Comments on Draft Final Proposal - Phase 1

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

In January of 2021, the American Wind Energy Association (AWEA) merged with a new organization to become the American Clean Power Association (ACP). The American Clean Power Association works to champion policies that will transform the U.S. power grid to a low-cost, reliable, and renewable power system.  As a result of this merger, AWEA’s California affiliate, AWEA-California, is now American Clean Power - California (“ACP-California”), and will continue to represent companies that develop, own, and operate utility-scale wind, solar, storage, offshore wind, and transmission assets. 

ACP-California offers limited comments on the Phase 1 Draft Final Proposal in the RA Enhancements initiative. Our primary suggestion in these comments is that, if CAISO must implement a minimum state of charge proposal, it should be done on a temporary basis with a sunset date. This will help ensure that a meaningful effort is put forward in evaluating alternative approaches that would address CAISO’s concerns around ensuring discharge capabilities of storage resources, while not creating the inefficient solutions that will result from the proposed minimum state of charge requirement. Additionally, ACP-California notes two other areas for CAISO’s consideration in Phase 2 and other ongoing policy initiatives: reiterating an opposition to a UCAP calculation that treats similarly situated Hybrid and Co-Located projects differently, and requesting additional dialog with stakeholders round gird-charging of Hybrid resources.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

The proposal for operationalizing storage resources would implement a requirement, during certain system conditions, for RA storage resources to maintain minimum state of charge to preserve the amount of energy scheduled for discharge in the day-ahead market. This solution is, at best, an imperfect short-term solution to CAISO’s concerns about the real-time market depleting storage resources and leaving insufficient discharge capabilities to meet net peak load need. The proposal is an out-of-market solution which will, inherently, result in market inefficiencies and drive up costs. CAISO itself has acknowledged that other market enhancements may need to be reviewed in the future to address concerns about maintaining storage discharge capabilities in the real-time market solution.  

Therefore, if CAISO implements this minimum state of charge requirement for storage resources, it should be implemented as a temporary measure while CAISO evaluates other solutions (including extending the real-time market’s look-ahead period) and its application should be limited to true scarcity conditions. If a minimum state of charge requirement is implemented, it should include a “sunset” date, to ensure that something intended as a temporary solution does not become permanent simply because alternative options are not carefully considered and evaluated by CAISO. Additionally, CAISO should include restrictions (beyond those outlined in the Draft Final Proposal) to restrict the use of a minimum state of charge to instances where there is a real risk to reliability. Further considerations of the system conditions that would trigger the application of a minimum state of charge requirement should be discussed with stakeholders in a working group meeting prior to this proposal moving forward.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

ACP-California will provide additional comments on Phase 2 of this initiative at a later date. But we wish to highlight two concerns for further consideration and discussion with CAISO now.

First, as stated in many prior AWEA comments in this initiative, ACP-California is highly concerned about the proposed disparate UCAP calculations for similarly situated Hybrid and Co-Located Resources, which would likely serve to disadvantage Hybrid configurations. Additional comments will be provided in the response to the Phase 2 proposal. But, in the meantime, we encourage CAISO to consider the implications and incentives created by potentially discriminatory treatment of similarly situated projects that would occur as a result of this proposal. We encourage CAISO to consider alternatives that would allow for comparable treatment of Hybrid and Co-Located Resource. CAISO should also consider implementing UCAP proposals for Hybrids and Co-Located resources that are consistent with the approaches used by the CPUC through this RA Enhancements initiative and could consider alternative methodologies at a later date after gaining additional operational experience with these resources.

We also wish to draw CAISO’s attention to the impacts of its ongoing implementation of policies related to Hybrid resources. Through several initiatives, including this one, it appears as though CAISO’s policy implementation may make it difficult for Hybrid Resources to prevent grid charging (to address ITC-related concerns), even as a number of PPAs explicitly prevent grid charging. We encourage further dialog between CAISO and stakeholders to develop approaches that may better address CAISO’s concerns while addressing the commercial realities that will result from these resources being grid-charged. We look forward to the opportunities for additional discussion on this issue and hope that, through collaboration, a solution can be developed to address CAISO’s concerns as well as the implications to developers and offtakers.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

In summary, BPA agrees with CAISO’s approach to import RA and applauds its effort to continue to distinguish Non-Dynamic Resource Specific RA Import resources from unspecified import resources.  BPA supports the attestation requirements and overall principles associated with Import RA.  BPA feels strongly that a system of resources managed in concert, from a single BAA is more reliable than any one resource.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

 BPA agrees with CAISO’s approach to import RA.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

No additional comments.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

No additional comments.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

BPA supports the CAISO’s objectives and proposal as defined on page 29 and 30 of the 6^th revised straw proposal.  

For clarification, BPA suggests that the CAISO define the “last leg of interest" to be the last transmission leg to the scheduling tie point between the CAISO and adjacent BAA.   The CAISO should post a list of scheduling points at the tie points in order to help entities to ensure there is firm transmission on the last leg.

In addition, BPA supports the newly proposed day-ahead tagging timelines for Import RA.  

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

No additional comments.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No additional comments.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Boston Energy appreciates the ISO’s continued efforts to work with stakeholders to improve the ISO’s resource adequacy structure.  While the draft final proposal provides incremental improvements form the prior iteration Boston Energy has concerns with the ISO new Planned Outage Substitution Obligation (POSO) proposal and continues to oppose the ISO’s plan to impose an artificial constraint on energy storage resources ability to participate in the ISO’s market on the same footing as non-energy storage resources.  For these reasons, Boston Energy can’t support the ISO’s draft final proposal.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Boston Energy appreciates the ISO’s continued efforts to work with stakeholders to improve the ISO’s resource adequacy structure.  While the draft final proposal provides incremental improvements form the prior iteration Boston Energy has concerns with the ISO new Planned Outage Substitution Obligation (POSO) proposal and continues to oppose the ISO’s plan to impose an artificial constraint on energy storage resources ability to participate in the ISO’s market on the same footing as non-energy storage resources.  For these reasons, Boston Energy can’t support the ISO’s draft final proposal.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

First, Boston Energy would like the ISO to provide clarification on its proposal to “implement an immediate requirement for summer 2021 that all planned outages for RA resources must bring full substitute capacity for the outage to be approved”.  Does this mean the ISO is requiring upfront full substitute capacity for planned outages scheduled during only the Summer 2021 months or starting May 2021 forward?  This is a very important clarification as many resources have already scheduled fall and winter planned maintenance with the ISO. 

Second, Boston Energy continues to support an earlier ISO proposal for procurement of additional resource adequacy in the spring and fall to allow for planned outages to take place.  Reliability is goal #1 of an ISO.  Making it harder for critically needed resources to take planned outages is not a policy the ISO should be proposing.  We ask the ISO to reengage stakeholders on this issue and work to develop a proposal that improves reliability, not places reliability in jeopardy. 

Third, If the ISO’s proposal was to require upfront substitute capacity only for Summer 2021 months is to address reliability needs based on Summer 2020 heat events, Boston Energy would be in a better position to support this element of the proposal.  Most of the major planned outage work is completed prior to or after Summer and therefore from a resource planning and contracting standpoint we do not see this having a significant impact on planned worked that has been scheduled months in advance. Plus, such a proposal would not jeopardize reliability.

