statements regarding storage BCR eligibility.

4. Provide your organization’s comments on Terra-Gen’s presentation:

Terra-Gen expresses continued appreciation for the attention to hybrid resource policy issues in this forum. We also thank the CAISO for the second opportunity to present these issues and refine our input for further consideration. We reiterate our feedback here:

Our hybrid resources presentation highlighted several fundamental, unresolved issues that create significant operational uncertainty, compliance risk, and market inefficiencies for hybrid resources. These are not minor administrative matters; they are structural flaws that impede the effective integration and utilization of these critical assets. Terra-Gen insists that CAISO develop a formal straw proposal to provide clear, actionable solutions to the following problems:

Problem: Ambiguous and Contradictory Guidance on the Use of Hybrid Resource Dynamic Limits

The evolving and often conflicting guidance from CAISO regarding the use of Dynamic Limits has created an untenable situation for hybrid resource operators. A shared, unambiguous understanding of how DLs can be used is essential for ensuring feasible dispatch targets and reliable market participation.

Despite removing explicit references to "SOC management" from the Business Practice Manual (BPM), CAISO has retained language such as "reflecting onsite charging" and "manage onsite charging." These concepts are inextricably linked to SOC management. This creates a direct conflict with other BPM language stating that operators must "manage the state of charge... through typical (Price, MW) bid submissions." This contradiction leaves operators without a clear and compliant pathway to manage their resource's state of charge effectively.

CAISO’s emphasis that "dynamic limit capacity representation must be in good faith" and that withholding for economic gain is subject to FERC referral underscores the critical need for clarity. Without explicit guidance, Scheduling Coordinators (SCs) face the risk of an unintended compliance violation simply for managing the physical limitations of their resource, particularly for grid-charging-restricted hybrids that must avoid premature SOC depletion to meet their obligations.

The Storage Design and Modeling effort should allow CAISO to provide clear, detailed guidance affirming that DLs can be used for SOC management. Without this, SCs will remain handicapped in their ability to optimize resource performance, manage operational constraints, and ensure compliance with tariff requirements.

Problem: Lack of Clear Guidance for Hybrid Resource Ancillary Services (AS) Certification and Provision

CAISO has failed to provide the necessary specific guidance and provisions for hybrid resources within the Ancillary Services market, leading to inconsistency, uncertainty, and inefficient market outcomes.

While the BPM provides detailed guidance for Non-Generator Resources (NGRs), it completely lacks tailored provisions for hybrid resources, which are a unique type of NGR with distinct operational characteristics. This has resulted in an ad-hoc application of certification requirements, creating a lack of transparency and inconsistent expectations for market participants.

The recent expectation that hybrids providing Regulation must use the OMS to reflect availability changes due to VER variability or SOC limitations is operationally unworkable. The significant time-lag of 35-45 minutes between submitting an outage and its reflection in market awards makes it impossible to provide AS effectively without resorting to overly conservative operational postures that withhold capacity from the market. This status quo actively hinders the efficient integration of hybrid resources into the AS market and limits their ability to provide reliability services.

Problem: Deficient Outage Management and Critical Flaws in Mitigation Logic

The current market infrastructure is ill-equipped to handle the specific operational realities of hybrid resources, leading to inaccurate forecasting and unfair market treatment.

The OMS lacks the fundamental capability to process outage or derate submissions at the component level (e.g., a subset of solar inverters or individual battery racks).

• This limitation means that derates on a hybrid’s Variable Energy Resource (VER) component do not flow into the CAISO VER forecast. This directly impairs the accuracy of system-wide forecasts, particularly for Residual Unit Commitment (RUC), leading to inefficient procurement and inaccurate price signals. It forces SCs to operate conservatively, further degrading market efficiency.
• CAISO must commit to updating the OMS to allow for sub-resource ID component-level outages and ensure this granular data is incorporated into all relevant market and forecasting processes.

Inequitable Resource Adequacy (RA) Accreditation: The industry's move toward an Unforced Capacity (UCAP) framework for RA accreditation makes the lack of component-level data a critical vulnerability for hybrid resources.

