Comments on January 16, 2024 working group

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

The Alliance for Retail Energy Markets (“AReM”) is pleased to see its feedback on the implementation of Proposed Revision Request (“PRR”) 1280 incorporated in the Problem Statement 3 summary of participant comments. AReM remains concerned that load-serving entities ("LSE") will be held liable for capacity procurement mechanism (“CPM”) cost allocation even if they meet local regulatory authority (“LRA”) resource adequacy (“RA”) standards. As described in previous comments, this occurred last August, and the discrepancy stems from treatment of demand response (“DR”) resources pursuant to PRR 1280.

AReM now anxiously awaits further guidance from CAISO on whether and when it will take up this issue. AReM foresees two possible paths. The first, which is AReM’s preferred approach, is to add resolving the discrepancy in DR resource treatment as a fast-track item. The second is to take up the issue after larger issues of RA rule consistency are resolved. This is discussed further in response to Question 7 below.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

No comment at this time.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

No comment at this time.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

No comment at this time.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

CAISO discusses a survey of LSEs to gather data on procurement. One survey would request data on short-term procurement to facilitate a study of the reliability of the prospective RA fleet on a year-ahead basis. Data would focus on filling the gap between the 90% of procurement mandated to be completed on a year-ahead basis and the 100% necessary to meet reliability requirements on a monthly basis. In addition to this, a midterm and long-term survey would request data on new resource procurement and long-term planning.

As to the short-term survey, AReM agrees with other stakeholders that a backward-looking study that assesses the RA fleet procured in the prior year on a stochastic basis would be preferable to attempting to forecast the full RA fleet on a year-ahead basis. If CAISO persists in forecasting year-ahead RA, AReM prefers CAISO conduct a survey of LSEs to receive their input. However, CAISO should be prepared to handle the instance when an LSE does not know what resources will fill the 10% procurement gap. For times when the LSE does not have executed contracts or contracts under review for the 10% gap, asking LSEs to provide a confidence level in their responses would assist the CAISO. For instance, if LSEs are 50% confident in their forecast of resource type, they would indicate that in the survey response. That way, CAISO will better be able to interpret the uncertainty in LSE responses to the survey and could distinguish between responses where an LSE is very confident in its response (>80% confidence) or much less confident (<20% confidence).

AReM also recommends CAISO prioritize consistency with this survey and other LSE reporting. For instance, AReM members regularly supply procurement data using resource data templates to the California Public Utilities Commission (“CPUC”). Allowing LSEs to submit the data in the same file format would reduce the burden of preparing a survey response and likely increase LSE response rates.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

No comment at this time.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

As discussed in response to Question 1 above, AReM foresees two possible paths to resolving its identified issue of discrepancies in treatment of DR resources by CAISO and the CPUC. The first, which is AReM’s preferred approach, is to add resolving the discrepancy in DR resource treatment as a fast-track item. The second is to take up the issue after larger issues of RA rule consistency are resolved.

Ideally, the CAISO would set a policy goal that CAISO rules around CPM cost allocation not conflict with LRA rules around RA compliance to avoid the situation when LSEs are compliant with LRA rules and still assessed CPM cost allocation. However, given the complexity of the CPUC’s new slice-of-day rules, which CAISO has not adopted, ensuring this broad consistency will not be a trivial undertaking. And achieving consistency at all will demand the CAISO and LRAs respect jurisdictional boundaries so that standards can be consistent. It is not clear from the working group discussions to date that consensus will be reached on all these issues. Therefore, they would benefit from a long-term stakeholder process.

However, AReM does not wish to wait to resolve all concerns regarding LRA and CAISO jurisdiction prior to resolving discrepancies related to DR resource treatment. That issue is more narrow in scope and could be addressed more quickly with stakeholder consensus, and prevent a recurrence of what happened during the CPM event last August.

Therefore, AReM recommends that preventing LSEs from being assigned CPM cost responsibility when compliant with LRA RA rules due to treatment of DR resources pursuant to PRR 1280 be added to the problem statement scope and have this move forward into the proposal development phase as soon as possible, preferably prior to the February 27^th meeting. 

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

AReM interprets the phrase “policy development phase” to be equivalent to “proposal development phase” as referenced in the presentation materials provided at the previous working group meeting. Given that, as AReM also states in response to Question 7 above, AReM recommends that preventing LSEs from being assigned CPM cost responsibility when compliant with LRA RA rules due to treatment of DR resources pursuant to PRR 1280 be added to the problem statement scope and have this move forward into the proposal development phase as soon as possible, preferably prior to the February 27^th meeting. 

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

No comment at this time.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

AReM is not actively seeking participation in a panel at this time.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

N/A

12. Provide any additional comments not already captured:

No comment at this time.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

The California Community Choice Association (CalCCA) appreciates the opportunity to provide comments on the Resource Adequacy (RA) Modeling and Program Design Working Group (Working Group). CalCCA supports the California Independent System Operator Corporation’s (CAISO) efforts to update their RA modeling, tools, and processes to ensure RA capacity is available when and where needed to support reliable grid operations. In the sections that follow, CalCCA provides the following recommendations:

• The CAISO should replace the Resource Adequacy Availability Incentive Mechanism (RAAIM) with Unforced Capacity (UCAP) counting rules and explore whether changes to the planned outage substitution process are needed.
• CalCCA agrees with the CAISO’s key takeaway that its default Planning Reserve Margin (PRM) warrants revisiting. As the CAISO revisits the default PRM, the CAISO should consider how the level of PRM necessary to meet reliability targets is dependent on resource counting rules.
• The CAISO should consider if a Flex RA requirement is needed for California Public Utilities Commission (CPUC)-jurisdictional load serving entities (LSE) once the CPUC transitions to slice-of-day (SOD).
• Given the information that the CAISO has about Year-Ahead RA (YARA) and Month-Ahead RA (MARA) filings that other stakeholders do not, the CAISO should estimate the RA supply used for its RA sufficiency tests.
• Either update the CAISO’s backstop cost allocation rules to consider “credited resources” or work with the CPUC to have them update their rules to have credited resources shown on a supply plan.
• When considering longer-term reforms for systemic changes to the CAISO’s RA rules, the CAISO should prioritize replacing RAAIM with a UCAP counting methodology. 
• The CAISO should move the curing and settling CAISO balancing authority areas (BAA) day-ahead resource sufficiency evaluation (RSE) shortfalls scope item to the Day-Ahead Sufficiency initiative.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

In the Working Group, the CAISO discussed the existing tools and processes the CAISO uses to incent RA resource availability. Data presented by CAISO suggests that such tools and processes are not successful in incentivizing resources to be available or to conduct planned maintenance to prevent forced outages. Outages during the summer months regularly exceed outage rates used in state planning and neared 18 percent of the shown RA fleet during the September 2022 heat event.

There are several reasons RA resources may not have the right incentives to be available, primarily stemming from the ineffectiveness of the current RAAIM mechanism,[1] and how RAAIM interacts with the bi-lateral RA market. RAAIM unavailability charges are 60 percent of the Capacity Procurement Mechanism (CPM) soft offer cap (resulting in a RAAIM charge of $3.79 per kilowatt (kW) -month). The CAISO presented prices at major hubs outside of CAISO to demonstrate that implied capacity prices are significantly above the CPM soft-offer cap. CalCCA agrees with the CAISO’s suggestion that capacity prices are significantly above the CPM soft-offer cap, and therefore the RAAIM unavailability charge, but recommends looking at a data source that is better suited to come to this conclusion – the Federal Energy Regulatory Commission (FERC) Electronic Quarterly Reports (EQR). These reports show that, as RA supply tightened, the weighted average price for capacity delivered to the CAISO system more than tripled between 2019 and 2023.

Importantly, detailed transaction-level data from the FERC EQRs shows that the rise in average capacity prices is primarily driven by a growing share of transactions at extremely high prices. In September 2020, a time with excess RA supply, around 2,800 megawatts (MW) of RA capacity was purchased by California LSEs at prices above $7.34/kW-month, the CAISO’s recently proposed CPM soft-offer cap. In contrast, more than 7,800 MW, 10,600 MW, and 11,700 MW were purchased at prices above $7.34/kW-month in September 2021, 2022, and 2023 respectively, times with an RA deficit or extremely tight market. The highest observed prices rose from $29/kW-month in September 2020 to over $60/kW-month in September 2021, 2022, and 2023.

When RA market prices reflect market scarcity, it is logical to assume sellers would find it worth it to sell RA that may not be available instead of taking measures to avoid RAAIM charges, like providing substitution or performing planned maintenance.

This does not suggest the RAAIM price or the CPM price is too low, as the CPM price is meant to reflect the going forward fixed costs of marginal resources, not RA market prices. Instead, it points to RAAIM being structurally insufficient because it does not properly incent resources to be available.  This is because RAAIM is not tied to RA market prices, which do not always reflect going forward fixed costs. UCAP counting rules could remedy this issue by tying penalties for non-performance to the resource’s ability to sell RA in the future.  Doing so would tie penalties for non-availability to the ability to receive revenues at the existing RA market prices. UCAP should also be applied to non-RA resources with NQC values to incent availability from resources that are not currently providing RA but looking to provide it in the future.  This also simplifies the process of applying UCAP, as the calculation will use all forced outages and not have to discern between a forced outage when it was providing RA and a forced outage when it was not providing RA.   

Including forced outages in the counting rules, as UCAP does, creates incentives for generators to conduct planned maintenance to prevent unplanned, forced outages. The CAISO should further explore whether UCAP should be coupled with changes to the planned outage process to ensure resources are not disincentivized to take planned outages and are able to take them when necessary. Currently, the CAISO requires substitution to take planned outages. Resources should be planning maintenance during off-peak months so that they are available during the peak summer months that are most challenging from a reliability perspective. It would be helpful to know if resources are having trouble finding substitution during off-peak months, and therefore are unable to take planned outages when necessary.  

The CAISO should work with the CPUC, which has scoped UCAP into its new RA proceeding, to evaluate how to incorporate UCAP into the CAISO and CPUC’s RA programs. Part of this evaluation should include whether special considerations need to be made to make UCAP compatible with SOD. Whether or not a UCAP methodology needs to be specifically tailored to SOD can be informed by evaluating how forced outage trends vary by hour.

[1]             Several reasons could contribute to RAAIM’s ineffectiveness including but not limited to sellers incorporating the risk of RAAIM charges into capacity pricing, scheduling coordinators’ payments and charges balancing each other out, or too many resources or outage types receiving RAAIM exemptions.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

The CAISO presented the PRM setting process, in which each Local Regulatory Authority (LRA) sets its own PRM and resource counting rules. The CAISO has a default PRM if an LRA does not provide its own PRM. The CAISO’s presentation indicates that six LRAs have PRMs of less than or equal to seven percent, 20 LRAs have PRMs of 15 percent, and one LRA has a PRM of 16 percent. CalCCA agrees with the CAISO’s key takeaway that “The CAISO’s default PRM warrants revisiting in light of changes in the RA landscape.” As the CAISO revisits the default PRM, the CAISO should consider how the level of PRM necessary to meet reliability targets is dependent on resource counting rules. For example, the PRMs of LRAs under a SOD RA framework would be different than PRMs of LRAs not under SOD RA frameworks. These differences should be considered when the CAISO considers revisiting the default PRM.  In addition, if the CAISO pursues UCAP, this would account for forced outage rates in the resource counting and the PRM should be reduced as the PRM would no longer need to account for resource forced outage rate.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

The CAISO presented the existing Flex RA program and open questions and challenges related to the program. One key question the CAISO should consider is “Does the CAISO require a Flex RA requirement under slice-of-day?” Stakeholders in the CPUC’s RA proceeding have suggested that there may not be a need for Flex RA under SOD. This is because hourly RA showings would ensure that if the CAISO were to dispatch the shown RA fleet, it would meet load for each hour of the day. To evaluate the need for a Flex RA requirement under SOD, the CAISO should evaluate SOD 2024 test year showings to see if they meet the CPUC-jurisdictional LSEs’ portion of the 2024 Flex RA requirement. Because the test year showings are not binding, and LSEs may not have completely filled out their RA portfolio to meet non-binding requirements, the CAISO could also evaluate the first binding SOD showings (i.e., 2025) to see if they meet the CPUC-jurisdictional LSEs’ portion of the 2025 Flex RA requirement. If the CAISO finds that a separate Flex RA product is not needed to meet flexibility needs under SOD, then the CAISO could at that time remove the Flex RA requirement for LSEs subject to SOD.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

The CAISO presented the scope of its short-term, medium-term, and long-term modeling that it proposes to perform to analyze RA sufficiency. CalCCA appreciates the CAISO’s responses to stakeholder feedback on the short-term study scope that (1) affirm the CAISO will work with LRAs to ensure consistent assumptions with LRA requirement setting and planning, (2) assure that the CAISO can perform a stack analysis along with the probabilistic modeling, and (3) confirm that the CAISO will provide RA supply data to stakeholders.