Fourth, If the ISO’s proposal is to start the upfront substitute capacity requirement Summer 2021 forward then the ISO needs to provide some grandfathering or exemption for resources that have already submitted fall 2021 planned maintenance outages.  Many resource submitted these outage in the fall of 2020 based on the existing planned outage substitution rules.  It’s unfair to change the rules in such a short fashion and put these resources in jeopardy now of having to cancel there already scheduled planned outage.  Alternatively, if the ISO does not feel grandfathering or an exemption is warranted then we ask the ISO to wait until Fall 2022 to implement this requirement for non-Summer months.Last, the existing planned outage substitution process is cumbersome and confusing but is a known quantity and something that market participants have navigated for some time now.  We ask the ISO to consider keeping the existing process in place until a phase 2 solution can be developed or institute the upfront requirement for Summer 2021 months only, while keeping the existing process in place for all other months.   

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

Boston Energy’s position from the very beginning has been that the ISO market principles of a three-settlement system should apply to all resource equally.  While we appreciate the ISO listening to stakeholders and limiting the enforcement of the minimum charge constraint, Boston Energy still views the current proposal as discriminatory against storage resource and not consistent with FERC Order 841.  The ISO should be working on policies to enhance the value of fast and flexible resources on its system, not restricting or limiting that value from being received by customers. Therefore, Boston Energy cannot support this element as currently proposed.

Consistent with feedback provided by CESA and other energy storage resource owners the only way to avoid discriminatory treatment of energy storage resources is to implement an opportunity cost payment that makes energy storage resources indifferent to whether the ISO restricted real-time market flexibility of not. Such an opportunity costs payment, if implemented properly, would accomplish this and given the ISO the reliability benefits the current energy market apparently is not. Such a method would calculate the energy lost opportunity associated with holding back the resource in real-time from otherwise economic energy dispatch.  The ISO has all the information to perform this calculation in clear and consistent manner.

An opportunity cost payment approach must be implemented at the same time the ISO starts enforcing the minimum charging constraint.  Without this payment structure we see no other way to avoid treating energy storage resources differently than all other resources participating in the ISO’s market.  If the ISO can’t commit to developing opportunity cost payments at the same time and enforcing this constraint then the ISO should postpone this element of the proposal.   

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Brookfield Renewable Trading and Marketing LP (BRTM) offers the following comments.

The CAISO proposes a transition to a resource-specific import RA paradigm with certain specific additional requirements. In general, BRTM supports the adoption of import RA rules that provide for the firm delivery of power to the CAISO when needed. BRTM also supports the development of import RA rules and are aligned with the best and standard practices and products employed in the larger Western Electricity Coordinating Council (“WECC”) bilateral market. Historically, entities throughout the WECC have relied upon and utilized such products as the Western Systems Power Pool (“WSPP”) Schedule C firm energy contracts to satisfy their broader RA needs and any rules adopted by the Commission should not prohibit use of such widely traded and demonstrably-reliable products. Similarly, BRTM supports import RA transmission requirements that are aligned with the practical realities of and best practices regarding the delivery of power. To that end, BRTM recommends that CAISO adopt import RA transmission requirements that ensure a low probability of curtailment and are aligned with the historical and practical realities of securing transmission service over transmission providers’ systems in the WECC. 

2. Provide your organization’s overall position on the draft final proposal – phase 1:

BRTM supports the proposal subject to the recommended modifications and caveats discussed below.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

BRTM has no comments on this issue.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

BRTM has no comments on this issue.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Resource Specificity

The CAISO proposes a transition to a resource-specific import RA paradigm with a voluntary/preparatory transition year for the 2022 RA compliance year and full implementation in the 2023 RA compliance year. Under the CAISO’s proposal, qualified resource-specific import RA resources would include pseudo-tied resource-specific resources, dynamically scheduled resource specific resources, and non-dynamic resource-specific system resources. Non-dynamic resource specific resources could include a single resource, a specified portfolio or aggregation of resources within a single balancing authority area (“BAA”), or a BAA’s pool/system of resources. Non-resource specific system resources would no longer qualify as import RA resources. The CAISO also states that WSPP Schedule C contracts could count if they satisfy the source (i.e., specify the source BAA), transmission, and attestation requirements specified in the CAISO proposal. WSPP contracts sourced from multiple BAAs would not qualify. Subject to certain concerns discussed below and with respect to the proposed attestation requirements, BRTM supports this general construct of the CAISO’s import RA proposal. With respect to source specification, BRTM recommends that the CAISO permit some flexibility with respect to WSPP Schedule C contracts. For example, when BRTM sources power from Palo Verde, while an initial source BAA is specified (and BRTM can provide this information in the T-45 timeframe), that source can change since there are multiple BAAs at the hub. BRTM recommends that the CAISO permit import RA suppliers to, if necessary, change the source BAA so long as the resource is delivered to the same CA intertie.

Delivery Requirements

With respect to import RA transmission requirements, the CAISO proposes a “last line in”  proposal wherein import RA resources would have to secure firm transmission (North American Reliability Corporation (“NERC”) Schedule 7F) over certain identified interties (i.e., the “last lines into CA”) but could procure monthly non-firm service (NERC Priority 5, NM) over upstream transmission legs, for example, over the northern portions of the Bonneville Power Administration’s (BPA’s) system. Such transmission service (firm and non-firm) would have to be procured by T-45 (forty-five days prior to the delivery month) so that a supplier could include it in its RA showing. BRTM supports the “last line in” proposal but continues to recommend that the CAISO permit import RA suppliers to procure as-available short-term firm transmission service on a day-prior basis or, if necessary, as-available non-firm transmission service wherein, if the non-firm service was curtailed, the import RA resource could either take a forced outage (which would count towards its CAISO-proposed UCAP value) or provide a substitute import RA resource that is deliverable (firm) to the intertie point. As shown in the data provided by the CAISO (see CAISO December 17, 2020, proposal at pp.46-47 and CAISO September 15-17, 2020 working group presentation at slides 96-120) it is typically the last line into California that is constrained and that the flowgates on the northern BPA system (e.g., North of John Day) typically have available capacity and are infrequently curtailed. As the data indicates, even under peak load conditions, these paths were not constrained. Moreover, BRTM observes that, in a change from historical practice, with the CAISO serving as reliability coordinator, unscheduled flow (USF) cuts only occur on the path contributing to the USF and not all transmission legs, thus further reducing the likelihood of transmission curtailments on the unconstrained paths in the northern portion of the BPA system. Most importantly, BRTM points out that, based on its experience, BPA does not offer non-firm or conditional firm service over these flowgates until the day prior (10PM release), once it knows what existing firm transmission capacity may be released/unused. It is our understanding that, in accordance with its established business practices, BPA calculates available transmission (ATC) by first deducting firm transmission requirements to determine available daily and hourly non-firm transmission. Furthermore, it is BRTM’s experience that, from an RA perspective, non-firm service is largely not available during the peak months, July through September. BRTM is concerned that overly stringent transmission requirements that do not take into account the operations of bordering markets, including a requirement to procure monthly non-firm transmission many weeks in advance of the delivery month, a product which is or may not be available in the BPA system for all or most of the time, will likely disqualify a large number of energy contracts from qualifying as RA and obstruct external entities from selling RA to California, especially as regional market/capacity conditions tighten and markets/entities outside of California are seeking supply.