• Without granular data on component outages, it is impossible to fairly and accurately apply a UCAP metric to a hybrid resource. This will inevitably lead to an imprecise assessment of a resource's firm capacity, systematically disadvantaging hybrids in RA procurement and undermining the integrity of the UCAP calculation itself.
• The CPUC is targeting a 2028 implementation for UCAP, which will rely on multi-year outage data. The time to act is now. CAISO must prioritize OMS updates and coordinate with the RA Modeling and Program Design (RAMPD) initiative to ensure equitable treatment for hybrid and storage resources.

New Mitigation Concepts for Complex Resources Require Dynamic Limit Clarifications: Applying market mitigation to hybrid resources without a Default Energy Bid (DEB) that accounts for their composite nature and operational complexity is not necessarily needed and it is vital that CAISO clearly allow for SOC management through the use of Dynamic Limits should it seek to apply mitigation for hybrids.

• A viable DEB must account for fluctuating marginal costs and, critically, operational constraints like grid charging restrictions. Applying mitigation without simultaneously providing clear mechanisms, such as the use of Dynamic Limits for SOC management, places SCs in a no-win situation. They will be faced with the potential choice of violating a dispatch instruction to observe a physical constraint or depleting their SOC and failing to meet future obligations. This introduces unacceptable operational and compliance risks.
• Terra-Gen recommends that CAISO immediately address the current bidding rules inappropriately restriction hybrid resources from bidding above $1,000/MWh during high-priced periods. This approach unfairly penalizes hybrid resources and creates operational uncertainty. The current framework fails to recognize the unique operational complexities and costs of these assets.
• The current prohibition preventing hybrid resources from bidding above the $1,000/MWh soft offer cap during high-priced conditions, when the system-wide bid cap is raised above $1,000/MWh is unjustified and must be eliminated. This rule restricts hybrid resources from reflecting their true marginal and opportunity costs during periods of critical system need.
• Allowing hybrids to bid up to the system-wide cap should be a straightforward rule change and should not be held contingent on the development of a DEB. While Terra-Gen is open to discussing a DEB for hybrids, the complexity of that task should not delay this urgently needed and common-sense update to bidding rules.
• Hybrid Resource DEBs should account for fluctuating marginal costs and, critically, operational constraints like grid charging restrictions. Both stakeholders and CAISO recognize that creating a workable DEB for hybrid resources is complex. A viable DEB formulation must account for the composite nature of these resources, beyond the physical constraints like grid-charging restrictions CAISO should consider their dynamically fluctuating marginal costs, variable opportunity costs over different timeframes, and SOC management needs.
• Applying market mitigation to a hybrid resource without a properly formulated DEB, and without clear rules allowing the use of Dynamic Limits for SOC management, creates significant risk. It could force a resource into premature SOC depletion to follow a dispatch instruction, impacting its availability for subsequent, more critical periods and creating a potential compliance conflict between following dispatch and observing the physical limitations of the asset.

Terra-Gen respectfully requests that CAISO develop a robust issue paper and straw proposals to address the concerns included in our presentation and reiterated here.

5. Provide your organization’s comments on NextEra’s presentation:

Terra-Gen supports including the two issues raised by NextEra in this initiative. We agree with requests that CAISO provide data on the frequency and magnitude of out-of-merit schedules in the real-time market. Additionally, CAISO should explore different treatments and provide clarity on how the follow Dispatch Operating Target (DOT) flag for co-located resources is determined to ensure it does not unnecessarily curtail VERs. The CAISO has not justified its blanket follow DOT treatment when co-located resources receive AS awards. There are certain types of AS provision that would not require this application and CAISO should discuss these issues in greater detail and propose a more granular and circumstance specific approach for its co-located follow DOT rules.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

Terra-Gen reiterates the CESA’s feedback on this issue.