The CAISO also presented its proposed methodology for estimating RA showings in the short and medium term. For the short-term modeling, the CAISO proposes to collect information from LSEs through non-binding “soft-showings” in which LSEs provide information year-ahead about their expectations for their 100 percent RA showings. During the workshop, the CAISO explained that it would prefer LSEs to do this estimation rather than the CAISO doing the estimation itself because CAISO does not see historical trends in the types of resources shown between the YARA and MARA showings. CalCCA continues to recommend the CAISO explore its own ability to estimate 100 percent RA showings for the following reasons:

1. If the CAISO does not see historical trends in the types of resources shown between the YARA and MARA showings, it is unlikely LSEs do.
2. The CAISO knows the resources shown in the YARA showings, LSEs only know what they have shown and therefore do not have insight to the availability of other resources to fulfil their MA obligations.
3. The CAISO knows which resources on the NQC list are still available after the YARA showings.
4. The CAISO knows historical import RA shown between YARA and MARA.

Given the information that the CAISO has, the CAISO can identify resources on the NQC list that have not been shown in the YARA showings and use that information to make better assumptions about what resources will be shown between the YA and MA.

For collecting information on the medium-term RA supply, the CAISO should utilize individual LSE IRP plans, which are filed biennially with the CPUC. This will reduce the administrative burden on LSEs and ensure consistency between CAISO and CPUC modeling.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

CalCCA appreciates the information provided by Department of Market Monitoring (DMM) that informs storage resource availability. DMM’s presentation offers several observations about storage resources that may be “limiting” storage resources’ availability (Slide 92 of 96). CalCCA addresses select observations below:

• Regulation awards may deplete SOC reaching full capacity and the ancillary service state-of-charge (SOC) may influence SOC in adjacent hours – These observations are correct and a function of the CAISO’s market and RA resource bidding requirements. RA storage resources have must offer obligations bidding for energy and for the ancillary service products they are certified to provide. When storage resources are dispatched to provide ancillary services, it is because it is the most economic market outcome. Further, unlike when there were very few batteries on the system, storage resources now provide a significant amount of energy in addition to regulation. It is not clear this observation is a problem that requires a solution.
• Lack of must-offer obligations for charging leading to insufficient SOC – CalCCA agrees that this could be a limitation. The CAISO should evaluate whether current market rules provide sufficient incentive for RA storage resources to bid to charge. For example, the CAISO already has must offer obligations, bid insertion, and market power mitigation on storage discharging. With these elements in place, storage likely already has an incentive to bid for charging because if it has bids inserted and cannot perform to its awards, it would need to buy back the imbalance. If there are not sufficient incentives and the CAISO is seeing routine unavailability of storage discharge because it did not charge, then the CAISO should consider what rule changes may be necessary.
• Bidding predominantly in the real-time market – Additional information is needed to classify this as a limitation. RA storage resources have must offer obligations to bid into the day-ahead market, in addition to the real-time market. If an RA storage resource fails to meet its must offer obligation in the DA market, the CAISO has rules to address this failure. 
• Exceptional Dispatches – Operators rely on exceptional dispatches to manage resources outside of the market when needed for reliability purposes. The Energy Storage Enhancements initiative adopted a policy that would allow operators to exceptionally dispatch storage to manage SOC.  If the operators are inefficiently using exceptional dispatch and this is leaving them with insufficient amounts of energy storage, then the CAISO should examine the operators’ practices to determine if those practices should change or if a rule change for all RA storage resources is needed.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

Incremental Change

Either Update the CAISO’s Backstop Cost Allocation Rules to Consider “Credited Resources” or Update the CPUC’s rules to have Credited Resources Shown on a Supply Plan: The CAISO’s tariff does not allow the CAISO to consider “credited” resources (resources count for RA under CPUC rules but are not shown on CAISO supply plans) when allocating CPM costs, a problem that revealed itself after the CAISO’s August 2023 CPM. The CAISO should work with the CPUC to ensure credited resources’ RA capacity is recognized, either through changes to the CPUC rules to have credit resources shown on supply plans or through a CAISO tariff change to support credited resources when allocating CPM costs.

Systemic Change

Replacing the Resource Adequacy Availability Incentive Mechanism (RAAIM) with an Unforced Capacity Counting Methodology:  When considering longer-term reforms for systemic changes to the CAISO’s RA rules, the CAISO should prioritize replacing RAAIM with a UCAP counting methodology, for the reasons described in section 2.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

CalCCA has no comments at this time.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

CalCCA supports the CAISO’s proposed sequencing of issue deep dives and potential panels, including resource counting, outage and availability incentives, and backstop.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

CalCCA plans to continue to actively participate in the RA Working Groups going forward. CalCCA would like to participate in panel discussions that include the Proposed Revision Request 1280 issue and, if it remains in the scope of this initiative, the Extended Day-Ahead Market (EDAM) CAISO BAA RSE Shortfalls topic.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

See response in Section 10.

12. Provide any additional comments not already captured:

The CAISO includes curing and settling CAISO BAA day-ahead RSE shortfalls in the scope of this initiative. The CAISO should remove this item from the scope of this initiative and include it in the Day-Ahead Sufficiency initiative. The causes of EDAM RSE failures are not solely attributable to LSE RA deficiencies. In fact, RA deficiencies are fully resolved prior to the EDAM RSE, because the CAISO assesses the need for additional RA and procures it through its backstop process prior to the RA operational month. Additionally, opportunities to cure EDAM RSE failures will differ from those used to cure RA deficiencies given the differences in the timeframe for identifying and curing RA deficiencies in the year-ahead and month-ahead and the timeframe for identifying and curing EDAM RSE failures in the days prior to the trade date. Including this item in the scope of this initiative presupposes that EDAM RSE failures are directly attributable to RA deficiencies, which is not necessarily the case nor is an RA deficiency the only cause of an RSE failure (generator outages, generation and load not following dispatch, etc., can all be causes of RSE failures as well). For these reasons, the CAISO should move this scope item to the Day-Ahead Sufficiency initiative.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

CDWR has significant concerns with proposals to adjust its planning reserve margin (PRM ) or its resource counting rules as a non-CPUC jurisdictional Local Regulatory Authority (LRA). This is because CDWR’s operations are significantly different from those of other LSEs and the “standard” default rules (many taken from the CPUC) are not always appropriate.

CDWR has no retail customers. The power it generates, or purchases is used to operate the pumps, canals and reservoirs that collect, transport, and deliver water to customers throughout California. Its pumping loads do not follow typical load curves, and those loads can often be dropped in situations where the grid is under stress. On days when the grid is under significant stress, the dropping of those pump loads not only help to avert serious conditions, but also make CDWR’s effective PRM for those days equal to many multiples of its current 15% requirement. Resource deployment depends on when and where it rains, other weather factors, system hydrology, the need for emergency actions such as flood control and the needs of California water consumers.

Holding CDWR to a uniform standard on PRM or counting rules risks losing the significant benefits that CDWR has provided to the CAISO grid and the benefits of its flexible hydroelectric system, not to mention raising costs for water users due to the purchase of unneeded RA capacity for situations that CDWR has historically been able to manage in real time. These points are discussed in further detail below.

Problem statement #2:

Emphasizing unforced capacity (UCAP): CDWR’s unique hydro resources are an integral part of its water delivery system and vary considerably in availability year to year and month to month. This is because the CDWR load forecasts are primarily based on uncertain hydrology and water demand. Significant variations in availability of these resources do not necessarily reflect a historical pattern. Therefore, capacity estimation based on historical outage rates (as is a common UCAP adjustment method) may or may not reflect the actual operational  availability of these resources closer to real time. With application of UCAP, the result could be inaccurate capacity counting. To achieve an enhanced availability forecast for its unique system, CDWR must use its own method of forecasting demand and supply and resource counting rules.

Problem statement #3:

Counting rule: Counting of RA resources specific to CDWR’s water delivery system’s unique hydro-resources should be aligned with water operation which is the primary objective of the State water Project (SWP). Using the common default method of counting may not represent the operational 

availability. Therefore, CDWR must use its own method of forecasting demand and supply for resource counting.

Planning reserve margin (PRM): An appropriate planning reserve margin (PRM) should meet both reliability and cost effectiveness needs. CDWR adopts CAISO tariff default PRM. CDWR also notes that it has supported grid reliability in stressed conditions by dropping or shifting its load (to the lowest feasible) during those events (e.g., at 4:57 p.m. , on September 6, 2022) and making all of its resources available to the CAISO making its effective reserve margin several multiples of the adopted default PRM. This indicates common PRM criteria may not be necessary for CDWR based on historical behavior during those stressed grid conditions. This example demonstrates the uniqueness of CDWR operation in that it can manage its load differently than other LSEs by dropping or shifting in a significant volume during stressed system conditions. Raising the default PRM and applying it to all LRAs (including those regulated by the CPUC) removes CDWR  knowledge of its unique and flexible hydroelectric system  from the calculations. In the short run, it also has the effect of raising already high prices for existing RA capacity, without providing a mechanism to get new RA capacity built.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

An analysis on systemwide effective PRM should investigate hours with occurrence of  effective reserve margin based on RA availability. This may redirect focus on a particular period within a day for RA resource to be available. If substitution resources are not available for planned or forced outages, limiting substitution for only critical hours where reserve margin is tighter may increase the pool of available resource and enhance the reliability.

With regard to outages of resources by fuel type, the slide #24 indicates that forced outages of gas resources constitute about 10-13% (out of maximum 16.5%) of total outages followed by hydro resources (about 2-3%, which may not be abnormal). If the outage concern is for a specific fuel type resource, should the counting rule revision be focused on that particular fuel type resource is an open question.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

Please refer to 1 above.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

CDWR does not oppose any study to validate the current flexible RA requirements. For an LSE that manages 3 hour load ramps for supporting grid reliability, allocation method should incentivize such LSEs.

Clarity on criteria and technical aspects  for renewable resources to provide flexible RA could be explored.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

CDWR does not object to informational filing both for short term and the midterm. For the midterm, is the data needed only for an annual peak month instead of 12 months?

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

No comment at this time.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

No comment.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

No comment.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

No comment.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

No comment.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

 No comment at this time.

12. Provide any additional comments not already captured:

CDWR opposes proposals (discussed by stakeholders at page 54 of the presentation) to eliminate the monthly RA showings and rely only on an annual showing for RA. CDWR needs the monthly showings to provide CAISO with better  RA information that reflects operational availability. CDWR does not have retail customers. Its loads are relatively manageable. However, there may be significant changes to the monthly forecast of its loads and resources from the annual forecast. The operational availability of its resources and system coincident peak demand forecast is more aligned with the within the year updates of loads and resources study performed almost in a monthly interval. Timing of the CDWR loads depends on factors such as weather and how much and where it rains, hydrology, water customers’ needs for deliveries at certain times and overall California needs for flood control, movement of water and other factors. If CDWR demand changes significantly in the within the year, updated monthly forecasts of loads and resources will be necessary for an accurate representation. With only an annual RA showing, otherwise, the annual forecast might allow unnecessary RA capacity to be locked into an annual plan. This would cause cost inefficiency and count resources at a higher level in the annual forecast and could result in resources being unavailable operationally within individual months.