Attestation Requirements

The CAISO also proposes certain attestation requirements for import RA resources. The CAISO states that the purpose of the attestation requirements is to ensure that the RA import capacity being shown on a supply plan has been committed only to the LSE and consequently the CAISO, and that same capacity has not been sold or otherwise committed to any other parties for the duration of the showing. To the extent the attestation requirements cannot be met, the CAISO states that the capacity could not be shown for RA purposes. Specifically, the CAISO proposes that the Scheduling Coordinator (SC) submitting the supply plans, which include RA import resources, must attest to the following elements at the time of submission of the supply plan:

• The capacity shown is owned or has been contractually secured;
• The capacity shown has not been sold or otherwise committed to any other party than the LSE identified on the plan;
  • Note that at the January 6, 2021, RA Enhancements meeting the CAISO stated that it was considering expanding the above requirement to require the RA supplier to state that: It expects the capacity shown will be available to support delivery of the RA import resource(s) to the CAISO, and will not be dependent on securing additional capacity to make it available; it expects the capacity shown will be surplus to its obligations to serve load or meet other commitments in the host BAA; and the capacity shown has not been, and will not be, sold or otherwise committed to any other party than the LSE identified on the plan.
• The capacity can only be interrupted for reliability reasons as determined under the host BAA’s tariff, a transmission curtailment, or a plant outage; and
• Transmission service of proper firmness has been reserved for the delivery of the RA import resource(s) to the CAISO.

The CAISO states that it proposes to implement the attestation requirements through a “check box” on the CAISO’s Customer Interface for Resource Adequacy (CIRA). If not checked/validated, the related supply plan would not be accepted. BRTM recommends further discussion and explanation of the proposed attestation requirements. Especially since a false representation could result in a tariff violation and/or referral to FERC, BRTM is concerned that the proposed requirements may entail making representations regarding information that a SC may not have regarding the status of a BAA’s resource position or transmission system. Specifically, BRTM is concerned with the use of phrases such as “or meet other commitments in the host BAA.” A SC can only make representations with respect to its own (owned or contracted) resources and the services it has procured from BAAs to support the delivery of such resources. The SC cannot make representations with respect to a BAA’s balance of resources or operating plans and capabilities.

Must-Offer Obligation

The CAISO is also proposing certain interim real-time bidding requirements for RA imports.  As stated by the CAISO, under current rules, RA imports have a day-ahead (DA) must offer obligation up to the full shown RA amount, and they are obligated to bid their full RA capacity into the real-time market for any hour in which they received any award from the day-ahead market. If they do not receive a day-ahead award for a given hour, then they are released from any further bidding obligations in the real-time market. The CAISO now proposes to extend the must offer obligation into the real-time market irrespective of the day-ahead market award for most RA imports. The CAISO states that, with implementation of the extended suite of day-ahead market products contemplated in the day-ahead market enhancements (DAME) initiative, the CAISO expects all RA imports will then have only a day-ahead market must offer obligation. Real-time market bidding obligations will then depend solely on the day-ahead market award and will apply regardless of RA status. Specifically, under the CAISO’s interim (pre-DAME) proposal, all non-dynamic resource specific RA import resources and short- and medium-start pseudo-tie and dynamic resources must bid their full capacity into the real-time market regardless of day-ahead market awards.  All other pseudo-tie and dynamic imports must bid their full RA capacity into the real-time market for any hour in which they receive a day-ahead market award. In general, BRTM does not oppose an extension of the import RA must-offer obligation into the real-time market. That said, such requirement should apply comparably across resources. It appears that CAISO’s proposal would not require long-start pseudo-tie or dynamic resources to bid into the real-time market unless they receive a day-ahead market award; however, long-start non-dynamic resource-specific resources would be required to bid into the real-time market irrespective of whether they receive a day-ahead market award. Such disparity in treatment of long-start resources is inequitable.

Tagging Requirements

The CAISO is proposing certain e-tag requirements for import RA resources. The CAISO explains that in prior initiatives, it developed tagging deadlines (to be implemented in 2021 for all imports) wherein at T-40, SCs must submit valid e-tags with the transmission profile equal to the economic bid or self-schedule, and at T-20 minutes, SCs must revise/update the energy profile of the e-tag.  The CAISO states that it is now considering the potential inclusion of a DA tagging requirement for RA imports so as to provide further visibility of the transmission service supporting RA imports. Specifically, under the CAISO proposal, it will require that SCs submit a DA e-tag (by 3pm) with only the transmission profile specified. The requirements for the subsequent e-tag deadlines (T-40, T-20) would remain as explained above. BRTM does not necessarily oppose a DA tagging requirement but is concerned that not all transmission in neighboring BAAs (such as the BPA system) is released prior to 3PM. As BRTM recommends above, the CAISO should permit import RA resources to rely on as-available short-term firm and non-firm transmission for the upstream (non-intertie) transmission segments. To the extent the CAISO adopts a 3PM DA tagging deadline, such a requirement would likely artificially constrain a market participant’s flexibility to deliver RA capacity from neighboring BAAs where transmission availability is not determined by the 3pm deadline.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

BRTM has no comments on this issue.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

BRTM has no comments on this issue.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

BRTM has no comments on this issue at this time.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

BRTM has not comments on this issue.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

BRTM has no additional comments.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Please see the following link for comments from the Department of Market Monitoring:

http://www.caiso.com/Documents/DMMCommentsonResourceAdequacyEnhancements-DraftFinalProposalPhase1-Jan212021.pdf 

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Please see item 1 for comments from the Department of Market Monitoring.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

Please see item 1 for comments from the Department of Market Monitoring.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Please see item 1 for comments from the Department of Market Monitoring.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Please see item 1 for comments from the Department of Market Monitoring.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

Please see item 1 for comments from the Department of Market Monitoring.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

Please see item 1 for comments from the Department of Market Monitoring.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

Please see item 1 for comments from the Department of Market Monitoring.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

Please see item 1 for comments from the Department of Market Monitoring.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Please see item 1 for comments from the Department of Market Monitoring.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

CalCCA continues to support CAISO’s RA Enhancements in general and appreciates CAISO’s efforts in developing the Draft Final Proposal. CalCCA offers comments on aspects of the Phase 1 elements below. In summary:

• While CalCCA would prefer a more immediate transition to a planned outage replacement margin approach, CalCCA is interested in exploring the planned outage replacement pool proposal in Phase 2 in the hope that it may ultimately result in the ability to remove planned outage substitution requirements.
• CalCCA supports CAISO’s proposal to ensure RA imports are verifiable and resource specific, including Non-Dynamic Resource-Specific Resource Adequacy Imports (single resources, specified portfolio or aggregation of resources within a single BAA, or a BAA’s pool/system of resources), Resource-specific system resources (dynamically scheduled) and pseudo-tie resources.
• CalCCA opposes CAISO’s proposal to require firm transmission on the last leg and no lower than Monthly Non-Firm PTP transmission on all other upstream legs. This new requirement unnecessarily burdens load within the CAISO, without a demonstrable associated benefit.  
• CalCCA appreciates the CAISO’s consideration of stakeholder feedback regarding the minimum state of charge requirement but continues to believe that it will hinder the ability of storage resources to respond to real-time conditions and is a poor substitute for a better optimized real-time market solution with a longer time horizon.
• CalCCA supports CAISO’s proposal to modify its existing CPM authority to procure additional capacity if CAISO identifies need to procure local RA after a local area or sub-area fails to meet the energy sufficiency test. It is crucial, however, that CAISO consider that capacity to be procured to meet local RA requirements will also be available to meet system RA requirements.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