7. Provide your organization’s comments on High Sustainable Limit

Terra-Gen supports efforts to improve resource forecasting and High Sustainable Limit submissions.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

See detailed response to #4 above. Terra-Gen strongly advocates for allowing hybrid resources to bid above $1,000/MWh during high-priced conditions, consistent with the $2,000/MWh bid cap. This should not be contingent on the development of a DEB for these resources. While open to discussing a DEB for hybrids, we reiterate the complexities involved, as described above.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

See response to #4 above for our detailed recommendations on these issues for hybrid resources.  As previously stated, Terra-Gen requests that CAISO develop a straw proposal to address the concerns we have raised regarding the use of dynamic limits for communicating ancillary service availability.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

Terra-Gen supports the enhanced modeling of distribution-level charging constraints in the market optimization. The continued use of outage cards for unmodeled operational constraints is an inadequate approach.  

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

No comment.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

Terra-Gen is uniquely situated as the largest owner/operator of hybrid resources in the CAISO’s market, therefore we place the utmost emphasis on this topic being prioritized with in this initiative.  We also recognize and support the continued focus on the storage BCR redesign and request that CAISO provide adequate staffing and resources to address both areas of focus in a timely manner, i.e., within the next 12 months for implementation no later than Fall 2027.

13. Please provide any additional comments:

No comment.

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

Storage’s need for Bid Cost Recovery is largely driven by CAISO’s market design that overly constrains and mitigates storage resources at mitigated prices that fail to allow the assets to manage their opportunity costs and risks. Given the unintended market outcomes that the command-and-control design has surfaced, it is time to rethink these decisions and better balance market risks.

Vistra supports elimination of Bid Cost Recovery (“BCR”) in both the Integrated Forward Market (“IFM”) and the Real-Time Market (“RTM”) – Fifteen Minute Market and Five Minute Market – in exchange for CAISO ceasing its practice of overly constraining storage assets through Market Power Mitigation (“MPM”), the Ancillary Service (“AS”) State of Charge (“SOC”) constraint, and allowing an AS obligation to be converted into an energy position when derates occur.

Vistra requests the CAISO:

• Exempt Limited Energy Storage Resources (“LESR”) and Hybrid Resources from MPM,
• Remove the AS SOC constraint,[1] and
• Cease converting AS awards into energy awards when a LESR experiences an outage where the penalty prices associated with the Upper Economic Limit or Lower Economic Limits trigger energy awards.

The last two bullets should be acceptable from a market design perspective with accompanying changes that:

• Identify the Unavailable Quantity due to outage or SOC availability as No Pay Unavailable Quantities,
• Identify incremental RT AS if Unavailable Quantity are identified in RTM, and
• Categorize it as AS No Pay Unavailable Capacity subject to rescission.

Given the unintended market outcomes observed under the current command-and-control design decisions, it is prudent to shift the responsibility for State of Charge management to the Scheduling Coordinator (“SC”) and subject the SC to penalties for failure to deliver on its obligations. This direction is also more compliant with FERC Order 841 direction where FERC decided:

“Consistent with the NOPR, we find that each RTO/ISO must permit electric storage resources to manage their state of charge because it allows these resources to optimize their operations to provide all of the wholesale services that they are technically capable of providing, similar to the operational flexibility that traditional generation resources have to manage the wholesale services that they offer… We therefore agree with commenters that resources using the participation model for electric storage resources must have the ability to self-manage their state of charge and it is often desirable to allow them to do so. Providing this flexibility will allow resource owners/operators to ensure their own Minimum and Maximum States of Charge are not violated… Therefore, we require each RTO/ISO to allow resources using the participation model for electric storage resources to self-manage their state of charge. We also find here that a resource using the participation model for electric storage resources that self-manages its state of charge will be subject to any applicable penalties for deviating from a dispatch schedule to the extent that the resource deviates from the dispatch schedule in managing its state of charge.”[2]

We look forward to engaging with stakeholders to discuss the benefits of better complying with FERC’s decision on energy storage subjecting the SC to the responsibility for managing its SOC subject to any applicable penalties. To be clear, if these needed market changes are not accepted then a robust uplift framework is needed as CAISO’s current command-and-control approach overly constrains storage and its opportunity costs and operations & maintenance costs must be made whole if limited due to CAISO market operations.

