Please provide a summary of your organization’s comments on the summary of changes and responses to stakeholder feedback from the fourth revised straw proposal, as described in Section 1:
The CAISO should provide estimates of the annual average hourly price of IR and RC products and estimates of the annual average hourly volume of procurement of those products. Since the inception of the DAME initiative, the CAISO has not provided clarity on the potential costs of IR and RC if implemented. The Draft Final Proposal includes descriptions of how IR and RC procurement may create market efficiencies and price formation improvements; however, the Draft Final Proposal does not estimate the price, volume, or overall costs of IR and RC procurement. During the December 7 stakeholder meeting, the CAISO estimated average IR procurement requirements of 1,800 megawatts (MW) and discussed a hypothetical price range of $4-$9/MWh. The CAISO’s procurement and price estimates were based on historical data and bids of similar products. The CAISO should refine its estimates to express estimated IR and RC specific volumes and prices in the context of EDAM.
CAISO price and volume estimates of IR and RC would allow stakeholders to understand the potential total CAISO Balancing Authority Area (BAA) cost for IR and RC procurement. Such estimates would also allow LSEs and generation owners to estimate costs and revenues of IR and RC respectively. Cal Advocates recognizes that the true value of IR and RC is difficult to estimate since IR and RC services are generally procured today at no cost and valuations of EDAM costs and benefits are difficult to perform at this stage of EDAM development. However, even basic estimates of the price and volume of IR and RC procurement can establish a range of expected costs and revenues for the IR and RC products. The costs of IR and RC are also a necessary input to calculating the net benefits provided by EDAM to California and its ratepayers, which the California Public Utilities Code requires to be considered if implemented.
The CAISO should provide these estimates in the Final Proposal of the DAME initiative. Volume estimates should consider historical procurement volumes of capacity to meet net load forecast differences for IR and RC. Pricing estimates should consider historical bidding behavior of similar products as appropriate Volume and price estimates should consider expected procurement requirements of the EDAM Resource Sufficiency Evaluation (RSE) for the CAISO BAA.
 The CAISO’s Day-Ahead Market Enhancements Draft Final Proposal (Draft Final Proposal) includes two graphs showing monthly trends of day-ahead net load imbalances and adjustments to the RUC forecast, which IR and RC will be designed to address, respectively. However, it is unclear whether the figures are average hourly procurement expectations. Establishing the cost of IR and RC requires clarity on expected volumes of IR and RC procurement by the CAISO BAA, in addition to estimated prices. (Draft Final Proposal at 9-10.)
 Draft Final Proposal at 8-14.
 DAME December 7, 2022, Stakeholder Meeting (DAME Stakeholder Meeting) at 10:04 and 24:29. Available at: https://youtu.be/ysglmbn8dDQ.
 DAME Stakeholder Meeting at 10:04 and 24:29. Available at: https://youtu.be/ysglmbn8dDQ.
 The proposed EDAM design includes IR and RC showing requirements in a Resource Sufficiency Evaluation. (Draft Final Proposal at 13, and 56.)
See also CAISO, EDAM Final Proposal, December 7, 2022 at 62-63. Available at: http://www.caiso.com/InitiativeDocuments/FinalProposal-ExtendedDay-AheadMarket.pdf.
 For example, the RUC forecast was adjusted by over 10,000 MW on some days during the September 2022 heatwave. IR and/or RC would likely have been procured to address that adjustment. It is impossible to determine the potential cost of that procurement and how it would have compared to typical procurement volumes and prices since there are no estimates of IR and RC prices and volumes. Estimated prices and volumes of IR and RC would provide a basic understanding of the costs of IR and RC procurement and how many resources may be needed during future RA scarcity events. CAISO Summer Market Performance Report: September 2022, November 2, 2022 at 62. Available at: http://www.caiso.com/Documents/SummerMarketPerformanceReportforSeptember2022.pdf.
 California Public Utilities Code Section 345.5(b)(2):
… the Independent System Operator shall manage the transmission grid and related energy markets in a manner [consistent with] [r]educing, to the extend possible, overall economic cost to the state’s consumers.