CalCCA appreciates the consideration CAISO made regarding the advantages of creating an alternative to the relatively minor proposed Phase 1 enhancements to the current planned outage process and substitution requirements. Particularly, CalCCA agrees that removing planned outage substitution requirements will reduce withholding of capacity from the market, eliminate the need for resources to include a risk premium to cover any potential costs of replacement capacity and result in more supply being available lower cost. CalCCA continues to believe that a planned outage reserve margin approach would achieve these benefits, allowing for less replacement capacity need in aggregate than the interim replacement requirement, and reducing the amount of potential RA capacity that resource owners may hold in reserve to self-supply the increased amount of replacement capacity. While CalCCA would prefer a more immediate transition to a planned outage replacement margin approach, CalCCA is interested in exploring the planned outage replacement pool proposal in Phase 2 in the hope that it may ultimately result in the ability to remove planned outage substitution requirements.  CalCCA looks forward to working with the CAISO to continue developing the Phase 2 replacement pool approach.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

CalCCA supports CAISO’s proposal to ensure RA imports are verifiable and resource specific, including Non-Dynamic Resource-Specific Resource Adequacy Imports (single resources, specified portfolio or aggregation of resources within a single BAA, or a BAA’s pool/system of resources), Resource-specific system resources (dynamically scheduled) and pseudo-tie resources.

CalCCA opposes CAISO’s proposal to require firm transmission on the last leg and no lower than Monthly Non-Firm PTP transmission on all other upstream legs.  This new requirement unnecessarily burdens load within the CAISO, without a demonstrable associated benefit. While CAISO included data showing that the COB and NOB interties were near their transfer limits during the August 2020 outages, this does not actually demonstrate that the transmission that was used during those periods contributed to reduced reliability in CAISO. As the path operator of the California Oregon Intertie (COI), CAISO is required to allocate the available scheduling capability and available system transfer capability to the owners of the COI pro-rata based on their ownership, and to coordinate operations with BPA as the Pacific Northwest Path Operator.[1][2] The amount of COI capacity is known to CAISO and BPA prior to the operation of the CAISO Day Ahead and Real-time markets, and each will allow only as much energy to be scheduled on their respective portions of the COI path as can be accommodated by the available transmission facilities. facilities.  This means that any energy that clears the CAISO markets (DAM, HASP, FMM or RTD) can be expected to flow whether the schedules are using BPA Southern Intertie firm or non-firm transmission. In the event of post real-time market cuts to scheduled COI transactions, while there could be immediate cuts by BPA to schedules using non-firm transmission, within that class the cuts will be pro-rata and there is no reason to believe the schedules sinking to the CAISO BAA would be more or less likely to be using non-firm BPA Southern Intertie transmission than the schedules sinking to the non-CAISO BAAs. Even if a disproportionate share of the schedules to CAISO were cut initially, the situation would self-correct as soon as the new reduced transfer capability is reflected in subsequent real-time market runs, making the full amount of CAISO’s “share” of the now-reduced COI available to serve CAISO loads.[3]  It is also worth noting that; i. if only firm BPA Southern Intertie transmission were being used for all COI schedules, the CAISO would experience its pro-rata reduction in the COI path anyway; and ii. CAISO has no guarantees that the RA import resources won’t be displaced by resources with lower-priced bids in the real-time market, and those resources are not required to use firm transmission. Therefore, CAISO’s proposed last leg firm transmission requirement will not result in increased reliability for CAISO.

Further, CalCCA is concerned that CAISO’s analysis of the competitiveness of the COB and NOB interties reaches incorrect conclusions about California LSE’s ability to obtain firm transmission to meet the proposed RA requirements. The BPA Open Access Tariff mitigates the ability of the firm transmission rights holders from exercising market power by requiring them to release their unused rights into the real-time market. CAISO’s proposal would remove the ability for this mechanism to be effective by removing the risk that rights holders will have unused rights that must be released into the real-time market. The unfortunate result will be the unchecked ability to exercise market power in the firm transmission rights market. However, CAISO is not proposing to replace the no longer effective BPA mitigation mechanism with any other mechanism to mitigate the exercise of market power. This approach is flawed and likely to harm consumers in California.

Regarding assessing the competitiveness of the interties, CalCCA reaches a different conclusion from CAISO about the level of competitiveness of the BPA Southern Intertie rights used to provide deliveries to COB and NOB. As discussed during the stakeholder meeting, the Herfindahl-Hirschman Index (HHI) is a simple measure of market concentration. Putting aside for a moment the drawbacks of using simplistic measures to assess complex markets, the data provided by CAISO shows that the HHI for NOB indicates that the firm transmission rights are highly concentrated (HHI >2500), with 2760 HHI in August 2021 and nearly 2900 HHI in December 2021.^[4] The combined COB/NOB firm transmission rights approach or exceed the 1500 HHI threshold indicating they are moderately concentrated, with 1429 HHI in August 2021 and 1594 HHI in December 2021. This is before considering the impact of control of generation and without taking into consideration that a portion of the intertie rights will be held by entities that already have load serving obligations, so the net capacity available to the market will be less than the total capacity. The simple HHI calculations therefore do not take into consideration the net capacity available and overstate the competitiveness of the market.

Further, because buyers need to acquire both transmission and generation, considering only transmission holdings misses an important part of the picture. There is a much more limited set of potential suppliers that have access to both generation and transmission. The CAISO’s analysis completely ignores this point. Parties with dominant positions in firm transmission rights potentially could demand excess payments for the firm transmission to a level that prevents third party generators without firm rights from competing in the RA market. Contrast this with the current environment in which all generators with available generation capacity have the opportunity to compete to deliver the energy from their resources to COB and NOB. Not only is CAISO overstating the existing competitiveness of the firm transmission market, but its proposal will also exacerbate concerns over market power that parties have under the current market structure without this new requirement.

Finally, the CAISO itself does not rely on measures as simplistic as HHI to determine competitiveness in its market. Instead, CAISO uses the competitive path assessment that applies a three pivotal supplier test that is much more stringent in identifying the potential for the exercise of market power. While that test focuses on control over generation capacity and does not take into consideration control over the constrained transmission facilities (since within its markets no party is allowed to withhold transmission capacity from the CAISO markets), CAISO nevertheless should consider a more rigorous analysis of the potential for parties to exercise market power in the combined generation and transmission markets for which CAISO is proposing to implement new RA import requirements.

[1] First Amendment to the Second Amended COI-POA California-Oregon Intertie Path Operating Agreement Among Pacific Gas and Electric Company, PacifiCorp, the Transmission Agency of Northern California, Western Area Power Administration, And California Independent System Operator Corporation December 15, 2020

[2] This discussion focuses on the COI, but similar conclusions can be drawn related to the operation of the Pacific DC Intertie for schedule at the Nevada Oregon Border (NOB).

[3] CAISO has provided no evidence that the other California BAs have similar firm transmission requirements for imports into their BAAs as CAISO is proposing to impose within its BAA. In its comments on the January 12 and 13 Summer 2021 Readiness, CalCCA has identified issues and raised questions about the treatment of loads and exports, that should be considered before adopting CAISO’s RA import firm transmission proposal.