Vistra supports the practical concerns raised by Terra-Gen and NextEra on co-located or hybrid resources. These items should be in scope of this initiative as discussed further.

[1] This may also include ceasing development of the envelope equations although that requires additional discussion.

[2] FERC Order 841 Paragraphs 246-248.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

See above for Vistra’s position on CAISO’s market design for storage including need to shift responsibility for SOC management to SC and subject them to any applicable penalties. While we fundamentally struggle with trying to isolate market intervals that “warrant” or “do not warrant” BCR due to Multi-Interval Optimization (“MIO”) among other factors, Vistra illustrates our view on each scenario raised by CAISO briefly:

Finally, Vistra requests CAISO allow resources the ability to update their energy bids closer to the Fifteen Minute Market run to better reflect the most accurate value associated with the use of its SOC. The delay between the market close (T-75) and the FMM run was thoroughly discussed in the previous Bid Cost Recovery expedited effort. CAISO should allow updated price – quantity paired bids as close to the FMM market run as feasible.

[1] Market issue requested scope by Vistra in opening meetings, see slide 6 at https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Vistra-Storage-Design-Modeling-Jan-23-2025.pdf.

3. Provide your organization’s comments on DMM’s presentation:

Vistra finds the manner that DMM approaches evaluating storage operations indicates an unfamiliarity with storage as a technology and its market participation needs and challenges. Storage does have operating costs and risks that change as a function of its state-of-charge levels. Storage also has opportunity costs for its use given its highly use-limited nature. Finally, storage provides a critical load shifting value within the CAISO market that should be incentivized to be made as fully available as possible.

Market participants’ should not be considering Bid Cost Recovery when trading. DMM’s concern begin with a concern that “current BCR rules remove the exposure to real-time prices” builds off a premise that market participants are building BCR expectations into their bidding. The DMM appears to believe current BCR rules distort bidding incentives even when they should be aware that BCR should not inform bidding practices in any way. Vistra reminds market participants, the CAISO, and the DMM that behavior such as this is ripe for a referral to Federal Energy Regulatory Commission. We expect DMM to be performing monitoring against strategic behavior it believes is motivated by BCR expectations and to forward credible investigations to FERC. The market monitoring role is a critical role within an ISO.

Regardless, Vistra would be more open to eliminating Bid Cost Recovery in exchange for CAISO stopping its overly constraining practices as described above. If CAISO stops mitigating storage, stops enforcing the AS-SOC constraint, and stops the practice of issuing energy awards when a resource with AS award experience outage leading up to real-time, then we feel confident we can manage our risk of uneconomic market outcomes without BCR. As these market interventions are the primary drivers of the bid cost recovery needs, it is more prudent to stop unnecessarily constraining storage offers or applying constraints than to continue musing about both overly constraining storage operations and also withholding cost recovery when the market design is driving the uneconomic results that are most of concern.

4. Provide your organization’s comments on Terra-Gen’s presentation:

Vistra thanks Terra-Gen for providing thought leadership on hybrid and co-located challenges in this stakeholder initiative. Vistra is in development of a 50 MW solar and storage hybrid resource that will achieve commercial operations in the near term.[1] Consequently, the challenges raised by Terra-Gen are high priority issues to have resolved prior to our hybrid resource coming online.

Vistra requests CAISO produce an updated issue paper with fuller explanations summarizing stakeholder concerns raised by Terra-Gen and to propose a set of options for stakeholder consideration to address each of the following issues:

• Responsibilities of the Generator Owner versus Scheduling Coordinator for hybrid or co-located data submission or bidding tools.
• Risks or performance expectations for co-located assets even in the event the assets have different Scheduling Coordinators.
• Use and application of hybrid dynamic limits including the ability to manage the battery’s SOC especially for safety or reliability reasons.
• Detailing the process and requirements for certifying hybrids to provide AS.
• Clarifying when hybrid resources should use the dynamic limits to reflect VER availability or to manage its SOC (Tariff Section 30.5.6.2) versus submitting outage tickets.
• Representing outages at a hybrid component level that likely requires modifying its registration in Master File and its modeling in the market to use parent-child relationship so that outages can be reported by child component (VER or storage).[2] This scope is likely to impact Master File, Market Model and Outage Management System at the minimum.