California Public Utilities Code Section 359.5(a):
… the transformation [of the CAISO into a regional organization] should only occur where it is in the best interests of California and its ratepayers.
 The Draft Final Proposal’s DAME stakeholder engagement plan does not include a final proposal milestone date. However, the CAISO clarified that it plans to create a final proposal. (See the December 14, 2022, CAISO Market Performance and Planning Forum workshop recording.)
 IR is intended to account for net load forecast uncertainties and interval differences between the day-ahead and fifteen-minute market time frames, as well as the uncertainty of day-ahead load and Variable Energy Resource (VER) production. RC is intended to provide upward and downward dispatches in the RUC to account for differences between bid-in load and the CAISO Forecast of CAISO Demand (CFCD), as well as any backfill of virtual supply. (Draft Final Proposal at 5, 16, 18-19, 28, and 37-38.)
 During the DAME Stakeholder Meeting, the CAISO estimated IR costs to be $4-$9/MWh based on similar products including non-spin ancillary services. (DAME Stakeholder Meeting at 10:04-11:01.)
Please provide your organization’s comments on the proposed transitional measures for CAISO load-serving entities as described in Section 5, in context of the removal of inter-SC trading of imbalance reserves and the removal of the reverse settlement of reliability capacity revenue for RA capacity from the proposal:
The addition of IR and RC products will result in double-payments for contracted RA resources since the services IR and RC would provide are currently accessed by the CAISO through the RA must-offer obligation, a key provision in RA contracts. RA contracts are priced to cover generation costs and the opportunity costs of providing the must-offer obligation. The CAISO previously proposed Inter-Scheduling Coordinator trading (IST) and reverse settlement mechanisms as solutions to avoid double-payments of IR and RC to contracted RA resources. In the Draft Final Proposal, the CAISO removed those proposed mechanisms and instead proposed that parties perform contract renegotiations to avoid double payments.
The CAISO claims that “many stakeholders argued it would be more efficient and effective to let counterparties handle settlement of imbalance reserve revenues bilaterally than to use the CAISO’s inter-SC trading mechanism.” This description generally summarizes the comments of five resource owners or representatives of resource owners. However, six stakeholders representing LSEs or ratepayers commented that mechanisms must be developed to avoid IR and RC double-payments for contracted RA resources. CalCCA, PG&E, and SDG&E stated that some contracts may have existing provisions that can avoid some double-counting concerns, but ultimately recommended that the CAISO maintain or modify IST and/or implement reverse settlement mechanisms, or develop alternative mechanisms to address double-payments. SCE recommended that the CAISO use IST on a short-term basis and develop changes to CAISO’s settlement process to correct double-payments. Six Cities sought modification to reverse settlement and requested clarity on how IST could be implemented. Cal Advocates recommended that IST be made mandatory and enforceable.
Stakeholders noted that some contracts may include “Residual Unit Commitment (RUC) Availability Payments” language that would avoid contract double-payments. Some contracts may also include “RUC Successor” provisions that require counterparties to meet in good faith to amend a contract when new CAISO market products are created. Although not all contracts may include these provisions, RUC payments and RUC successor terminology may obviate the need for contract renegotiations or at least expedite contract renegotiations for those contracts that do include these provisions.
In order to help facilitate contract renegotiations between LSEs and resource owners if IR and RC are adopted, the CAISO should provide a statement addressing RUC successor and payment provisions in the DAME Final Proposal. The CAISO statement should address three issues: (1) whether the CAISO intends to consider IR and/or RC as “RUC Successor Products,” (2) whether RUC Availability Payments will be made after IR and RC is implemented, and (3) whether the CAISO would consider IR and/or RC payments to be RUC Availability Payments.
The CAISO has expressed a reluctance to be involved with contracting issues. However, given the significant cost impacts of implementing IR and RC, the CAISO must clarify whether IR and RC products are RUC successors or qualify for RUC availability payments.