[4] It is important to recognize that CAISO requires LSEs to have MIC allocations for specific interties to be able to count Import RA towards their obligations, so the COB and NOB import rights are not interchangeable within the CAISO for Resource Adequacy purposes.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

CalCCA appreciates the CAISO’s consideration of stakeholder feedback regarding the minimum state of charge requirement but continues to question the efficacy and fairness of CAISO’s proposal. Specifically, CalCCA continues to believe that the minimum charge requirement will hinder the ability of storage resources to respond to real-time conditions and is a poor substitute for a better optimized real-time market solution with a longer time horizon. While the two proposed changes to 1) limit the constraint to days when non-storage resources are within less than 110% of need and 2) allow for charging to occur at the later of the period based on the day-ahead market awards or when day-ahead prices are lowest may provide storage resources with marginally more flexibility in terms of meeting CAISO’s constraints, they also introduce uncertainty and complexity. CalCCA encourages CAISO to consider a more viable, long-term solution to operationalizing storage resources that does not overprescribe market participation and inadvertently reduce the ability to utilize the flexibility of the storage fleet, such as including a longer horizon in the real-time market or, in the interim, re-running the Integrated Forward Market multiple times each day to capture changed conditions, as proposed by CalCCA in previous comments. While CalCCA appreciates the challenges associated with developing a longer real-time optimization model, these efforts are prudent given the significant volumes of storage coming online.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

CalCCA supports CAISO’s proposal to modify its existing CPM authority to procure additional capacity if CAISO identifies need to procure local RA after a local area or sub-area fails to meet the energy sufficiency test. It is crucial, however, that CAISO consider that capacity to be procured to meet local RA requirements will also be available to meet system RA requirements. Thus, when assessing the system level portfolio performance, CAISO should consider the impact of potential local RA CPM procurement to avoid over procurement.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

CDWR supports phased development and implementation of various aspects of RA enhancements proposal.

CAISO is proposing to develop a new resource adequacy test that will ensure there is sufficient capacity to not only meet both gross and net peak load needs, but, just as importantly, to ensure sufficient energy is available within the RA fleet to meet load requirements for all hours of the year. It is CDWR’s understanding that LSEs at the individual level meet system coincident peak demand (at CAISO system gross load) with the generic RA obligation whereas the net peak load and all- hours energy needs are assessed in aggregate in the CAISO system. LSEs meet these requirements through the combined effect of flexible RA requirements and generic RA requirements. Any shortfall in net peak load and all-hour energy requirements would be a collective shortfall that can be cured by LSEs or the shortfall can be fulfilled by CAISO backstop procurements.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

 Support with caveats.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

With compliance requirement in terms of UCAP/NQC and demand based on 1 in 5 (about 4% above 1 in 2) requirements, CDWR estimates that the minimum requirement will be about 19% planning reserve margin (PRM) assuming 10% forced outage rates of shown resources compared to static standard of 15% PRM today.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

The Phase 1 (summer 2021) proposal requires that all planned outages for RA resources must bring full substitute capacity for the outage to be approved. CDWR needs clarity on the supply plans  submitted at T-45: a) will CAISO validate the plan if a resource in the plan has submitted a planned outage request that is not approved by CAISO at the time of submission ? b) if the resource in the plan does not have sufficient substitute capacity, will the validation system accept the portion of the capacity reduced due to outage? c) does CAISO require substitution capacity for planned outages submitted after T-45? e) if no substitution is provided for planned outages submitted after T-45, will the plan be considered deficient and treated as forced outage for UCAP calculation?  

CDWR also recognizes that substitution for planned outage capacity may not be available all the time. If the validation process rejects such capacity, it could be prevented from providing RA capacity for the whole month due to the supplier being unable to find a substitution, even for a fraction of a month. In order to minimize such risks, CDWR proposes to reduce the substitution capacity requirement to below 100% for the planned outage to be approved in recognition of the fact that no organized and functional substitution capacity market exists today. If a resource submits a planned outage before T-45 and can not find the required substitution even if for only for one day of the planned outage period, under the current proposal, it would be disqualified for providing RA for the whole month resulting in adverse impact on grid reliability for the rest of the 30 days for the month. If that single day substitution requirement is waived off, the resource could provide 30 days of RA obligation which is more valuable for the grid reliability. Therefore, reducing 100% requirement to some appropriate level in terms of capacity and time span could be helpful for overall grid reliability, as well as cost effective for suppliers.    

The day 2 presentation slide 4 indicates that in Phase 2, CAISO will explore the possibility of allowing planned outages during the summer months, when and if operationally appropriate. Does this mean that, in Phase 1, RA resources will be barred from taking planned outage in summer months? 

CDWR supports development of planned outage pool and a calendar in phase 2.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Compared to the fifth revised straw proposal, the CAISO provides further clarifications and specifications on RA import source requirements, transmission delivery requirements, and the associated attestation requirement. CDWR supports two-phased implementation plans with 2022 being a bridge year and 2023 being a full compliance year, allowing time for revisions to be made in the existing contracts for RA import. CDWR supports the provision to allow a pool or system of resources in the sending BAA as satisfying physical resource qualification for a non-dynamic resource specific import.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

No comments at this time.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No comments at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

The ISO’s evaluation of the resource adequacy (RA) framework must be undertaken carefully and with strong considerations of stakeholder input. The ISO should recognize that, as the grid evolves and the challenges ahead transform, multiple stakeholder initiatives may be needed to fully develop the reforms needed to sustain reliability and market efficiency while advancing the State’s clean energy goals. In this context, substantial modifications that remain incomplete or have not been properly vetted and tested should be avoided insofar as they may materially disrupt contracts or yield inefficient or ineffective market outcomes.

While CESA supports the fundamental goals and objectives behind the ISO’s proposals detailed in the Draft Final Proposal, CESA strongly opposes several aspects of the market design proposed within the RA Enhancements initiative. Most of CESA’s reservations on the Draft Final Proposal relate to the minimum state-of-charge (MSOC) requirement. As CESA has noted previously, this proposal has not been properly discussed or developed from a procedural perspective. The MSOC requirement has been pursued despite its omission in the initial scoping of this initiative, its transfer to another initiative, and its later reintroduction to the present initiative. Moreover, as the ISO moves forward with its 2021 Summer Readiness Initiative, the MSOC proposal has now been positioned for “expedited approval” by Summer 2021 despite its significant deficiencies and the lack of broad stakeholder support. These procedural issues must not be disregarded as they could significantly hinder the ISO’s commitment to a public and transparent policy process.

In terms of the material modifications considered by the MSOC proposal, CESA remains opposed given the ISO has not demonstrated the need and urgency for such a reform. While CESA appreciates the modifications included to this proposal in light of the feedback offered by the Market Surveillance Committee (MSC), key elements of this proposal remain incomplete. Namely, CESA requests the ISO provides stakeholders with information related to the likelihood and frequency that the MSOC will be triggered, as well as put forth proposals related to reevaluating the need for this restriction given real-time sufficiency and the settlement structure applicable for resources under an MSOC requirement.