Adjusting the PRMs and counting rules for CDWR may negatively affect the benefits that CDWR’s flexible system provides to the CAISO grid and may result in purchases of unneeded RA capacity, and increased costs to water users. A more effective way to address reliability might be to address bringing new resources on-line. The clogged CAISO interconnection queue demonstrates that there is no shortage of entities seeking to build resources to serve California load and obtain RA deliverability. CAISO can do more to increase reliability by addressing the problems of the interconnection queue and transmission construction delays than by tinkering with relatively small changes in the PRM or attempting to alter resource counting rules.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

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

Comments on Resource Adequacy Modeling and Program Design

January 16, 2024 Working Group

Department of Market Monitoring

January 30, 2024

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Resource Adequacy Modeling and Program Design January 16, 2024 Working Group.[1] DMM supports the developments and stakeholder engagement in the working group process.  

DMM supports the overarching goal that resource adequacy (RA) enhancements should improve the economic incentives for individual participants to procure sufficient capacity, and make this capacity operationally available to the ISO markets. Some of the areas in which incentives can be improved include: (1) the use of forced outages in place of planned outages, and (2) incentivizing resource availability, and aligning resource capacity accounting with availability. DMM also recommends the ISO assess the availability of storage resources, and implications for resource availability during stressed grid conditions. This assessment should include, but is not limited to, the role ISO market design may play in storage availability.

Planned to forced outages

The working group discussion of planned and forced outages, and their requirements for substitution capacity, did not raise the issue that forced outages are not examined by ISO operators as much as planned outages. As discussed in the working group, all planned outages without substitute capacity are automatically denied. The tariff, however, does not have the same mechanism for forced outages. When approving forced outages, ISO operators may not be able to discern whether the outage is required for immediate plant operation, or whether the outage could be delayed. The use of a forced outage does not inherently convey urgency. Forced outages are defined only as outages that are taken seven or fewer days from the start of the outage.  

Forced outages requested within seven days of the start of the outage can lead to local or system instabilities and affect overall reliability. Therefore, if the outage involves discretionary maintenance, it is important the resource scheduling coordinator clearly identify it as such. DMM recommends the ISO enhance outage reporting requirements to more clearly require the resource scheduling coordinator to identify if a forced outage is necessary immediately for plant operation, or if the forced outage is for discretionary plant maintenance that could be postponed in the case of imminent system reliability concerns. In addition, as discussed below, increased penalties for outages should further increase the incentive of resources to perform when needed for reliability.

Resource availability and performance, and an unforced capacity framework

CAISO’s resource availability incentives currently fall under the resource adequacy availability incentive mechanism (RAAIM). However, the ISO and the California Public Utility Commission (CPUC) are in discussion to develop an unforced capacity framework (UCAP). DMM sees both of these policies as complementary, and recommends their enhancement and development.

DMM has long reported on, and suggested, a modified definition of availability be used in the ISO market for RA resources that is both consistent with RAAIM and UCAP.[2] This potential measure of availability would use bids in the day-ahead and real-time markets for RA resources with must offer obligations (MOO). This measure would incorporate outages, derates, and each resource’s ability to feasibly respond to a schedule from their submitted bids. This quantitative method can also create the baseline for resources in a UCAP framework and the RAAIM availability band.

DMM reports show that in 2022, resources with an RA MOO had an average capacity derate to 91 percent of their nameplate capacity during Energy Emergency Alert hours, or hours of more stressed grid conditions (EEA+ hours).[3]  The EEA+ hours are chosen to reflect when capacity is of the utmost importance to the system, and during conditions correlated with increased ambient derates and additional constraining operations of RA resources to provide system and local reliability. [4]

The adoption of UCAP creates a level playing field in the RA valuation of resources to meet stressed grid conditions. DMM has recommended creating performance standards in place of availability standards, and believes this would further enhance planning and grid operations.[5], [6], [7] However, DMM recognizes that performance standards are not within the scope of discussion for this stakeholder process. In place of that, the UCAP framework and increased RAAIM payments alone will enhance resource accounting, availability, and performance.

One consideration DMM makes in suggesting the UCAP framework is that it will require recalculating the planning reserve margin (PRM). DMM does not take this lightly, but in the long-term, equal resource valuation based on availability or performance creates a more fungible market across all resource types to ensure reliability.

Lastly, DMM has long supported enhancing the calculation of the capacity procurement mechanism (CPM) soft offer cap.[8] We understand this will occur in a parallel initiative, but want to reiterate our support for the initiative. Currently, the maximum possible monthly penalties and availability incentives are set at half of the CPM price, which is the ISO’s backstop procurement mechanism. As capacity becomes more limited and prices increase, the difference between capacity payments and RAAIM penalties also increase. DMM is concerned that the penalties have become insignificant compared to RA payments. The RAAIM adjustment alone could better incentivize suppliers to sell highly available and dependable capacity up front.

Energy and resource adequacy with storage resources

As presented in the working group meeting, DMM has questions about the availability of storage resources during stressed grid conditions. The availability of storage capacity has two different dimensions: (1) resource availability after considering outages or derates, and (2) state-of-charge availability, or ability to cycle, with respect to observable or unobservable constraints in the market. DMM had observed that a significant portion of storage resources may not be positioned to provide their full capacity and duration during critical periods.

Within DMM’s availability accounting framework using bid in capacity, it has been found that during stressed grid conditions in 2023, storage has an average RA fleet-wide derate around 88 percent to 90 percent of the full RA capacity.[9],[10] DMM’s analysis shows that during this period the average does not vary much across days, or during the availability assessment hours (AAHs).[11] In this context, defining availability as being available to meet reliability needs after considering outages and derates, the average availability is about 89 percent across the AHHs. Availability varies between 87 percent and 90 percent.

To assess reliability, DMM’s analysis has focused on the ability of storage resources to cycle and provide their RA value. Figure 1 averages the fleet’s charging and discharging during the RMO+ days. RMO+ days are restricted maintenance operations (RMO) days, or days with expected tighter grid conditions, i.e. EEA days. DMM finds peak charging is approximately 40 percent of the RA fleet, while discharge is 50 percent. Below addresses potential reasons why the system is not seeing closer to 100 percent of the capacity.

In addition to calculating a fleet-wide fleet average, DMM also examined the RMO+ days individually at the fleet and resource levels. This review found that, on average, the RA fleet is cycling approximately 55 percent, with an average of 30 percent state-of-charge (SOC) remaining at the end of the day. DMM did find a large degree of heterogeneity across the fleet, whereby some resources are cycling more than one full cycle during the day, while others are hardly cycling. The extremes are not the dominant behavior of the fleet, and results can be found in the footnoted reference.[12]

Figure 1. Average RMO+ capacity utilization for the storage RA fleet

Storage cycling, or capacity utilization, is only part of battery availability. Hypothetically, storage resources may not have been needed by the system, but were still 100 percent available if needed. Figure 2 modifies the analysis to the RA fleet’s SOC to discern fleet availability to meet the four-hour discharge and deliverability requirement to qualify as RA capacity. Figure 2 is the average SOC of the storage RA fleet over the RMO+ days in 2023.

The fleet’s SOC is represented by the upper line of the orange and red. On average, the SOC peaks at approximately 80 percent, and ends the day around 35 percent. In blue is the percentage of the SOC that is scheduled in that RTD interval. At its peak during the AAHs, only 70 percent of the remaining SOC is scheduled, or 43 percent of the RA fleet’s SOC. These data suggest that the RA storage fleet is not positioned to provide its full RA capacity during stressed grid conditions. DMM is concerned that this disconnect between storage RA capacity and observed availability may have reliability implications.

Figure 2. Average RMO+ state-of-charge for the storage RA fleet

DMM understands there are many limitations on the storage fleet, and has published a report on the battery fleet in 2023 with further detail. In short, DMM believes the full potential of RA storage resources is not being met because of a combination of issues:

• limitations in the market, such as state-of-charge constraints and charge limits;
• limitations not observable in the market model, such as cell balancing needs and foldback around the SOC extremes; and
• bidding behavior, market rules, and system operation needs.[13]

Finally, DMM notes that storage is commonly used to provide ancillary services (AS). This can limit the availability of storage resources for good reason, but this limitation should be taken into account when considering RA storage resources’ potential to provide energy during critical periods.

DMM recommends the ISO and stakeholders further study limitations in the RA storage fleet and address these issues in a future storage enhancements proceeding.

[1] Resource Adequacy Modeling and Program Design – Working Group Meeting, CAISO, January 16, 2023 [sic]: https://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyModeling-ProgramDesignWorkingGroup-Jan162024.pdf

[2] This is the most recent report, but it includes DMM’s measure of availability accounting: 2022 Annual Report on Market Issues and Performance, CAISO DMM, July 11, 2023, p 249: https://www.caiso.com/Documents/2022-Annual-Report-on-Market-Issues-and-Performance-Jul-11-2023.pdf

[3] Ibid.

[4] This measure is imperfect because there is heterogeneity across resource and fuel types, which must be considered, and there is also heterogeneity within types. Insofar as there is clear definition and regulatory certainty to capacity valuation and RAAIM payments, DMM supports further separation within type.

[5] 2022 Annual Report on Market Issues and Performance, CAISO DMM, July 11, 2023, p 249: https://www.caiso.com/Documents/2022-Annual-Report-on-Market-Issues-and-Performance-Jul-11-2023.pdf

[6] Comments by Department of Market Monitoring on Resource Adequacy Enhancements Issue Paper, CAISO DMM, November 30, 2018: http://www.caiso.com/InitiativeDocuments/DMMComments-ResourceAdequacyEnhancements-IssuePaper.pdf

[7] Comments by Department of Market Monitoring on Resource Adequacy Enhancements, CAISO DMM, October 20, 2023: https://stakeholdercenter.caiso.com/Comments/AllComments/5860a092-9299-4cf2-a3f7-60efa5105b32 - org-bde68f42-bf0e-4842-b152-d0cc02a2140e

[8] Comments by Department of Market Monitoring on Resource Adequacy Enhancements Issue Paper, CAISO DMM, November 30, 2018: http://www.caiso.com/InitiativeDocuments/DMMComments-ResourceAdequacyEnhancements-IssuePaper.pdf

[9] Due to few EEA+ days in 2023, in this analysis DMM is using restricted maintenance operation (RMO) hours, or more stressed conditions, which we refer to as RMO+ hours, and this includes any days that were declared RMO or EAA+.

[10] DMM has found that, on average, storage resources are on outage/derate 88 percent of their RA capacity, but are bidding 90 percent of capacity: Resource Adequacy Modeling and Program Design – Working Group Meeting, CAISO, January 16, 2023 [sic], slides 71 and 74: https://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyModeling-ProgramDesignWorkingGroup-Jan162024.pdf

[11] Resource Adequacy Modeling and Program Design – Working Group Meeting, CAISO, January 16, 2023 [sic], slide 75: https://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyModeling-ProgramDesignWorkingGroup-Jan162024.pdf

[12] Resource Adequacy Modeling and Program Design – Working Group Meeting, CAISO, January 16, 2023 [sic], slides 80 and 81: https://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyModeling-ProgramDesignWorkingGroup-Jan162024.pdf

[13] Special Report on Battery Storage, CAISO DMM, July 7, 2023: https://www.caiso.com/Documents/2022-Special-Report-on-Battery-Storage-Jul-7-2023.pdf

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

See #1

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

See #1

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

See #1

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

See #1

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

See #1

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

See #1

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

See #1

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

See #1

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

See #1

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

See #1

12. Provide any additional comments not already captured:

See #1

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the state-appointed independent ratepayer advocate at the California Public Utilities Commission (CPUC).  Our goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.  Our efforts to protect ratepayers include energy, water, and communications regulation advocacy. 

Cal Advocates provides no response to this topic at this time.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

Cal Advocates provides no response to this topic at this time.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

Cal Advocates reiterates its request from previous comments that the CAISO publish the Planning Reserve Margins (PRMs) of all Local Regulatory Authorities (LRAs) for whom the CAISO is the Balancing Area Authority (BAA).[1]  CAISO staff pointed out during the January 16, 2024 working group that the heterogeneity in resource counting rules complicates comparisons between PRMs.  While acknowledging that this is indeed a challenge, Cal Advocates maintains that transparency is the best solution.  Publishing the PRMs of LRAs should also include information about counting conventions.  For example, Silicon Valley Power’s 2023 Integrated Resource Plan (IRP) notes that Silicon Valley Power uses a 22% Installed Capacity (ICAP) PRM, which translates to a 14% Perfect Capacity (PCAP) PRM.[2]  Specification of the type of net qualifying capacity (NQC; ICAP or PCAP) implied by a PRM is also necessary for the purposes of making comparisons.  Not all CAISO LRAs publish their PRMs with the type of NQC that is necessary for this.  For example, the IRP documents of Riverside Public Utilities,[3] City of Palo Alto,[4] and Vernon Public Utilities[5] all state they use a 15% PRM, although these entities do not specify the type of NQC in question, nor is it always clear what forecast the PRM is based on.