Applying mitigation or attempting to develop a DEB for hybrids is an exercise unlikely to be able to successfully estimate incremental costs of hybrids in light of CAISO’s challenges estimating costs for storage. Consistent with our request to no longer mitigate stand-alone storage, Vistra similarly supports not subjecting hybrid resources to mitigation in exchange for no longer receiving Bid Cost Recovery.

[1] Deer Creek Solar & Energy Storage Facility in development, https://vistracorp.com/vistra-zero/.

[2] The multi-stage generator data resource template allows registering configurations within plants (child to parent) and the format may be able to be leveraged to model hybrids at a component level within the same resource ID.

5. Provide your organization’s comments on NextEra’s presentation:

Regarding the stand-alone make-whole payment, we believe the next step is for CAISO to perform additional investigations and explanation around the frequency that the opportunity cost due to future advisory signals does or does not set the binding interval pricing. NextEra gave an example of being discharged prematurely at a negative price with the hypothesis this is due to multi-interval optimization. In the recent Market Performance and Planning Forum, CAISO showed how the opportunity cost of holding the SOC for a future interval tightness set the price in the binding interval.[1] We request the CAISO under this effort perform more education including:

• Multi-Interval Optimization education,
• Frequency and magnitude that the opportunity cost of holding, charging, or discharging storage sets the binding interval clearing price versus the opportunity cost does not set the binding clearing price, and
• Magnitude of differences in the schedules and clearing prices for a given interval across all advisory and binding intervals for better understanding of the skew of pricing observed by participants versus observed in earlier advisory runs.

As always, we strongly support improving demand and resource forecasting that may be leading to systematic differences in forecasts in advisory intervals versus the demand and VER forecasts reflected in binding intervals.

Regarding the follow Dispatch Operating Target concern raised, Vistra supports CAISO describing its policy around issuing a follow-DOT flag for VERs. At a conceptual level, Vistra wants to ensure that if a BESS receives an AS award that it is obligated to have the room available on the BESS to either discharge (upward AS) or charge (downward AS) similarly this means that there needs to be room within the Point of Interconnection as well. Unfortunately, that may mean that a VER may have to limit its dispatch within a POI if increasing its output would limit the headroom within the POI needed for the AS award.

NextEra recommends that CAISO eliminate follow DOT flag for VER, which we may be able to support if the appropriate penalty is then applied to BESS as result of VER being able to displace the BESS ability to meet its AS obligations. If CAISO changes its practice to allow the VER dispatch to limit the headroom of the BESS dispatch such that it cannot provide its full AS obligation then the co-located BESS should be identified as unavailable and it should be included in AS no pay. We think the operating practice needs to be clearly described so that VER and BESS that are co-located can clearly understand the operating risks to both of being co-located so that the risk can be reflected in its offers. We can understand need to avoid being overly limited in dispatches as long as commitments to supply AS are held to similar standard across all resources and failure to make that capacity available in an interval is subject to no pay penalties.

[1] Market Performance and Planning Forum, June 26, 2025, page 83-84, https://www.caiso.com/documents/presentation-market-performance-and-planning-forum-jun-26-2025.pdf.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

Vistra thanks CAISO for sharing its data on impacts to Flexible Ramping Product results post the expedited SOC management changes to include FRU. Vistra remains concerned that there are several issues facing the efficacy of FRP today; it appears the lack of considering FRU in storage’s state of charge calculation was not a primary driver of ineffectiveness. Vistra supported in the 2025 Policy Roadmap survey that the one initiative needed to be picked up by the CAISO is a FRP Enhancements initiative, and these results will not conclusory indicate that there is a need to review FRP effectiveness. We respectfully request that the FRP Enhancements initiative be launched reviewing FRP effectiveness and making any necessary policy or operational changes needed to shore up confidence in the product prior to EDAM/DAME go-live.