CESA respects and shares the ISO’s commitment to reliability. Furthermore, CESA acknowledges the hard work of the members of the ISO staff that have diligently worked to incorporate stakeholder feedback on these issues. Given the current status of this initiative, however, it is necessary to continue this collaboration in order to reach a viable, cohesive solution. As such, CESA recommends a series of modifications to this initiative’s schedule, highlighting areas where additional stakeholder engagement is required.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

CESA offers no comments at this time.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Phase 1

CESA considers the ISO's proposal to require all resource adequacy resources requesting planned outages to submit substitute capacity overlooks the benefits of assigning the substitution obligation to the load-serving entities (LSEs). LSEs have a more complete visibility into their RA requirements and portfolios, making them uniquely capable of understanding and managing the risk related to outage substitutions. As a result, placing the onus of substitution directly on resources might not lead to efficient outage planning. CESA recommends the ISO reevalutaes this component of its Phase 1 proposal. 

Phase 2 

In comments submitted April 2020, CESA supported the ISO's proposal to establish a planned outage reserve margin for off-peak months ("Option 1" within the Fourth Revised Straw Proposal). In those comments, CESA noted said proposal provides the correct incentives for LSEs to procure and plan ahead in order to minimize the risks related with planned outages; while sending market signals related to the need for increased RA-related procurement.

The establishment of a planned outage reserve margin for all months, provided outages during summer months are still allowed, continues to be an outcome CESA supports. Such a tool would incent LSEs and scheduling cordinators (SCs) to plan ahead and conduct procurement activities in a timely fashion. As such, CESA recommends the ISO draws from the proposals put forth in the Fourth and Fifth Straw Proposals when developing its planned outage pool proposal.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

CESA offers no comments at this time.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

CESA agrees with the ISO’s commitment to maintain grid reliability, particularly after the events of August 2020. While CESA shares this commitment, we oppose the ISO’s approach relative to energy storage resources. The MSOC proposal, as currently drafted, is incomplete and does not represent a workable solution. This proposal, as CESA has stated repeatedly in previous commenting opportunities and stakeholder calls, is discriminatory, unduly burdensome, and creates a marketplace that is adverse to the deployment of resources known to be needed for the overall reliability of California’s electric sector. From a system perspective, the MSOC proposal has the potential to cause severe market inefficiencies, increase the overall costs of running the electric grid, and minimize the capacity available to the ISO in moments of material supply constraints. Moreover, from the perspective of resource developers, the MSOC proposal would seriously hinder the economic viability of storage resources, as it would harm already executed Resource Adequacy (RA) contracts and would require future projects to recuperate their costs outside of the real-time (RT) market, forcing them to seek higher compensation in the form of more expensive RA contracts. While CESA recognizes the efforts of the ISO to incorporate the feedback offered by us and other stakeholders, there is much work to be done on this proposal. In this context, CESA offers the following comments on the MSOC proposal:

• The ISO should defer the implementation of the MSOC proposal to Summer 2022 by recategorizing it as a “Phase 1B” issue.
• For a Phase 1B implementation of the MSOC proposal, the ISO must focus on developing a settlement structure to make whole resources that have had MSOC applied to them.
• The ISO should clarify the MSOC is an interim solution that will be lifted when the necessary modifications are implemented.
  • The ISO should revise the current multi-interval optimization (MIO) software to achieve desirable state-of-charge (SOC) outcomes. 
  • The ISO should extend the look-ahead horizon of the RT market optimization software. 
  • The ISO should develop an energy shifting product through this or other pertinent initiatives.

The ISO Should Defer the Implementation of the MSOC Proposal to Summer 2022 by Recategorizing it as a Phase 1B Issue.

CESA opposes the classification of the MSOC proposal as defined in the Draft Final Proposal. Currently, the MSOC proposal is included as a Phase 1 issue, targeting Fall 2021 implementation.[1] This categorization is unwarranted as the proposal has not been fully developed and lacks essential elements, such as a thorough empirical analysis on the nature of the requirement’s trigger and a clear compensation structure to make whole resources that would be forced out of the RT market due to MSOC implementation. This issue is further aggravated by the ISO’s intent to expedite the implementation of this proposal to Summer 2021 as part of the 2021 Summer Readiness Initiative.[2] The ISO’s haste to implement an incomplete and unduly discriminatory proposal does not mitigate the potential reliability risks of Summer 2021; it instead has the potential to exacerbate them.

On January 13, 2021, the ISO, along with the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC), published the Final Root Cause Analysis related to the August 2020 Heat Wave.[3] This analysis highlights it is not possible to derive conclusions on the role of energy storage given the marginal amount of storage assets to date.[4] This statement shows that energy storage had a limited impact on the events that transpired in August 2020; nevertheless, the ISO has made it a priority to establish rules that enable the grid operator to restrict the market opportunities of storage assets as quickly as possible, despite the lack of evidence signaling such reforms are needed. Moreover, the ISO’s proposal is currently incomplete, exposing buyers and sellers alike to significant financial and operational risks.

First, CESA is concerned with the lack of analysis related to the impacts of the MSOC proposal as currently drafted. In the Draft Final Proposal, the ISO recommends establishing an MSOC requirement which would be triggered solely on the days where 110% of the load cannot be covered by non-storage resources. It is unclear how the ISO concluded this was a reasonable trigger condition, as it does not perfectly correlate to a particular reliability metric. Furthermore, it is unclear how this trigger will interact with the resource mix as currently planned storage enters the market. As energy storage incorporates into the grid to support the State’s clean energy goals, establishing an unvetted trigger condition risks the possibility that MSOC will be triggered increasingly often, severely hindering the availability of flexible, responsive capacity across the ISO’s footprint. Such an outcome would endanger reliability, particularly in periods of grid stress. As such, it is necessary to properly vet this proposal as to limit potentially counterproductive results in the years to come. Furthermore, the current MSOC proposal does not contemplate the possibility for RT conditions to be substantially different from those observed in the DA market runs. A proposal that would limit a resource’s ability to participate in the RT market based on forecasts must be equipped with a methodology that allows for the relaxation or removal of said restrictions if market conditions allow. Not doing so would resolve in substantial market efficiency losses. In order to address this deficiency, the ISO should collaborate with stakeholders to incorporate a sufficiency test during the day to determine if the MSOC is still needed.

Second, the current proposal does not include settlement or compensation provisions to make whole resources that have been affected by the implementation of the MSOC requirement. CESA has noted this deficiency to the ISO previously, offering potential settlement constructs based on the exceptional dispatch (ED) paradigm; nevertheless, the proposal remains incomplete. This omission by the ISO only increases the risks faced by developers, as they would need to contemplate revenue streams different than the RT market to ensure they are well-positioned to fully recover their costs. As a result, the lack of a clear settlement process has the potential to impact Californian ratepayers directly. CESA elaborates on this in the following section of these comments.

In this context, it is clear the ISO’s MSOC proposal is neither urgent nor ready for implementation and must be deferred. To do so and ensure that energy storage assets are properly positioned to support grid reliability in Summer 2022, CESA recommends creating a Phase 1B within this initiative. Phase 1B would include the MSOC proposal and would be set for implementation for the ISO’s Spring 2022 Update. CESA recommends that this deferral is accompanied with a commitment by the ISO to work through the issues related to settlement, as described below.

For A Summer 2022 Implementation of the MSOC Proposal, The ISO Must Focus on Developing a Settlement Structure to Make Whole Resources That Have Had MSOC Applied to Them.