If the CAISO still finds it inappropriate to publish LRAs’ PRM requirements, Cal Advocates recommends that the CAISO alternatively provide two pieces of information.  First, the PRM that applies to the full CAISO (i.e., the average PRM, weighted by load-serving entity (LSE) coincident peak load) for the current RA year.  This forward-looking, compliance target based PRM is useful for planning purposes.  For example, Cal Advocates recently published a stack analysis estimating the amount of surplus capacity available to California Public Utilities Commission (CPUC)-jurisdictional LSEs.[6]  Accurately estimating the aggregated capacity requirements of 37 LRAs besides the CPUC requires knowing the PRMs of each LRA.  Absent this information, Cal Advocates had to rely on likely-stale estimates from August 2020.[7]  Second, the CAISO should publish the observed reserve margins during the previous year’s peak month.  The observed reserve margin is useful for understanding how effective the PRM has been in past years. 

[1] Cal Advocates, Comments on Resource Adequacy Modeling and Program Design, December 6, 2023 Working Group, December 20, 2023 at #1.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/1aafa171-55d2-4e71-869e-f2b78a0718c9#org-dfdc1571-e19b-4e94-8e48-7d1298e06ceb.

[2] Silicon Valley Power, 2023 Integrated Resource Plan, Draft 2023 at 94, footnote 49.  Available at: https://www.siliconvalleypower.com/home/showpublisheddocument/82481/638367924630670000.

[3] Riverside Public Utilities, 2018 Integrated Resource Plan at 11-1.  Available at: https://riversideca.gov/utilities/sites/riversideca.gov.utilities/files/pdf/about-rpu/RPU_Full_IRP_2018_Final.pdf.

[4] City of Palo Alto Utilities, 2018 Electric Integrated Resource Plan at XI-20.  Available at: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports-cmrs/year-archive/2018/final-staff-report-id9761_approval-of-the-2018-electric-integrated-resource-plan-and-related-documents.pdf.

[5] Vernon Public Utilities, 2023 Integrated Resource Plan, November 20, 2023 at 3-17.  Available at: https://efiling.energy.ca.gov/GetDocument.aspx?DocumentContentId=88473&tn=253268.

[6] Cal Advocates, Residual Capacity Auction Proposal of the Public Advocates Office (Public Version), January 19, 2024 at A-1, footnote 2; filed in CPUC Rulemaking (R.) 23-10-011, Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Reforms and Refinements, and Establish Forward Resource Adequacy Procurement Obligations. 

[7] CAISO, CPUC, and the California Energy Commission, Final Root Cause Analysis Mid-August 2020 Extreme Heat Wave, January 13, 2021 at 41.  Available at: http://www.caiso.com/Documents/Final-Root-Cause-Analysis-Mid-August-2020-Extreme-Heat-Wave.pdf.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

Cal Advocates provides no response to this topic at this time.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

Cal Advocates provides no response to this topic at this time.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

Cal Advocates provides no response to this topic at this time.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

Cal Advocates recommends the following rank-order for addressing issues raised at the working group, followed by justifications below:

1. Review Planned Outage Substitution Obligation (POSO) Rules
2. Unforced Capacity (UCAP) Development
3. Assessment of Flexible Resource Adequacy (RA)
4. Revaluation of the RA Availability Incentive Mechanism (RAAIM)

Review Planned Outage Substitution Rules

Cal Advocates recommends that a review of POSO rules be the CAISO’s first priority in the extant initiative.  Review of the POSO rules represents a low-effort, low-risk, and high-upside opportunity for the CAISO to quickly provide RA price relief to ratepayers.  Prior to June 7, 2021, RA resources could request planned outages without substitution, subject to CAISO approval based on an evaluation of system needs during the potential outage.[1]  Today, all planned outages must be paired with substitution RA capacity regardless of system conditions.[2]  Compared to other issues currently scoped in this initiative, re-evaluating POSO rules may be the easiest policy change to achieve, given that there is no need to alter systems or major procedures.  Loosening the current rules, or reverting to pre-June 2021 rules, would likely benefit ratepayers by increasing the liquidity of the RA market and reducing the transaction costs faced by LSEs seeking to optimize their RA positions.  At a time when RA prices are elevated and burdening ratepayers, the obligation to procure substitute capacity for every single planned outage places upward pressure on RA demand.[3]  Determining if a planned outage does not require substitution would involve evaluating near-term supply conditions to evaluate if costly substitution or delayed resource maintenance are necessary.[4]

The current planned outage substitution rules were also intended to be interim,[5] assuming that “Future enhancements to the [RA] rules will consider a longer-term solution that accounts for the need for planned outages in the upfront procurement and eliminates the need for all planned outage substitution.”[6]  Cal Advocates continues to oppose upfront procurement that would establish a pool of RA resources usable for substitution but not used on supply plans.[7]  However, other solutions should be developed in this current initiative to enable less strict POSO rules.

UCAP Development

Cal Advocates supports UCAP Development as the second priority in this initiative to facilitate coordination with the CPUC’s accreditation process.  UCAP has been considered at length in the CAISO’s 2018-2021 RA Enhancements initiative,[8] as well as in the CPUC’s RA proceeding.[9]  Although Cal Advocates expressed a number of concerns with UCAP designs in the RA Enhancements initiative,[10] UCAP can provide benefits such as accounting for forced outages in resource’s NQCs rather than in the Planning Reserve Margin (PRM).  Accreditation methods used by the CPUC for variable resources, namely Effective Load Carrying Capability and exceedance, already include forced outage assumptions, causing potential double-counting of outage rates embedded in the PRM.

Adopting UCAP would affect the NQC values of many RA resources and would likely require adjustments to the CPUC’s Slice of Day RA program.  Development of UCAP will require ensuring that unintended impacts are mitigated, forced outage rates are accurate, and any de-rate mechanism to NQCs based on new outages are appropriate.  Cal Advocates supports resuming UCAP development to enable sufficient time to finish record development and coordination with LRAs, including the CPUC’s RA proceeding.[11]

Assessment of Flexible RA

Next, Cal Advocates supports prioritizing an assessment of Flexible RA as the third priority in this initiative.  The CAISO resource portfolio has added significant solar and storage in recent years.  While solar resources can increase Flexible RA requirements,[12] storage resources are exceptionally suited to respond quickly to Flexible RA needs and ancillary services.[13]  As the CAISO notes, the need for a Flexible RA product has not been recently evaluated.[14]  An evaluation of the Flexible RA program is prudent now, given the current and future resource portfolio of high solar and storage resources.  The lack of a market premium for Flexible RA attributes suggests that the market is fully competitive and does not require a separate categorical designation to attract supply.[15]  However, LSEs recover RA procurement costs from ratepayers, including any Flexible RA costs, and the CAISO assessments require time and personnel costs.  Lastly, it is unclear if state-of-charge operations and other recent energy storage market refinements’ interactions with effective flexible capacity (EFC) assumptions have been evaluated.[16]  EFC impacts affected by existing and any planned-for market operations governing the dispatch of storage resources should be included the Flexible RA evaluation at this initiative.[17] 

Re-evaluation of RAAIM

Cal Advocates supports re-evaluating RAAIM as the fourth priority in this initiative.  The RAAIM mechanism helps maintain the integrity of the RA program by incentivizing RA resources to meet their must-offer obligations.  The RAAIM structure includes exposing a scheduling coordinator to a penalty if it fails to provide substitute capacity to cover resource unavailability.[18]  Given that the cost of RA substitution is far above[19] the current RAAIM price of $3.79/kW-mo,[20] it may be prudent to increase the RAAIM penalty rate to make the RAAIM more effective relative to the cost of compliance through substitution.  The Department of Market Monitoring (DMM) has previously recommended increasing the penalty, in addition to recommending that RAAIM could also act as a performance-based incentive.[21]  These two DMM recommendations should be evaluated in this initiative so that appropriate and effective incentives exist to enhance compliance with RA must-offer obligations.

[1] CAISO, Tariff Amendment to Implement the Resource Adequacy Enhancements Phase 1 Initiative – Summer 2021 Provisions, March 29, 2021 at 4.  Available at: https://www.caiso.com/Documents/Mar29-2021-Tariff-Amendment-ResourceAdequacyRAEnhancements-ER21-1551.pdf.

[2] CAISO, Resource Adequacy Modeling and Program Design Working Group, January 16, 2023 (January 16 Working Group Slides) at 21.  Available at: https://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyModeling-ProgramDesignWorkingGroup-Jan162024.pdf.

[3] Cal Advocates, Residual Capacity Auction Proposal of the Public Advocates Office (Public Version), January 19, 2024 at 2-4; filed in CPUC R.23-10-011, Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Reforms and Refinements, and Establish Forward Resource Adequacy Procurement Obligations. 

[4] Under the previous planned outage rules, the CAISO would notify approval or denial of past planned outage without substitution requests no earlier than 22 days before the month of the outage.  The CAISO would evaluate RA showings for that month, but it may be prudent to enhance the evaluation by considering regional supply availability and hydroelectric conditions known at the time of determination.  CAISO, Tariff Amendment to Implement the Resource Adequacy Enhancements Phase 1 Initiative – Summer 2021 Provisions, March 29, 2021 at 22. 

[5] The POSO was Phase 1 in what was intended to be a two-phase solution.  The POSO was intended to sunset when a Phase 2 solution was adopted; however, the RA Enhancements Initiative did not resolve the POSO issue.  CAISO, Resource Adequacy Enhancements Final Proposal - Phase 1, updated March 23, 2021 at 17.  Available at: https://www.caiso.com/InitiativeDocuments/ResourceAdequacyEnhancements-Phase1FinalProposal.pdf.

[6] CAISO, Resource Adequacy Enhancements Final Proposal – Phase 1, updated March 23, 2021 at 3.  Available at: https://www.caiso.com/InitiativeDocuments/ResourceAdequacyEnhancements-Phase1FinalProposal.pdf.

[7] Cal Advocates, Comments on Resource Adequacy Enhancements Draft Final Proposal – Phase 1, January 21, 2021.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/9c1e6759-bbeb-4930-ad6b-ec6894b2b2a4#org-59e16160-3d44-4f81-938c-7a46f61eabd9.

[8] See proposal drafts and UCAP assessments at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Resource-adequacy-enhancements.

[9] The CPUC expressed a desire to explore adopting UCAP through collaboration with the CAISO.  Decision (D.) 23-06-029, Decision Adopting Local Capacity Obligations for 2024-2026, Flexible Capacity Obligations for 2024, and Program Refinements, June 29, 2023 at 30; issued in CPUC R.21-10-002, Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Reforms and Refinements, and Establish Forward Resource Adequacy Procurement Obligations.  Available at: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M513/K132/513132432.PDF.

[10] The UCAP design developed at the RA Enhancements initiative posed threats to ratepayer costs as it could reduce the available RA supply pool and transfer costly risks from generators to ratepayers.  Cal Advocates, Comments on Resource Adequacy Enhancements, September 15 and 17, 2020 Working Group, October 1, 2020.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/e0efc91f-6c4e-44be-a701-85039cefc61a#org-5e577f90-2d66-474e-8b8a-732437b8605a.

[11] The CPUC’s current RA proceeding includes consideration of using UCAP for resource accreditation.  CPUC, Assigned Commissioner’s Scoping Memo and Ruling, December 18, 2023 at 4-5; filed in CPUC R.23-10-011, Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Reforms and Refinements, and Establish Forward Resource Adequacy Procurement Obligations.  Available at: https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M521/K589/521589385.PDF.

[12] Solar and wind resource output have direct effects on Flexible RA requirements.  CAISO, Final Flexible Capacity Needs Assessment for 2024, May 16, 2023 at 23-24, and 27.  Available at: https://www.caiso.com/InitiativeDocuments/Final-2024-Flexible-Capacity-Needs-Assessment-v2.pdf.