A CAISO statement in the Final Proposal specifying how IR and RC align or don’t align with existing contract provisions would assist contract renegotiation and help to avoid costly litigation concerning contract interpretation. Contract renegotiations may lead to significant administrative costs given the volume of recent Integrated Resource Plan (IRP) procurement. Renegotiations also may not be feasible if a counterparty is not compelled to modify a contract when new market products are introduced. Lastly, a CAISO statement could clarify whether existing RUC payment and successor language removes the double-payment issue altogether; existing contracted RUC payment provisions could enable IR and RC payments to flow to specified counterparties in the same manner as RUC payments are handled today. Since the CAISO has removed its proposed solutions for RA double-payments, it should at least provide this clarifying statement to help avoid the additional ratepayer costs resulting from the introduction of IR and RC.
 CAISO, Day-Ahead Market Enhancements Stakeholder Workshop, September 14, 2022 at 7. Available at: http://www.caiso.com/InitiativeDocuments/Presentation-Day-AheadMarketEnhancements-Sep14-2022.pdf.
 See IST and reverse settlement summaries. CAISO, Day-Ahead Market Enhancements Fourth Revised Straw Proposal, October 26, 2022 (DAME Fourth Revised Straw Proposal) at 11-12. Available at: http://www.caiso.com/InitiativeDocuments/FourthRevisedStrawProposal-Day-AheadMarketEnhancements.pdf.
 DAME Fourth Revised Straw Proposal at 37-39, and 46.
 The CAISO would also provide information to facilitate renegotiations and establish a 3-year transitional period if parties agree to a 50-50 split of IR and/or RC revenues. (Draft Final Proposal at 7-8, and 54-55.)
 Draft Final Proposal at 7.
 See the November 15, 2022, party comments on the DAME Fourth Revised Straw Proposal: California Energy Storage Alliance (CESA), Independent Energy Producers Association (IEP), Middle River Power (MRP), Rev Renewables, and Wellhead Electric Company (Wellhead). Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/2da0b776-8a88-48cf-a87f-8424ed85477f.
 See the November 15, 2022, stakeholder comments on the DAME Fourth Revised Straw Proposal: California Community Choice Association (CalCCA), Cal Advocates, Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), San Diego Gas & Electric Company (SDG&E), and Six Cities.
 Cal Advocates comments on the DAME Fourth Revised Straw Proposal. Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/2da0b776-8a88-48cf-a87f-8424ed85477f#org-e4198ff8-cfa7-4251-b1b7-74987bf28b17.
 SDG&E describes RUC Availability Payment contract language as possibly avoiding double-payment issues. SDG&E requests that the CAISO clarify whether IR revenue would qualify as a RUC Availability Payment. (Comments of SDG&E on Draft Final Proposal at Response 4.) CalCCA also describes RUC payment contract provision but notes the possibility that not all contracts contain that provision. (Comments of CalCCA on Draft Final Proposal at Response 2.)
 During the DAME Stakeholder Meeting, SCE sought clarity on whether the CAISO considers IR and RC to be “RUC Successor Products.” The CAISO responded that it did not consider IR to be a RUC Successor Product and that the CAISO preferred to not participate in contract issues. (Dame Stakeholder Meeting at 1:38:59 to 1:44:17.)
 DAME Stakeholder Meeting at 1:38:59 to 1:44:17.
 Decision (D.) 19-11-016 and D.21-06-035 require 14,800 MW net qualifying capacity (NQC) of resources to come online by 2026, most of which is required to have a contract of ten years or more. 6,700 MW NQC from 200 projects are estimated to come online between 2022 and 2023. CPUC, Tracking Energy Development, May 20, 2022 at 6, filed in Rulemaking (R.) 20-05-003, Order Instituting Rulemaking to Continue Electric Integrated Resource Planning and Related Procurement Processes. Available at: https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/summer-2021-reliability/tracking-energy-development/cec-may-reliability-workshop-tracking-energy-development-may-2022.pdf.
 SDG&E requested that the CAISO clarify whether the new product payments would count as RUC Availability Payments, and that specification could help address the double payment issue. (Comments of SDG&E on the Fourth Revised Straw Proposal. Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/2da0b776-8a88-48cf-a87f-8424ed85477f#org-33b965a5-c86a-4c0e-8322-0c76794cbd64.)
 However, as noted by SCE, a portion of IR payments may be appropriately split between counterparties. (Comments of SCE on Draft Final Proposal.)