As mentioned above, CESA has indicated the need for a settlement structure within the MSOC proposal. As currently drafted, the MSOC proposal would not compensate energy storage resources for the reliability value they provide while under MSOC. This is an undesirable outcome, as it lowers the market value of these assets and fails to compensate them for their full capability. Given CESA’s proposal to create a Phase 1B to ensure this proposal is implemented by Summer 2022, CESA recommends the ISO focus on a settlement methodology. To reach this state, CESA offers two recommendations for the ISO to explore.

First, CESA considers the Bid Cost Recovery (BCR) framework could be modified to fully apply to resources affected by a triggering of the MSOC requirement. Currently, the BCR mechanism does not properly address the losses non-generator resources (NGRs) incur when following CAISO dispatch, an issue specifically related to the settlement charge code being zero at the end of the day. These losses are essentially overlooked due to the way BCR is set up: this mechanism has been built with conventional generating resources in mind and is not properly equipped to incorporate the complexities related to storage assets. Given the limitations of this construct, CESA recommends modifying it to capture the actual economics that drive the market behavior of NGRs. This can be accomplished by using a backtest of what a resource would have earned if it was a price taker and its bid curve had been honored in each hour, considering the actual prevailing locational marginal prices (LMPs) in each of the DA, Fifteen-Minute, and Five-Minute market runs for the day. This proposal is detailed further in the comments submitted by LS Power on the 2021 Summer Readiness Initiative. CESA supports this approach and urges the ISO to closely consider it. CESA understands a reframing of BCR could take time since there are issues today regarding how BCR applies to storage resources; as such, it is essential to modify the implementation timeline of this proposal as detailed in the previous section of this comments.

Second, as CESA has proposed previously, the ISO could create a settlement structure for MSOC based on the one applied in the ED framework. CESA first offered this recommendation in informal comments to this initiative. For ease, CESA includes this proposal below:

CESA considers the settlement prices for resource i on interval t could be derived as follows:

For charging:

For discharging:

This definition of settlement, while useful and viable as it is applicable for ED, is not fully equipped for MSOC use as it cannot integrate the opportunity costs faced by a storage asset that has been compelled to forego market revenues in order to ensure later, potentially uneconomic, dispatch. Considering the ISO’s efforts in the Day-Ahead Market Enhancements (DAME) Initiative, it is important to mention that, eventually, the DA market will co-optimize energy, ancillary services (AS), and imbalance reserve awards. As a result, the main revenue stream affected by the application of the MSOC would be RT energy revenues. Thus, CESA recommends the ISO focus its attention within the RA Enhancements Initiative to develop means to account for RT energy opportunity costs within the MSOC construct. Given the complexity of estimating different counterfactual operating scenarios, focusing on RT energy arbitrage would enable a viable opportunity cost framework. To initiate this conversation, CESA suggested in previous comments that the ISO should consider its work on storage opportunity costs within Phase 4 of the ESDER Initiative. For the development of default energy bids (DEBs) for storage, the ISO simplified opportunity costs as the assumption that a resource would deplete its total charge during the period (hour) with the 4th highest price per the DA market. Since the MSOC methodology currently does not capture potential RT energy revenues? and in order to maintain simplicity, CESA recommends the ISO consider a methodology similar to that of ESDER. In this potential methodology, the opportunity cost proxy for a 4-hour battery storage resource could be defined as:

This definition would allow the ISO to compare the net revenue associated with settlement via the formulae described above to that assumption of complete discharge during a 4-hour period priced as the four highest-priced hours. As long-duration energy storage (LDES) is becoming increasingly available within California, this methodology should be adapted to a resource’s particular duration. Thus, the ISO should pay the resource the maximum of either the settlement amount or the opportunity cost:

The ISO Should Clarify the MSOC is an Interim Solution That Will Be Lifted When the Necessary Modifications are Implemented.

The ISO has a long-standing commitment to market-oriented, non-discriminatory solutions that yield economic and efficient results. As noted by CESA and other stakeholders such as the Department of Market Monitoring (DMM), the CPUC’s Energy Division, and the Western Power Trading Forum (WPTF), the MSOC proposal does not uphold said principles. CESA understands that as California’s resource mix dramatically evolves and the effects of anthropogenic climate change become more present, the ISO’s reliability concerns have become more salient. In light of the ISO’s responsibility to keep the lights on, CESA understands the need to apply sub-optimal solutions in an interim manner to mitigate said risks.

The MSOC proposal, however, does not address the core issues behind the ISO’s RT market optimization, nor does it prepare the grid for further storage development. Namely, this proposal does not cure the deficiencies related to the RT market’s optimization look-ahead, the MIO mechanism, and the ISO market’s ability to incent daily energy arbitrage. In this context, it would be detrimental to the ISO, and all market participants, to commit to an incomplete solution on a permanent basis. To minimize these risks, CESA urges that the ISO formally deems the MSOC proposal as an interim solution and commits to work, along with stakeholders, on the following issues:

• The ISO should revise the current MIO software to achieve desirable SOC outcomes: The current MIO tool does not adequately process the bid curves submitted by storage assets. This is due to the tools focus on conventional resources. As a result, the MIO software’s operation can lead to undesired discharge in intervals prior to the evening peak, potentially causing reliability concerns similar to the ones the ISO seeks to mitigate with the MSOC proposal. In order to address the limitations of MIO, CESA supports the proposals made by LS Power. LS Power offers two solutions for this issue: (1) link real-time dispatch (RTD) instructions directly to the binding interval and not the advisory intervals; or, (2) reduce the number of advisory intervals for NGRs from 13 to two or three. CESA agrees with these recommendations as resource owners already face strong incentives to align their behavior with reliability-driven outcome (i.e. abide by their DA schedules given the penalties associated to them). Another potential solution to this issue can be found in the experiences of other ISOs, such as the Electric Reliability Council of Texas (ERCOT). In order to allow storage assets to manage their SOC in a more granular manner, ERCOT has adopted a modification that will allow storage to update its bid curves at every five-minute interval, rather than submitting bid curves for all five-minute intervals for the following hour. This is a market-oriented solution that allows resource owners to operate based on their own forecasts, putting the operational onus on them to perform adequately given these and other applicable incentives.
• The ISO should extend the look-ahead horizon of the RT market optimization software: The ISO must invest in optimization schemes with longer look-ahead periods in preparation for times when battery storage penetration is significant. As currently drafted, the ISO’s MSOC proposal seeks to prematurely address an issue that, while significant, does not pose great reliability risks in the present time. Considering energy storage will be deployed en masse in the coming years, investments in better optimization software are needed in order to prepare the ISO to mitigate this risk.
• The ISO should develop an energy shifting product through this or other pertinent initiatives: The heart of the issue that ISO has tried to solve with its MSOC proposal lies in the need to properly incent storage assets to engage in daily diurnal energy arbitrage. Instead of out-of-market or command-and-control solutions, this behavior can be incentivized if adequate market signals are communicated to resources in the form of energy products/services they can provide and be compensated for. Currently, the CPUC estimates that around 11 GW of energy storage will be needed by 2030 in order to meet California’s ambitious energy goals. Given the growth of energy storage is directly related to the State’s commitment to decarbonization, the ISO would be amiss to defer the creation of a market product that properly guides energy storage to participate in an efficient way and provides compensation accordingly. Thus, CESA recommends the ISO, through this or other pertinent initiatives such as a new Phase 5 of the Energy Storage and Distributed Energy Resources (ESDER) Initiative, commits to develop such a framework in order to unlock the potential of and fairly value all energy storage resources.