[13] CAISO, Special Report on Battery Storage, July 7, 2023 at 3.  Available at: https://www.caiso.com/Documents/2022-Special-Report-on-Battery-Storage-Jul-7-2023.pdf.

[14] January 16 Working Group Slides at 44.

[15] CPUC, 2021 Resource Adequacy Report, April 2023 at 33.  Available at https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/resource-adequacy-homepage/2021_ra_report_040523.pdf.

[16] “Current data suggests EFC accreditations do not match the EFC provided” January 16 Working Group Slides at 44.

[17] The CAISO’s Energy Storage Enhancements included additional market operational limits to preserve some level of charge in energy storage resources (the State of Charge).  For more information, see: CAISO Energy Storage Enhancements Final Proposal, October 27, 2022 at 3-5.  Available at: http://www.caiso.com/InitiativeDocuments/FinalProposal-EnergyStorageEnhancements.pdf.

[18] January 16 Working Group Slides at 20.

[19] The average weighted price of system RA contracts transacted from December 2020 through August 2023 for delivery in 2024 is $14.37/kW-mo.  CPUC, Calculation of the Market Price Benchmarks for the Power Charge Indifference Adjustment Forecast and True Up, October 2, 2023.  Available at: https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/community-choice-aggregation-and-direct-access/calculation-of-mpb-2023-2024-final.pdf.

[20] January 16 Working Group Slides at 31.

[21]  DMM, Comments on Resource Adequacy Enhancements,  October 20, 2023 at 1.  Available at: https://www.caiso.com/Documents/DMM-Comments-on-Resource-Adequacy-Enhancements-Oct-5-2023-Working-Group-Oct-20-2023.pdf.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

Cal Advocates supports moving “Reviewing POSO Rules” to the action plan stage.  Reviewing the POSO Rules will require relatively little analysis and one of the likely outcomes is a simple rollback of the POSO implemented in 2021.  Stakeholders would likely be able to converge on a solution in a relatively short time frame. 

The next topic that could likely move to the action plan stage is UCAP Development.  In a forthcoming working group, the CAISO should review the extensive record developed for UCAP from the RA Enhancements initiative that preceded the extant initiative.  This would set the stage for stakeholders to determine whether UCAP Development is ready to move to the action plan stage.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

Cal Advocates provides no response to this topic at this time.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

Cal Advocates does not at this time offer to participate in Question 9 topic panels.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

Cal Advocates does not at this time offer to present on other topics.

12. Provide any additional comments not already captured:

Cal Advocates provides no additional comments at this time.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

No comments.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

No comments.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

CEBA is a trade association of clean energy buyers, their service and energy providers, and partner NGOs. Nationally, CEBA is comprised of 405 members, representing $7T in revenues and 17 million employees and including 89 Fortune 500 companies. CEBA has 24 energy customer members headquartered in California and many more with offices, data centers, distribution centers, manufacturing plants, research and development sites, hotels, and retail operations in the state. Since 2014, 11 CEBA members have contracted for 22 in-state clean energy projects, representing 1,573 megawatts of clean capacity added to the grid.

CEBA agrees that the CAISO’s default PRM warrants revisiting in light of changes in the Western Resource Adequacy landscape. In our recent Customer Priorities for Resource Adequacy, CEBA emphasizes the need for resource adequacy frameworks to meet minimum planning standards while proactively evolving to meet future grid needs. The Planning Reserve Margin is a critical tool to ensure reliability meets the widely adopted 1 in 10 Loss of Load Expectation (LOLE) standard.

In light of the relationship between the PRM and counting rules, CEBA supports CAISO undertaking additional data analysis to explore how resource adequacy resources meet a 1 in 10 LOLE reliability standard. In addition, CAISO should revisit the default PRM and evaluate whether or not it needs to be updated to meet reliability standards.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

No comments.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

CEBA strongly supports CAISO’s proposal to improve visibility into system reliability in the mid-term time horizon. Assessing whether the current level of authorized procurement and contracted capacity is sufficient to meeting 1 in 10 LOLE will provide needed system insight. This assessment should also consider possible retirements and reasonable assumptions for future resource development. CAISO can leverage a mid-term (2-4 year) view to create more runway for parties to resolve possible deficiencies and maintain reliability. Finally, CAISO could also make use of retrospective resource adequacy data, assessing if resources actually met a 1 in 10 LOLE standard.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

No comments.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

No comments.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

No comments.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

No comments.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

No comments.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

No comments.

12. Provide any additional comments not already captured:

No comments.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

none

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

none

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

none

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

none

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

Microsoft appreciates the CAISO initiating a Resource Adequacy Working Group and the CAISO’s effort to focus on reliability and update the Resource Adequacy program. Microsoft has been focused on the reliability of the electric grid as a top priority for our engagement in California. We have been an active participant in the CPUC’s Resource Adequacy proceedings where we have focused on the need to set a planning reserve margin (PRM) transparently based on Loss of Load Expectation (LOLE).

As a significant component of its business platform, Microsoft constructs, owns, and operates data centers around the world and has a growing presence in California. A reliable and resilient energy supply is a critical need for its datacenters and further enables local economic development opportunities. Microsoft is also committed to meeting its industry leading sustainability commitments: (1) by 2025, 100% of Microsoft’s energy supply will be 100% renewable for all of its operations, and (2) by 2030, 100% of Microsoft’s electricity consumption, 100% of the time, will be matched by zero carbon energy purchases. These sustainability goals require a reliable and effective system of electricity production and transmission to support substantial increases in renewable generation across California and the West.

Microsoft’s existing footprint in California relies heavily on the state’s electric grid, and an unreliable electric grid is extremely detrimental for Microsoft’s operations and customers, who include first-responders and emergency services, among many other California-based agencies and businesses.  

Microsoft supports CAISO implementing short-term reliability modeling

Microsoft believes the CAISO modeling year ahead reliability is important, even without perfect supply information from LSEs (at a minimum 90% of supply to meet load plus planning reserve requirement). This reliability modeling will provide CAISO important insights on how the year ahead supply is shaping up to meet demand plus a reserve. This annual process will also provide new insights and data to inform an appropriate PRM to meet a 1 in 10 LOLE.

Microsoft supports CAISO implementing mid-term reliability modeling for years 2-4

Microsoft supports the CAISO modeling efforts and especially modeling RA needs in the mid-term (2-4 years ahead) to enhance reliability visibility. While the CPUC has conducted sporadic mid-term reliability modeling, it is a) not comprehensive of the CAISO system and b) not formalized or completed regularly. 

At the CAISO, the RA program is the middle piece of a full reliability program beginning with long-term resource and transmission planning and ending in the operational market space.  CAISO can bloster reliablity and solve a gap that currently exists between long term planning and daily operations by moving forward with mid-term reliablity studies and supporting a forward capacity procurement program. Many other RTO/ISOs procure capacity 3 years ahead, because they have rightly concluded that forward procurement supports reliability. Forward procurement provides revenue certainty and incents generators to invest and improve performance and also sends price signals to the market of capacity shortfall (or excess).

CAISO should conduct an annual transparent stakeholder process to assess the reliability of the CAISO BAA for a minimum of a 5-year projection. This evaluation should be based on LOLE principles and involve close coordination with WRAP to prevent import double counting and ensure alignment of interchange assumptions. The outcomes of this study could be used by the CPUC in setting the PRM. And, importantly, this study could be used in determining whether generation resources can retire without harming reliability.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

none

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

none

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

none

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

none

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

none

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

none

12. Provide any additional comments not already captured:

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

Middle River Power LLC (“MRP”) believes that there are multiple interrelated layers of issues and sub-issues within the current RA program.  Consequently, MRP would like the CAISO RAMPD working group to work on a holistic approach to fixing the RA program rather than limiting the solutions available or working on individual solutions in isolation.

MRP is encouraged that the CAISO intends to review the current default PRM by performing LOLE studies.  The requirement to show only 90% of monthly requirements in the year-ahead showing process complicates the CAISO’s ability to assess the sufficiency of shown resources prior to the compliance year.  MRP asserts that more capacity than simply the 90% requirement is shown the year-ahead showings.  While the CAISO has published historical RA aggregated data, that data does not provide the granularity to support or refute MRP’s assertion.  MRP believes that it would be helpful for the CAISO to provide some additional information to support its statements made during the working group meeting regarding only having 90% of the monthly requirements shown during the year-ahead showing process.

Regardless, MRP repeats its previous recommendation that the CAISO start a parallel process to perform a mid-term (2-5 years out) LOLE analysis.  This analysis would not be based on what is shown by LSEs in the current or next RA compliance year.  Instead, the various inputs to this analysis can be decided in the parallel process.  Further, MRP’s hope is that the CAISO will “stress test” its LOLE analysis (i.e., check to see if applying a PRM obtained from a single month to all months will still yield an aggregate 0.1 LOLE across the entire year) so that it conforms to the monthly structure of the RA program.  As the CAISO has observed from a presentation made during the final CPUC Reform Track workshop, a PRM that’s selected from the highest demand month of the year and then applied to all months of the year will yield a much higher LOLE.[1]  This is because additional capacity is required to be procured in other months of the year to reduce or eliminate LOLE in those months.  This type of stress testing could lead to a conclusion that a higher annual PRM, or seasonal or monthly PRMs, should be used.

With regards to a near-term (i.e., year-ahead) LOLE analysis that’s based on LSE showings, MRP repeats its previous proposal to switch from the current year-ahead and month-ahead showing process to a one-time year-ahead only showing process.  To build out this concept, MRP provides some additional details below.

1. LSEs submit 100% of their monthly RA requirement on Oct 31. (Date may be moved to allow for additional time for LOLE analysis.)
   1. All new resources (i.e., that have not yet achieved their COD) can be shown to count towards RA requirements for the month in which the resource is expected to be online. 
2. LSEs are provided a period to cure any deficiency.
3. CAISO performs LOLE analysis with results out on December 1. 
4. CAISO initiates CPM backstop procurement if the LOLE is higher than 0.1 starting on December 20.  CPM backstop procurement should would require LOLE analysis to ensure the CAISO will meet the 0.1 LOLE metric.
5. Intra-year following the showing:
   1. If new resource is unable to achieve COD for the month expected in the year ahead showing, then such a resource is required to provide substitute capacity to the CAISO.
   2. If an existing resource is on planned outage, then the resource must provide substitute capacity to the CAISO.  This can also be mitigated depending on whether planned outages are accounted for in the PRM or the LOLE analysis.
6. In May, CAISO initiates its mid-term year LOLE analysis to provide guidance for LRAs for future year PRMs.

MRP encourages the CAISO to consider this high-level concept, to which the CAISO and stakeholders would need to work together to add other pertinent details that would be required to implement this new RA process.

The benefit of this concept is that it would provide the CAISO with all data necessary to make determinations for CPM backstop and run its LOLE analysis.  This would compress the time in which LSEs would have to procure to meet their monthly requirements.  However, once that’s done for the first year, LSEs would not need to focus on intra-year procurement and have many months to contract for their forward needs, for which they already have much under long-term contract.

All other intra-year procurement would be between generators and/or the CAISO, which MRP expects would be primarily for outage substitution, to the extent that capacity to support outages is not already included in the LOLE and PRM analysis.  If planned outage substitution is still required on a daily basis, then MRP believes that CAISO should establish and conduct an outage substitution market.  The current bilateral market is not an efficient place for generators to transact substitution capacity. 

For resources on forced outage, MRP believes that RAAIM can still be applied without the option to provide substitution.  This can depend on the application of UCAP counting rules or the existence of an outage substitution market.

[1] See CPUC Energy Division October 6, 2022 presentation Slice of Day – Load Forecast Process Update and Loss of Load Studies Translation for RA proceeding Update at slide 10 of 16.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

As discussed during the workshop, the purpose of RAAIM was to incentivize scheduling coordinators to submit economic bids from flexible resources into the CAISO’s markets.  While RAAIM encouraged resource owners to provide substitute capacity for resources on outage to minimize RAAIM penalties, this was not RAAIM’s sole purpose.  If the CAISO asserts that RAAIM has failed, then it should also provide the data and metrics which allow for an in-depth assessment as to why RAAIM has failed.  For instance, do RAAIM-exempt resources have higher outage rates than RAAIM-applicable resources?  Is that contributing to the overall high rate of forced outages that the CAISO is experiencing?  How much substitute capacity was provided by RAAIM-exempt resources as a percentage of their outages?  Did the change from providing three days’ notice of a planned outage to seven days’ notice of a planned outage increase the number of forced outages?  This could have an impact if the expectation of lower forced outage rate is based on GADS data, which is not based on seven days’ notice.