7. Provide your organization’s comments on High Sustainable Limit

In the Market Performance and Planning Forum discussions it was our understanding that the causes of the data integrity are not known by the CAISO until it can perform a case-by-case review with the Scheduling Coordinator. Consequently, we do not yet understand if there is a systemic problem or if this is a business process requiring more customer training and coordination. We request CAISO develop a knowledge article as an initial step describing the issues it has learned of that can lead to untimely or inaccurate HSL submissions so that VERs are made aware of common challenges. This market issue does not appear to be a policy issue requiring Tariff or implementation changes but instead appears to be an education and compliance with existing requirement issue. If CAISO is instead trying to tee up expanding requirements that all VERs’ telemetry must include a HSL then CAISO should be direct in stating this desire and explaining how extending the requirement to all VERs would add reliability or market efficiency value. Until the CAISO clarifies that it is attempting to extend the HSL requirement to all VERs, this does not appear to be a policy issue but a business process one that should not be in scope of this effort. We hope the CAISO develops the knowledge article, holds training, and stays committed to ensuring compliance with HSL requirement for hybrids in the relevant training and compliance departments.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

CAISO struggles to calculate a storage DEB that accurately reflects the incremental costs of storage. Applying the storage DEB to hybrids is unworkable. CAISO should exempt stand-alone storage and hybrid resources from market power mitigation, allowing them to reflect their opportunity costs and risks in their offers. In exchange, Vistra supports eliminating bid cost recovery. CAISO should allow hybrid resources to offer above the soft-offer cap even without mitigation similarly to how demand response resources are allowed to bid above the soft-offer cap. In its procedures for demand-response resources, CAISO argued:

“RDRRs’ place in the bid stack is not a reflection of their marginal costs, but the intent that the CAISO only dispatches them when it has exhausted other resources. Although RDRRs are demand response resources because they provide load curtailment, RDRRs better resemble emergency purchases, which the Commission held were outside the scope of Order No. 831 because “such transactions are administratively priced rather than based on short-run marginal cost.”[1]

Similarly, stand-alone storage and hybrid resources place in the bid stack should also be a representation of CAISO’s intent to hold storage dispatch until it has exhausted other resources during tight conditions when Order 831 bidding is triggered. Consequently, CAISO should expand the bidding above soft offer cap rules applied to storage to hybrid resources and exempt both from mitigation.

[1] CAISO Transmittal Letter, FERC Docket No. ER22-1431,  Page 7.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

This issue should be prioritized as it appears the Tariff and market functionality is inconsistent with CAISO’s intent for dynamic limits based on its clarification. Section 30.5.6.2 states, “representing Hybrid Resources’ upper economic limit and lower economic limit in each Real-Time Market five-minute Trading Interval for a rolling six-hour lookahead period”. Further, the discussion to date has raised that the dynamic limit tool replaces the economic limits (Upper Economic Limit and Lower Economic Limit) not the Upper Operating Limit or Lower Operating Limits. Two changes to begin are needed to implement the “ISO clarification” included in the presentation:

• Tariff Section 30.5.6.2 should be revised: Representing Hybrid Resources’ upper economic limit, and lower economic limit, upper operating limit, and lower operating limit in each Real-Time Market five-minute Trading Interval for a rolling six-hour lookahead period.
• Market functionality should be updated so that dynamic limits adjust the Upper Operating Limit and Lower Operating Limit instead of the economic limits with the clarification that dynamic limits are to reflect economic and operational capability not just economic capabilities. CAISO should clarify whether this change is sufficient for AGC to respect the hybrid resources Operating Limits (upper or lower) in its regulation signal.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

None currently. 

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

None currently. 

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

The scope items raised by Terra-Gen and NextEra have merit to be in scope of this initiative. Once a comprehensive set of proposals is developed, stakeholders can provide feedback to the CAISO on which proposal is a higher priority. It may be possible the proposed outcome is insufficient to address the persuasive problem statements, at which time we would deprioritize the change. This question is premature. 

13. Please provide any additional comments:

None currently. 

1. Please provide a summary of your organization’s comments on the Mixed-Fuels & Distribution-Level Resources Discussion Paper and June 30, 2025 working group meeting:

WPTF appreciates the comprehensive analysis presented in the Discussion Paper and values the continued opportunity to participate in the Storage Design and Modeling stakeholder process. We offer the following comments and questions for CAISO’s consideration:

• Clarification on Scope and Impact of Distribution-Level Charging Constraints
  The Discussion Paper notes that distribution-level resource identification could "materially aid operators during stressed system conditions." However, with only approximately 1,400 MW of distribution-connected BESS currently participating in the market, we believe additional clarity is needed. Specifically:
  • How much capacity is subject to charging limitations imposed by the distribution provider?
  • Are these limitations persistent, or are they transitional and expected to be lifted as system upgrades are completed?
• Support for Transparency Measures via Master File Flag
  WPTF supports CAISO’s proposal to add a distribution-level flag in the Master File. This appears to be a relatively simple yet effective step to enhance transparency and operator situational awareness without placing additional burden on resource operators. We encourage CAISO to move forward with this improvement.
• Opposition to Development of Default Energy Bids for Hybrid Resources at This Time
  WPTF does not support the development of hybrid-specific Default Energy Bids in the near term. The current volume of hybrid storage capacity is relatively modest, just over 1,000 MW, and there is no evidence that these resources are routinely marginal or that their bidding behavior is distorting market prices. Developing Default Energy Bids for hybrids would require a significant modeling effort and policy development. We believe CAISO’s resources are better spent addressing higher-priority issues affecting a larger share of the storage fleet.

2. Provide your organization’s comments on Uplift: Current Drivers for Storage Resources, including your organization’s perspective on each of the drivers identified and whether they should warrant uplift:

We respectfully urge CAISO to ensure that policy initiatives are grounded in clear evidence and reflective of the broader stakeholder context. In an increasingly complex policy environment, it's important that conclusions are supported by robust data and that historical efforts are fully acknowledged. With that in mind, WPTF would like to express concern about the framing of the BCR issue in both the presentation and accompanying staff descriptions. We believe a more balanced and comprehensive portrayal would be beneficial for stakeholders and the policy process alike.

WPTF offers the following questions and comments for CAISO’s consideration:

• Historical Context Omission: In the background section, there is no mention of the recent, extensive stakeholder process that addressed real-time BCR issues. That process concluded with an approved proposal, which has not yet been implemented. Why was this omitted? Should this initiative not evaluate the performance of that prior policy before introducing additional reforms?
• Data Presentation Without Context: The reference to 2024 BCR data, specifically a figure under $20 million, lacks context regarding total BCR values, historical trends, or the scope and goals of the previous initiative. Could CAISO clarify why this data point was presented in isolation?
• Stakeholder Perspectives: Several stakeholders, including PG&E, Vistra, Terra-Gen, and WPTF, raised concerns during the earlier BCR initiative. These objections appear to be absent from the current scope. Would CAISO consider incorporating a review of those perspectives as part of this initiative to better evaluate the pending solution’s potential efficacy?

3. Provide your organization’s comments on DMM’s presentation:

WPTF believes it is inappropriate to eliminate Bid Cost Recovery (BCR) for storage resources based on outcomes that are largely the result of limitations in the CAISO market optimization framework. Storage resources must navigate complex intra-day dynamics, and the current market design does not fully capture or accommodate these operational realities.

The DMM presentation focuses on relatively small amounts of BCR payments to storage resources. Given the scale of the overall market, these amounts do not justify prioritizing BCR elimination, especially when such changes could introduce new inefficiencies or reduce reliability by discouraging rational and flexible participation by storage. We encourage CAISO to focus on enhancements to optimization and modeling before considering the removal of essential market safeguards such as BCR.

4. Provide your organization’s comments on Terra-Gen’s presentation:

WPTF supports Terra-Gen’s proposals and emphasizes the importance of clear, consistent, and enforceable rules for hybrid and storage resource participation in CAISO markets. The operational complexity of these resources, combined with evolving policy and modeling practices, underscores the need for additional clarity to support both compliance and efficiency.