Another concept of RAAIM, which evolved from the Standard Capacity Product (SCP), was to not eliminate contractual availability penalties.  This was why SCP and RAAIM allow for grandfathered contracts so that generators are not double-penalized.  However, the practice of contractual availability penalties still occurs, suggesting that RAAIM may be double penalizing generator availability. 

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

As noted above, MRP is encouraged by the CAISO’s conclusion, presented during the January 16 working group meeting, that the CAISO’s default PRM warrants revisiting in light of changes to the RA landscape.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

MRP believes that the CAISO and stakeholders should review the Flex RA program to determine whether it is the best way to secure the daily operational flexibility the CAISO requires.  The current Flex RA program was created at a time in which the ELCC and PRM values of the RA program were not being updated on a regular basis, which MRP believes forced about 4 GW of thermal capacity to retire early.  However, with NQC values of wind and solar resources now being more accurately reflected based on their reliability contribution at the time of need, and PRMs also being updated to more accurately reflect the changed supply mix, the Flex RA program, the requirements of which have never been binding, may not be the best way to ensure the necessary daily operational flexibility. The changes proposed to the CAISO markets through the Day-Ahead Market Enhancements process – the development of the imbalance reserve products, in particular, which require resources that receive IRU/IRD awards to bid into the real time markets – suggest that the CAISO can acquire the needed operational flexibility through means other than through forward flexible capacity requirements which have never constrained RA procurement nor provided meaningful additional value for resources that supply that flexibility. 

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

MRP strongly supports the CAISO developing and using the ability to model and analyze its system in both the near- and mid-terms.   As noted above, MRP encourages the CAISO to (1) start a parallel process to initiate mid-term reliability analyses, as such analyses would not depend on annual RA showings, and (2) strongly consider moving to a single year-ahead showing to better facilitate near-term analyses. 

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

While the presentation – such as (1) the information that showed that in 2023, storage resources’ availability, as measured through submitted bids, was less than that of thermal resources, and (2) the assertion that up to 20% of battery capacity may not be available during critical hours due to storage’s idiosyncratic limitations – was interesting, it’s not yet apparent to MRP how the CAISO intends to use this information within the framework of the RAMPD initiative.   Energy storage, due to its technology-specific state-of-charge characteristics, raises operational questions that need to be answered to ensure storage is properly credited for it resource adequacy attributes, but it’s not yet clear to MRP from the information presented what changes, if any, the CAISO intends to recommend or make to storage RA rules. 

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

MRP would like the CAISO to prioritize action on two matters.  The first is updating its default PRM values.  The second is revisiting the Planned Outage Substitution Obligation process and requirements.  Though, like all RA issues, these two issues are linked, and ideally should be addressed in a holistic way, MRP would consider segregated, incremental improvements to these processes. 

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

Not at this time, though MRP hopes the issues above (and others, such as mid-term modeling) could be ready for policy development by summer.   

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

MRP supports this sequence. 

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

MRP would consider participating on a panel on all RA issues but especially would consider participating on a panel on backstop procurement. 

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

MRP has no response.

12. Provide any additional comments not already captured:

MRP has no additional comments and thanks the CAISO for the opportunity to provide these comments.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

Please refer to NCPA’s prior comments, and the comments stated herein.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

CAISO states that it lacks various elements to ensure that various LRAs bring a portfolio of resources that are accessible at the right place, available at the right time, and provide the right attributes.  NCPA believes these requirements are already set through local area capacity technical studies, flexible capacity requirements, must offer and other bidding obligations, and availability assessment hours. Accordingly, this problem statement is inapplicable and existing tools should be reviewed individually or holistically and modified or calibrated as necessary.

Regarding individual LRA counting rules, NCPA reiterates that CAISO must respect the jurisdictional rights of LSEs. Additionally, it is critical that CAISO properly value hydroelectric and other use-limited resources. For example, CAISO relied on dispatchable hydroelectric resources heavily during its recent tight supply conditions, and rightly so. Properly managed hydroelectric resources with storage capability plan to have water available for the most valuable periods of the year, when supply conditions are tightest. For example, NCPA manages water storage and releases during the course of each hydroelectric cycle to ensure there is sufficient water available at all times to enable full generation whenever grid conditions are tight, even in drought years.  LRAs must retain the ability to establish individual counting rules that reflect the unique operating characteristics of their assets.  For example, hydroelectric resources that have material elevation drop between its storage and the generator often have the ability to operate at full output even during drought conditions. Neither the CAISO default counting criteria nor the CPUC counting criteria capture these types of nuances and if those criteria were applied to hydroelectric projects or systems belonging to non-CPUC jurisdictional LSEs that currently apply their own tailored counting criteria, the likely result will be unnecessary purchases of RA at even more elevated prices, and higher costs to ratepayers.

CAISO and CPUC appear to be moving toward a one-size-fits-all approach reflecting political compromise and convenience more than a realistic assessment of individual unit performance.  Non-CPUC jurisdictional entities have the ability to closely study and evaluate the resources in their jurisdictions and can adopt counting rules that allow for tailored and realistic results.  For this reason, any default counting rules have been secondary to rules established by LRAs, and NCPA requests that they remain so in the new paradigm.

CAISO incentivizes availability with the current RAAIM program. NCPA continues to support the current RAAIM program and the requirement for the RAAIM price to be set at 60% of the cost of new entry based upon the Capacity Procurement Mechanism Soft Offer Price.  NCPA believes the Capacity Procurement Mechanism Soft Offer Price provides an appropriate incentive because it reflects the cost of new entry for the current resource technology that is predominant in the CAISO and RA market today.  In fact, the Capacity Procurement Mechanism Soft Offer Price is a critical market design element to protect against market power.  NCPA believes that a supplier selling a product should receive fair compensation for the services rendered, including the ability for a supplier to recover its costs and earn a reasonable return on its investment, but a supplier should not be able to earn unjust profits at the expense of ratepayers where such profits are greatly in excess of its actual cost of operations.  The CAISO has implemented many controls in its market design to combat the ability of market participants to exercise market power, and NCPA strongly believes that the Capacity Procurement Mechanism Soft Offer Price is a key element of that design. It should therefore be retained.  Moreover, in the event that a supplier feels it is unable to recover its cost of operations by earning the Capacity Procurement Mechanism Soft Offer Price for services rendered, that generator can submit additional information to support its claim and, if confirmed, be eligible for additional compensation within the existing mechanism. 

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

NCPA has always appreciated CAISO’s history of partnering with its state and local LRAs and respecting their jurisdictional rights. Historically, NCPA’s members established their Planning Reserve Margins (PRM) in accordance with the CAISO’s default minimum PRM, though they are not required to do so. (see, e.g., Cal. Indep. System Operator Corp., 119 FERC ¶ 61,076, P 555). NCPA also has a lengthy history of providing sufficient RA capacity to serve its loads.  NCPA operates in the CAISO as a Load-Following Metered Subsystem (LF-MSS).  As such, it already has strong performance incentives built into its contract with CAISO that are very well aligned with CAISO operational goals. An LF-MSS is required to balance its portfolio of load and supply within a tight compliance deviation band during every 5-minute dispatch interval, or be subject to significant financial penalties. These penalties provide a strong incentive for a LF-MSS to ensure it has adequate capacity available at all times to meet its real-time load serving obligations, and to take appropriate measures to ensure that capacity performs in real-time. NCPA strongly believes that the operating characteristics and incentives of the LF-MSS model already align well with the goals that CAISO has identified for this initiative.

Although NCPA is comfortable that its current PRM and LF-MSS requirements position it well to meet current needs and requirements, NCPA has been actively engaged with the California Energy Commission in its ongoing proceeding to examine the Planning Reserve Margins of non-CPUC jurisdictional LRAs. NCPA had anticipated that it would receive further direction on its members’ PRMs from the CEC. NCPA’s view is that the changing grid may require program changes, but that the PRM need not be one size fits all.

On Slide 36 of the CAISO’s January 16, 2024 Resource Adequacy Modeling and Program Design Working Group presentation, CAISO indicates that six (6) LRAs have established a PRM that is less than the default 15% PRM.  If the CAISO cannot identify the individual LRAs due to confidentiality concerns, it would be helpful for CAISO to clarify what portion of the CAISO BAA load is represented by the six (6) LRAs that have been identified.  NCPA assumes that the six (6) LRAs of focus represent an insignificant amount of load in the CAISO BAA, and therefore do not pose or create a reliability risk for the system.  This information will be important to ensure stakeholders do not exaggerate concerns with the PRMs set by LRAs that represent an insignificant amount of load in the CAISO BAA (e.g., if a LRA representing a LSE with 3 MWs of peak load with a PRM less than 15%, that in itself will not create a reliability concern in the CAISO BAA).

NCPA is growing more concerned with unsupported statements being made by certain stakeholders (predominately for-profit merchant generators), claiming that the current PRMs adopted by LRAs are insufficient to support system reliability.  System reliability in the CAISO BAA to date has been exceptional, and LRAs and their LSEs are ultimately responsible for and answer to their customers if they fail to provide reliable and cost effective service. LRAs and their LSEs are therefore best situated to determine what is an appropriate level of reliability to plan for to support their load serving obligations.  It is no surprise that for-profit merchant generator stakeholders advocating for much higher PRMs (without providing any material evidence as to how such increased PRMs would enhance system reliability) are the same entities that would benefit significantly and profit from creating even greater market scarcity (or at least the perception of such), creating further opportunity for the exercise of market power and to demand even higher prices for the RA capacity available.  NCPA strongly believes that LRAs and their LSEs, who have the actual obligation to service their customers, are best situated to plan for how to reliably and cost effectively provide such service.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

No additional comments at this time.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

No additional comments at this time.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

No comment at this time.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

No comment at this time.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

None at this time.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

No comments at this time.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

No comment at this time.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

No comment at this time.

12. Provide any additional comments not already captured:

No additional comments at this time.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

PG&E recommends that the CAISO RA Working Group allocate time to address and prioritize the critical issues outlined in problem statements 2 and 3. The goal is to assess whether incremental changes or more systemic changes to the ISO’s rules are necessary.

As highlighted in our previous comments, PG&E recommends that the CAISO RA working group prioritize the following items:

1. addressing the RA Substitute Capacity Rules;
2. exploring Unforced Capacity (UCAP) counting rules and revisions to RAAIM;
3. assessing the necessity of Flex RA;
4. exploring Local Regulatory Authorities LRAs program alignment with CAISO’s RA rules.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

PG&E requests a thorough analysis by CAISO covering outages to provide a better understanding to stakeholders. CAISO’s analysis for summer 2021-2023 highlighted that the planned and forced outage rate exceeds assumptions used in state analysis. PG&E suggests CAISO provide analysis that categorizes resources into RAAIM penalized and exempt for both summer months and non-summer months.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

PG&E requests a thorough analysis by CAISO of system Planning Reserve Margin (PRM) alignment to provide a better understanding to stakeholders. While acknowledging CAISO’s overview of PRM set by each LRA, the default PRM rules have not been reviewed since 2006. With changes in the RA landscape and Extended Day-ahead Market (EDAM) implementation, PG&E supports exploring improved PRM alignment considering cost causation principles.

PG&E suggests calculating a system PRM for the entire CAISO BAA utilizing LRA requirements and constituent LSE loads for the 2022 and 2023 RA showings. This data is crucial for a comprehensive analysis of the effectiveness of these values in meeting load and system operating requirements adequately. Additionally, CAISO should provide a detailed description of any underlying assumptions and reliability criteria supporting system PRM values different from the default value that operators would accept without initiating procurement actions.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

The flex analysis (slides 42 and 43) shows the actual usage is below the required flex ramp. PG&E suggests that CAISO conducts a comprehensive assessment of the effectiveness of the three flex categories to understand the necessity and the impact of each category. This analysis is crucial given the use of battery storage across all three Flex RA categories.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

PG&E reiterates the need for CAISO to clarify RA only analysis objectives and guide stakeholders to prevent misuse in resource procurement justifications. While CAISO states the analysis aims for transparency, details on how the CAISO intends stakeholders to use this information for procurement decisions requires further clarity (see PG&E's comments submitted on 12/20).