In particular, WPTF agrees that:

• Clear articulation of the appropriate use of dynamic limits is critical. Ambiguities in their permitted application create risks for inadvertent tariff violations, unnecessary mitigation, or inefficient dispatch outcomes. Market participants must have confidence in when and how to use these tools.
• Standardization of HSL submittals and SOC management expectations will promote better forecasting, reduce deviation risk, and enhance system reliability. Inconsistent or unclear guidance can lead to conservative bidding strategies that reduce the full value storage can provide to the system.
• Transparent and uniform treatment of hybrid resources helps prevent market distortions. The lack of clarity around acceptable bidding behavior or operational limits may unintentionally advantage or disadvantage certain resources, undermining competition and efficiency.

Additionally, WPTF recommends that CAISO:

• Coordinate guidance with FERC precedent and practices in other RTOs and ISOs to the extent feasible. While CAISO’s framework is unique, aligning conceptual definitions of good faith bidding and operational transparency across markets can reduce compliance risk for multi-state operators.
• Ensure any future monitoring or mitigation measures are grounded in objective and observable criteria, rather than subjective interpretations of operator intent. For example, SOC management or dynamic limit usage should not be construed as economic withholding when used according to published guidelines.
• Maintain flexibility for resource operators to respond to real-time conditions, while also promoting clear ex-ante rules. Market efficiency depends not just on limiting undesirable behavior but also on enabling rational, well-informed bidding and scheduling practices.

By advancing clarity and consistency in its hybrid resource rules, CAISO can help ensure that market outcomes reflect true system needs and resource capabilities, which benefits all stakeholders.

5. Provide your organization’s comments on NextEra’s presentation:

WPTF believes that NextEra’s presentation highlights a critical issue that deserves focused attention in this initiative: what happens to storage operations and reliability outcomes as the market matures, becomes more saturated, and traditional price signals no longer produce optimal storage dispatch.

NextEra’s analysis of out-of-merit (OOM) dispatch driven by CAISO’s multi-interval optimization (MIO) framework reveals that batteries are increasingly exposed to economically inefficient outcomes, particularly when advisory prices fail to materialize. These impacts can erode the value proposition of energy storage and may result in reduced responsiveness and diminished reliability benefits in the long term. The challenges with identifying and quantifying OOM dispatch, as shown in the examples on pages 5 and 20 of the presentation, underscore the lack of transparency and complexity storage operators must navigate.

WPTF supports further investigation into mechanisms, such as a make-whole payment outside of existing BCR provisions, that could help mitigate these revenue impacts. In addition, CAISO should consider whether future enhancements to the optimization engine or more transparent publication of advisory prices could help reduce the incidence and severity of uneconomic dispatch.

Finally, WPTF encourages CAISO to view this issue not only from a market efficiency standpoint but also from a forward-planning, reliability perspective. If storage is to serve as a cornerstone of system reliability, the market must continue to send meaningful signals that support rational investment and operational behavior across varying market conditions. WPTF is increasingly concerned that in the not-too-distant future the combination of the RT market optimization shorter look-out period and storage bids will not yield a sufficiently charged storage fleet needed to meet afternoon peak reliability.

6. Provide your organization’s comments on Monitoring of PRR 1627 changes (SOC Management and FRU):

Thank you for providing such detailed analysis and information. 

7. Provide your organization’s comments on High Sustainable Limit

See comments above.

8. Provide your organization’s comments on Market Power Mitigation & Default Energy Bids for Hybrid Resources:

See comments above.

9. Provide your organization’s comments on Dynamic Limits and Ancillary Services:

See comments above.

10. Provide your organization’s comments on Distribution-Level Charging Constraints:

See comments above.

11. Provide other topics, challenges, or opportunities related to mixed-fuel and/or distribution-level resources that should be discussed:

See comments above.

12. Provide your organization’s comments on the prioritization of Mixed-Fuel and Distribution-Level Resources topics, relative to other topics in the Storage Design and Modeling initiative.

See comments above.

13. Please provide any additional comments:

None at this time.