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

PG&E recognizes the concern raised by DMM if energy storage resources are proven unable to provide their committed RA capacity in critical hours. However, given the consequential implications of the DMM's concern (i.e., that four-hour storage is not providing a full four hours of dispatchable energy at its Pmax), PG&E believes further analysis is required, from DMM or the CAISO, regarding both the data provided and more recent data on battery dispatch.  Significant changes in constraints on battery bidding and recognition of regulation energy through attenuation factors could impact the conclusions drawn. Noteworthy changes might also include “exceptional dispatch (ED) to hold state of charge” functionality, potentially enhancing the likelihood of batteries delivering their full four hours of energy under stressed conditions aligning with the intended coverage of RA. Additionally, PG&E poses the following questions on the DMM's analysis:

1. What portion of the “potentially unavailable energy” (slide 76) is due to foldback where batteries are unable to provide their max output at low SOCs (State of Charge)? What portion is attributable to regulation energy take? PG&E requests that the DMM assess the impact each of the various storage limitations (slide 92) have on the undispatched bids less than LMP. It would be helpful to know if there is a primary driver of the unavailability, or if the issue is spread evenly across multiple limitations.
2. By “critical hours”, is the DMM referring to the normal availability assessment hours averaged throughout calendar year 2022, or specific peak load days in 2022? If specific days were used, PG&E requests the DMM to provide the dates used in this analysis.   
3. Regarding the day-ahead (DA) data on slide 76— was no DA regulation down awarded to the battery fleet during this sample period or that it was excluded because those awards result in charging instead of discharging? If it was excluded, PG&E requests the DMM to provide these data as well.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

PG&E recommends that the CAISO RA Working Group allocate time to address and prioritize the critical issues outlined in problem statements 2 and 3 (see question 1).

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

PG&E believes further discussion and exploration of the sub-issues listed under problem statement 2 and 3 are needed prior to defining an action plan (see questions 1 and 7).

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

PG&E supports the proposed sequencing to further explore: 1) resource counting at the February 13 working group meeting; 2) outages and availability incentives at the February 27 WG; and 3) backstop at the March 13 WG.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

PG&E is interested in presenting on principles for UCAP methodology consideration in the upcoming session on resource counting. In response to the CPUC’s exploration of UCAP methodology in D.23-10-011, PG&E submitted principles based on CAISO’s Draft Final Proposal – Phase 1 and Sixth Revised Straw Proposal the CAISO released in its RA Enhancements. While PG&E does not endorse the CAISO’s previous proposal for UCAP, it is important to recognize the work that has been done in this area and acknowledge the need for close cooperation between the CAISO and LRAs on this topic. 

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

No comments at this time.

12. Provide any additional comments not already captured:

No comments at this time.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

No comments at this time.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

Bay Area Municipal Transmission Group (BAMx)[1] is pleased to submit these comments on the January 16, 2024 Resource Adequacy modeling and program design working group.

RAAIM has not been an effective mechanism for incentivizing RA resources to be available, but it seems unlikely that additional adjustments to the RAAIM mechanism will be fruitful. If market revenues in conjunction with potential RAAIM penalties have not resulted in adequate RA resource performance, it seems likely that factors other than financial incentives or penalties are affecting resource availability. Efforts should be made to understand and address these factors, rather than attempting to adjust the RAAIM penalties.

BAMx believes that if UCAP is implemented, thereby incorporating outages into the RA counting for resources, it would improve the ability of resources to seek and be granted approval for planned outages, which should improve resource availability during stressed conditions. In addition, UCAP should remove the need for RAAIM penalties related to resource performance, since RA capacity payments could be tied to the UCAP-adjusted RA counting levels. Implementation of UCAP therefore should be a priority for CAISO.

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

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

BAMx supports, in light of changes in the RA landscape, the CAISO reevaluating the default PRM used for LSEs whose LRAs have not adopted a PRM.  BAMx believes that parties will be able to better understand the potential consequences of some entities having PRMs that are below the 15% CAISO default PRM if CAISO would provide the aggregate coincident peak load served within each of the three groupings shown in the table on Slide 36 (i.e., 1 LRA with 16% PRM, 20 LRAs with 15% PRM, 6 LRAs with <=7% PRM). We suspect that the amount of coincident peak load included in the <=7% grouping will be relatively small, which might indicate less time pressure on CAISO to perform the analysis needed to develop an updated default PRM.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

The discussion of Slide #42 regarding flex RA requirements suggested there might be a need to increase the flex RA requirements or decrease the EFC credits applied to flex RA resources. BAMx believes other reasonable inferences can be drawn from the figure. The fact that the actual energy dispatched from the shown Flex RA resources was significantly lower than the Flex ramp requirements and the aggregate EFCs could mean that CAISO actually needs significantly less flex RA resources; or it could mean that the flexible attributes of non-Flex RA resources and/or the amounts above the shown Flex-RA are more than sufficient to meet CAISO’s flexible resource needs. Or, it could mean that the energy bid from the shown Flex RA resources was not as economical as the energy available to CAISO from other RA and non-RA resources, including Intertie bids. BAMx recommends CAISO develop an alternative graph that includes the MW of energy bid from shown Flex RA resources, the MW of energy bid from other (non-flex) shown RA resources, and the MW of energy bid from non-RA resources (with Intertie bid MW shown separately). This information could be compared to the actual energy dispatched from each of these groupings and would help to determine whether greater or lesser amounts of flexible RA resources are needed, or whether more stringent or less stringent flexible resource qualifications are needed.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

 No comments at this time.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

BAMx appreciates the information provided by DMM related to battery storage resources. The slides showing idealized vs. metered charging and discharging from storage resources, and the storage operations state of charge slides, were particularly helpful. One thing to consider is that the actual charging gets spread over more than four hours because it takes more than four hours to charge a “four-hour” battery due to efficiency losses. In addition, we suspect that the RTM economic bidding requirements for flex RA resources results in some flex RA BESS resources not receiving charging awards due to RTM charging bids being too low; it is simply not possible for all BESS scheduling coordinators to always be able to anticipate the appropriate price to bid 75 minutes prior to each RTM bidding interval to ensure the BESS resources are charged during the lowest priced 5-minute intervals. Likewise, the RTM economic bidding requirements for flex RA resources results in some flex RA BESS resources having RTM discharging bids that are set at levels early in the day that result in the resources getting discharged earlier than planned (even in cases where RTM prices are lower than the soft offer cap).

Our preferred solution for addressing these issues would be development of a RTM five-minute interval look-ahead window beyond the current 65 minutes (to at least cover the expected discharging intervals). Alternatively, the CAISO could run an hourly market multiple times within the delivery day, instead of running a single DAM. But if technology limitations continue to make either of those solutions impracticable, we recommend revising the RTM Must Offer Obligations for Flex RA BESS resources to allow them to economically bid or Self-Schedule consistent with their DAM awards, subject to availability of any co-located generation. Doing so would ensure that scheduling coordinators could elect to exactly match their DAM awards in the RTM. This approach would benefit the CAISO by flattening the Duck Curve and thereby reducing the net load ramp. The primary factor considered in setting the flex RA requirements is the magnitude of the 3-hour net load ramp, and the CAISO DAM optimization effectively minimizes both the 3-hour and 1-hour net load ramps. CAISO’s within-the-hour dispatch operating targets help shape the DAM hourly awards to the net load in the 5-minute intervals, and would benefit from the improved state of charge that would result from allowing BESS self-scheduling to the DAM awards. While a portion of flex RA resources may also be needed to address differences between the DAM forecast and the RTM forecast, we believe that a portion of the BESS fleet would not elect to use the RTM self-scheduling option and there will be non-BESS flexible RA resources, along with other non-RA or above-RA flexible resources, available to address the remaining RTM flexibility needs.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

We believe that changing the RTM MOO for BESS resources to allow either an economic bid or Self-Schedule consistent with their DAM awards, subject to availability of any co-located generation, is an incremental change to the existing CAISO rules that could be implemented quickly without requiring systemic rules changes.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

No comments at this time.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

We recommend including BAMx’ BESS RTM self-scheduling proposal as part of the resource counting discussion, or as part of the outage and availability incentives discussions.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

 BAMx will make available a representative to discuss its BESS RTM self-scheduling proposal as part of a panel discussion of resource counting issues or outage and availability incentives.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

 No comments at this time.

12. Provide any additional comments not already captured:

 No comments at this time.

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

In terms of problem statement 2, as noted in the Six Cities’ December 20^th comments in this initiative, the Six Cities support consideration of substitution-related topics in this initiative, and perceive that the CAISO’s substitution requirements are inherently linked to both the Resource Adequacy Availability Incentive Mechanism (“RAAIM”) and Unforced Capacity (“UCap”) topics.  As also noted, the Six Cities continue to have concerns that the current formulation of problem statement 2 may be overly broad (i.e., it encompasses multiple disparate sub-topics as shown on slide 11), and it may be appropriate to disaggregate this problem statement further.  For example, the Capacity Procurement Mechanism (“CPM”) and cost allocation may belong under problem statement 3.

The Six Cities continue to oppose the inclusion of issues related to the EIM resource sufficiency evaluation in this initiative, consistent with the discussion provided in prior comments and during the January 16^th stakeholder meeting.  This topic is presently included in problem statement 3, and it should be removed to a separate initiative.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

The data analysis presented during the CAISO’s January 16^th stakeholder meeting was helpful, and the Six Cities have not identified incremental data needs for this topic at this time.  The Six Cities remain supportive of a holistic consideration of issues related to RAAIM, UCap, and resource substitution in this initiative, because the incentive and penalty framework currently utilized within the CAISO is not workable.  As outlined in comments by the City of Anaheim during the January 16^th meeting, the Six Cities support consideration of ways in which load-serving entities can be incented to show all RA-eligible capacity to the CAISO to enable a meaningful evaluation of available resources and deficiencies.  While not taking an affirmative position in support of transitioning to a UCap framework at this time, the Six Cities agree that UCap may obviate the need for RAAIM and that the CAISO should avoid duplicative or overly burdensome counting rules and performance incentives.  We also note that modifications to RAAIM—including, for example, an exemption from RAAIM for any resources that are shown by LSEs above their minimum RA requirements—could be implemented relatively quickly and might serve as an interim measure to encourage LSEs to show any incremental RA-eligible resources above minimum requirements while more comprehensive changes are considered. 

In terms of problem statement 3, CalCCA raised several questions during the stakeholder meeting regarding the CAISO’s current perspective on issues related to Proposed Revision Request 1280, which is an earlier Business Practice Manual clarification related to the crediting of resources on RA plans.  In connection with questions of resource eligibility and resource counting (which may be a “problem statement 2” issue), the Six Cities request that the CAISO provide an overview of its current policy and rules related to resource crediting, including a discussion of how and what resources are eligible to be credited and what requirements are applicable to credited resources.  The Six Cities recollect that it has been several years since the crediting-related RA rules were comprehensively considered, and this initiative provides an opportunity for reevaluation of RA crediting requirements. 

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

The Six Cities reiterate the need for continued recognition of the authority of local regulatory authorities with respect to the formation of the Planning Reserve Margin (“PRM”).  In light of the California Energy Commission’s consideration of PRM-related recommendations for certain publicly-owned utilities, the Six Cities suggest that the CAISO’s consideration of changes to the default PRM may be premature. 

PRM-related discussions in this initiative may benefit from more in-depth discussions about the amount of load associated with each of the LRAs represented on slide 36.  For example, the CAISO cites six LRAs as having PRMs that are equal to or below 7%, but there is no discussion of whether there are unique circumstances associated with these LRAs that might support implementation of a relatively low PRM, and there is no discussion of whether the LRAs represent LSEs with a comparatively large or small amount of load.  Additionally, there is no discussion of whether there are material differences in the quality and type of resources that the other LRAs permit within their respective resource portfolios or whether there are circumstances in which the PRM shown is a “floor” and any LRAs’ LSEs actually have access to or plan to a higher PRM outside of the RA program.  More information about aggregate observed reliability margins could be informative as well.

Finally, as the Six Cities have stated previously, establishing a higher PRM will do nothing to increase the CAISO’s access to additional capacity without accompanying changes to the interconnection and deliverability allocation rules to enable more resources to come online more quickly. 

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

The Six Cities support a comprehensive reevaluation of the current Flex RA program.  Without prejudging the need for and type of changes that might be appropriate, it appears that the CAISO has identified a set of important initial questions that merit stakeholder discussion.  Given the continuing evolution of the resource fleet, it is an appropriate time to revisit the Flex RA program.  The CAISO’s transition to implementation of the Day Ahead Market Enhancements (“DAME”) would also seem to necessitate re-shaping of the Flex RA program.  For example, the Imbalance Reserve and Reliability Capacity products could affect the quantity of flexible resources that are needed and how flexible resources participate in the market. 

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

The Six Cities do not oppose the CAISO’s completion of short term assessments of RA, but reiterate the challenges that were highlighted during the stakeholder discussion, particularly around the development of assumptions in the year-ahead timeframe when only 90% of resources are required to be shown.  The Six Cities do not support Middle River Power’s (“MRP”) suggestion that the year-ahead showings become mandatory at the 100% level.  LSEs need the flexibility to shape their RA portfolios as they approach the RA month and to determine the exact mix of resources to supply on a monthly basis.  Using an estimate or basing assumptions about the incremental 10% for purposes of a year-ahead analysis would be appropriate. 

Moreover, the Six Cities concur that any year-ahead or month-ahead analyses should not create additional administrative tasks for CAISO LSEs, as the CAISO likely already has adequate information and tools to prepare a reasonably informative study. 

The Six Cities do not have comments on the mid-term years and longer term assessments at this time, except to note that any assessment that serves as a “look ahead” beyond the immediate RA year needs to include consideration of any resources that are eligible to come online and provide RA in the same timeframe and whether the CAISO’s interconnection and deliverability allocation processes are proceeding in a timely fashion to ensure mid- and longer-term needs can be met.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

During several discussions in this working group a representative of BAMx has suggested that challenges in achieving optimal charging and discharging cycles for storage resources could be addressed, at least in substantial part, by permitting storage resources to self-schedule to achieve Day-Ahead awards in real-time.  The Six Cities support further exploration of this concept.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

As noted in response to question 2, it may be feasible to consider and implement incremental changes to the existing RAAIM program relatively quickly to remove the current disincentives for showing any incremental RA-eligible resources above minimum requirements. 

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

 Please refer to the response to question 7.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

The Six Cities do not oppose this ordering. 

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

The Six Cities would like to present ideas for discussion related to the resource counting and outage and availability incentives topics. 

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

The Six Cities have not identified additional areas for presentation at this time.

12. Provide any additional comments not already captured:

The Six Cities note that the comment deadline for this set of comments was not included on the CAISO’s public calendar and request, going forward, that all comment deadlines and meetings for this initiative be calendared to ensure that applicable dates and deadlines are not overlooked by stakeholders. 

1. Provide your organization’s comments on the review of problem statement 2 and 3 stakeholder feedback:

Problem Statement 2: 

SCE believes that CAISO should work with CPUC on developing a UCAP mechanism and accounting for ambient derates to resources. As part of this process, the CAISO should also examine RAAIM to determine how effective it is, whether it continues to be necessary under a UCAP RA construct, and how it might be modified/improved, including how upcoming changes to the CPM soft offer cap will or should impact the penalty rates. SCE also agrees with comments at the workshop that it would be useful for the CAISO to provide estimates of the revenue impacts from both RAAIM and lost energy revenue on resources from not being available.  

Further, as part of reviewing the CPUC’s Slice-of-Day reform the CAISO should consider potential changes to Must Offer Obligations and bid insertion rules for various types of resources. As explained further below in response to question 6, this should specifically include the requirements for storage resources.

SCE continues to believe that the time is right to reassess Flexible RA, both whether it continues to be needed under a Slice-of-Day RA construct and how to measure the need for flexible resources and the amount that each resource can provide. As further explained below in question 4 the data presented seem to indicate that because of the day-ahead market’s ability to schedule resources across hours, it might be the hourly ramping capability of units that is most needed.

Problem Statement 3:

SCE agrees with the idea of providing information on the PRMs of the various LRAs, and the relative loads of those LRAs. SCE understands that PRMs are related to the counting rules and that this is the purview of the LRAs but given the communal nature of system reliability it is important for equity and fairness that the CAISO and market participants understand how each LRA treats these issues and what they are bringing to CAISO markets.

SCE understands that RA compliance and RSE failures are different, but there is clearly a connection between the two and SCE believes that a discussion of the connection between the month-ahead RA construct and the day-ahead RSE would be beneficial in suggesting possible improvements or modifications to RA, and in helping to start the discussion about how the various RA constructs of EDAM participants will interact.

2. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO's problem statement discussion on issues related to capacity counting, availability and performance incentives, and outage and substitution rules:

The CAISO’s presentation confirms what stakeholders’ comments have already made clear – that there needs to be additional information, analysis and discussion concerning:

• the PRMs and counting rules of the various LRAs and the overall reliability of the CAISO grid when all LSEs meet their respective RA requirements.
• the use of UCAP and ambient derates mechanisms and how this interacts with RAAIM, including the effectiveness of RAAIM at providing performance incentives, and the relative revenue contributions of RAAIM as compared to peak hour energy market prices. This discussion should also include the need for resources to take planned outages to perform maintenance and how best to allow this to occur. These discussions should include information about the types of outages that resources take, and to what extent planned maintenance outages can be scheduled in months when the resource is not providing RA. Stakeholders have indicated numerous issues with the current substitution rules and the possibility of removing them, especially with the adoption of a UCAP mechanism, should be considered.

3. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on the need to revisit the default PRM:

Before considering whether to modify the default PRM, the CAISO needs to provide additional information about the PRMs used by various LRAs and the counting rules used by those LRAs. The CAISO indicated that six LRAs had a 2023 PRM less than or equal to 7%. The CAISO should provide more information about the LRAs that have adopted such low PRMs and whether their counting rules are different than other LRAs. The CAISO also shows 20 LRAs using 15% PRM, but it would be helpful to understand whether these LRAs made a specific choice or have simply accepted the CAISO’s default PRM.

Additionally, before considering the PRM, the CAISO needs to determine whether RA will use a UCAP and ambient derate methodology. The outage rates shown in the CAISO’s presentation appear to exceed the outage rates that were generally assumed to be included in the PRM.

4. Provide your organization’s comments on the ISO presentation “Exploring problem statement 2 & 3 and data analysis needs,” specific to the ISO’s problem statement discussion on re-evaluating aspects of the Flex RA program:

As SCE has previously stated, FLEX RA should be re-evaluated in light of the Slice-of-Day RA mechanism.

Besides that re-evaluation, the CAISO presentation raises several issues that should be considered in studying Flex RA. The studies seem to indicate that the current three-hour ramping Flex RA definition may no longer be appropriate. The information presented shows that for most months the maximum 1-hour ramp is approximately 50% or more of the three hour ramp, which suggests that having enough 3-hour ramp may not provide sufficient 1-hour ramp. Since Slice-of-Day RA considers having sufficient RA to meet the needs across the hours, and the day ahead market also schedules resources to meet the hourly ramping needs it seems that what might be more necessary is ensuring that there is sufficient within hour ramping capacity – 1-hour ramp capability rather than 3-hour. The CAISO should consider whether modifying the EFC accreditation to be the one hour ramp would provide a more useful Flex RA.

Discussions of how storage is used, and its RA values should also be considered. The concept of allowing some portion of storage to follow its day-ahead schedule rather than having to bid into the real-time markets which doesn’t have sufficient look-ahead capabilities should be considered and seems to be related to whether storage can be counted as Flex RA.

5. Provide your organization’s comments on the ISO presentation “Potential modeling frameworks,” including feedback on short term reliability and reliability visibility in the mid-term years 2-4 and the survey proposals:

SCE is willing to work with the CAISO on potential, 100% year-ahead, non-binding showings, but at a minimum the CAISO should be able to provide analysis for the summer months using the current 90% showings and reasonable assumptions based on past year showings and resources expected to come on line before the summer. A peak day multi-hour stack analysis for those summer months is the minimum that should be provided. Hopefully, the CAISO could provide a study indicating the LOLE from the projected RA fleet using probabilistic assessment from a stochastic production cost simulation model.

For performing the mid-term study, the CAISO likely already has available information about new resources, resources that might be retiring, and the resources available to provide RA. It doesn’t seem that LSEs lock down most of their RA resources multiple years ahead so it is not clear what the CAISO would gain from a survey of LSEs on their RA resources 2-4 years out. Studies in this time frame will provide information about whether there are sufficient resources available to achieve the 0.1 LOLE as a signal to LSEs to either consider finding new resources, imports, or making sure that all CAISO resources are committed to providing RA for those years.

6. Provide your organization’s comments on the DMM presentation “Ensuring energy and resource adequacy with storage”:

SCE commends DMM for the data provided on storage, however the data raises many questions that will require both additional data collection and further analysis. Accompanying the recent rapid growth of storage on the grid there have been changes in how storage resource operators utilize their storage and it seems they are still figuring out how to best utilize their resources. For example, up until the last few years it seemed that storage was mostly used to provide regulation or reserves. These changing uses of storage are the reason that issues with storage are also being discussed in the Price Formations Working Group and have been discussed in specific storage initiatives. It seems that much of the problem is that in the real time markets without sufficient look ahead it is hard to anticipate when the opportune time to charge and discharge storage is. These issues also seem to be intertwined with the issues of flexible RA and Must Offer Requirements for resources. SCE suggests that the CAISO consider a proposal to allow some portion of storage resources to follow their day-ahead schedule and not provide bids into the real-time markets. This would ensure that the storage is effectively and profitably scheduled because of the 24 hour optimization in the day-ahead markets. If storage resources are forced to rebid into the real-time markets, their optimized schedule, locking in their profitability and their energy for addressing peak and ramping periods, may be changed in detrimental ways. This might be the best course of action until sufficient look ahead capabilities are able to be included in the real-time markets.

7. Which issues would your organization like to see addressed quickly, taking an incremental approach to the ISO’s rules, versus issues require longer reform for systemic changes to the ISO’s rules on RA?

SCE suggests that because the CPUC’s RA proceeding will be considering adopting a UCAP and/or ambient derate methodology, the CAISO should began working on these issues, along with the associated RAAIM and substitution issues, in order to ensure that such improvements can be adopted as soon as possible. The adoption of UCAP by the CPUC will obviously require coordination with the CAISO and the earlier those discussions can proceed the better.

The CAISO must also be ready to accommodate the CPUC’s switch to the slice-of-day (SOD) RA methodology. While it seems that the CAISO is prepared for this, it is likely that as the implementation of the SOD moves forward through this test year and into the initial binding year issues may arise. The CAISO, CPUC and stakeholders should have a process in place to resolve any potential issues in a timely manner.

While the coordination with the CAISO about SOD requires immediate, or short-term, attention, the comprehensive review of the SOD methodology and how it can influence RA at the CAISO can likely wait until experience is gained with the CPUC’s implementation.

The discussions begun by DMM on storage and its impacts on energy and resource adequacy should continue. All parties have much to learn about to best incorporate storage into CAISO markets in ways that promote reliability and efficient use of the storage resources.

8. Are there any issues that you believe are ready to go to an action plan, and then move to the policy development phase?

SCE has no comments on this question.

9. Please provide your organization’s feedback to the sequencing of issue deep dives and potential panels:

February 13: resource counting; February 27: outage and availability incentives; March 13: backstop

The sequencing makes sense, but before discussing backstop more information should be provided about the various PRMs and counting rules used by the different LRAs.

10. Please indicate if you would like to participate in a panel on any of the topics from question 9, and if so, which topics:

SCE has no comments on this question.

11. Please indicate if you would like to present on a different topic, and if so, describe the topic and the problem statement it is associated with:

SCE has no comments on this question.

12. Provide any additional comments not already captured:

No additional comments.