[1] Draft Final Proposal, at 8.

[2] This was communicated by the ISO in the 2021 Summer Readiness stakeholder update call on January 19^th, 2021.

[3] See CAISO et al, Final Root Cause Analysis, January 2021.

[4] CAISO et al, Final Root Cause Analysis, January 2021, at 60.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

CESA offers no comments at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

As noted in the response to Question 6, CESA recommends the ISO modify the proposed phases to accommodate necessary discussion regarding the MSOC proposal. As such, CESA recommends moving the “Operationalizing Storage” section of the Draft Final Proposal to a new Phase 1B, slated for implementation Summer 2022. CESA considers this modification is necessary to allow ISO staff and stakeholders to work jointly in curing the deficiencies related to the application (i.e. trigger condition) and settlement of the MSOC proposal. As currently drafted, this proposal is not ready to be feasibly implemented by Fall of this year without the potential for substantial market disruption. In light of this recommendation, CESA offers the following revised schedule for the present initiative:

Phase 1A (Fall 2021 for RA year 2022)

March 2021 Board of Governors

• Planned outage process enhancements – phase 1 (Applicable prior to Summer 2021)
• RA Import requirements
• Operationalizing storage
• Backstop capacity procurement – CPM for local energy sufficiency

Phase 1B (Summer 2022)

September 2021 Board of Governors (Phase 1B)

• Operationalizing storage

Phase 2 (Fall 2022 for RA year 2023)

May 2021 Board of Governors (Phase 2A)

• Unforced capacity evaluations
• Determining system RA requirements
• System RA showings and sufficiency testing – individual assessments
• Must offer obligations and bid insertion modifications
• UCAP for local studies
• Backstop capacity procurement – CPM modifications and availability penalty structure for RMR resources

September 2021 Board of Governors (Phase 2B)

• Planned outage process enhancements – phase 2
• System RA showings and sufficiency testing - portfolio assessment
• Flexible resource adequacy

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

CESA offers no comments at this time.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

CESA offers no comments at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

2. Provide your organization’s overall position on the draft final proposal – phase 1:

• Support some aspects with caveats, oppose others

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

In its sixth revised straw proposal CAISO proposes two phases for addressing modifications to its planned outage substitution obligation (POSO).  The first phase would be implemented for summer 2021 and would disallow planned outages for RA resources without replacement capacity. Under its proposal, CAISO would deny any planned outage requests for RA resources that do not provide substitute capacity.  The second phase would be to “vet in subsequent revised straw proposals, a longer-term proposal for a planned outage resource pool concept effective for RA year 2023 and beyond.” This second phase will also “explore the possibility of allowing planned outages during the summer months, when and if operationally appropriate.” 

In prior comments Staff voiced concern with this approach encouraging the CAISO to examine all the planned outages it would have denied in the last year had this proposal been implemented. Staff requested that CAISO use this data to perform an analysis of whether there will be enough excess supply available to accommodate this proposal, especially since import capacity is unable to provide substitution. 

Staff would like to first acknowledge the CAISO’s efforts in trying to address inefficiencies with its planned outage substitution obligation (POSO) mechanism. Staff recognizes the difficulty with trying to balance flexibility in allowing RA resources to take planned outages and ensuring those resources are available when needed to meet monthly reliability needs.  This is becoming increasingly challenging under the tight supply conditions California is experiencing.  Therefore, Staff supports the CAISO’s phase 1 proposal, to require substitute capacity for any RA resource that seeks to take a planned outage during the summer months.

Prior to moving the planned outage substitution obligation to CAISO, CPUC had in place planned outage replacement rules, originally adopted in D.06-07-031, that would lower the amount of NQC an LSE could count towards its system RA requirement for the applicable filing month.  Using CAISO’s prior outage management system, SLIC, Energy Division would verify RA capacity against scheduled outage information and allow only capacity that was not under a scheduled outage to count towards an LSE’s system RA requirements subject to the outage rules reflected in the table below.

Counting Resources with Scheduled Outages

When proposing to eliminate these rules and move the outage replacement obligation to CAISO, Energy Division proposed criteria for a future CAISO tariff based planned outage rule (approved by FERC), noting that it should:

1. Allow the CAISO to reliably operate the system including outage coordination with a reserve margin that may be lower than 15% due to resource outages.
2. Allow the CAISO to accept or deny outages within all the North American Electric Reliability Corporation (NERC) - Western Electricity Coordination Council (WECC) operating constraints the CAISO currently is required to maintain.
3. Rely solely on CAISO and suppliers of RA capacity to manage and coordinate unit outages, without interaction with the LSE that contracted that unit or consultation of the contract with the unit.   Rely solely on CAISO tariff authority over the unit as a provider of RA capacity
4. Remove LSEs completely from the coordination of unit outages such that the CPUC would not need to maintain rules to govern LSE behavior related to performance of RA contracted and committed units.
5. Create a specific penalty/incentive structure to limit the amount of time RA units are on outage.[1]

Staff would like to see the second phase of this initiative address these criterions as CAISO moves forward to establish a more durable POSO mechanism.  

Staff also encourages CAISO to look at current 2021 approved planned outages in its Outage Management System (OMS) and evaluate the impact and feasibility of it’s phase 1 proposal.

[1] R.09-10-032, D.11-06-022 at 26, November 30^th, 2010 Energy Division Staff Proposal- https://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442452644

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Staff appreciates the CAISO efforts to further advance its RA import proposal.  However, Staff raises several concerns with the CAISO’s current proposal including the incompatibility between the CAISO’s proposed rules and the CPUC’s current import rules. 

In the Commission’s recent import RA decision, D.20-06-028, it stated that “the Commission seeks to adopt RA import requirements that best address the following objectives: (1) requirements that effectively address speculative supply and double counting issues, (2) requirements that are implementable in the near term, and (3) requirements that reasonably balance reliability and costs to ratepayers.”[1] The Commission found that Energy Division’s “firm energy delivery” requirement best addresses the stated objectives.  Firm energy contracts (delivery of energy over standard time periods (e.g., on-peak)) paired with maximum import allocations have long been used for RA in California and have not raised concerns of speculative supply since the contracts require energy delivery and, not merely a “bid” into CAISO markets.

It further stated that the CAISO/Powerex’s proposal “may not address speculative supply issues if these resources bid at high prices and use the energy to serve native load or sell it elsewhere.  Thus, the metering and telemetry requirements and the degree to which these RA resources are made available to the CAISO and applicable CAISO rules are important considerations.  In addition, we agree with parties that it will take time to implement these modifications through CAISO’s stakeholder processes and FERC approval, and for the Commission to consider whether these modifications sufficiently address the speculative supply concerns.”[2]

In its 6^th draft final straw proposal, CAISO provides further specifics and clarifications regarding transmission delivery, source specification and attestations to its proposal. Specifically, CAISO is requiring source specification, firm transmission and an attestation “that the capacity of the resource is not sold or otherwise committed to any other entity and is not being used in connection with any other capacity or resource adequacy construct in the applicable RA compliance month or showing timeframe.”[3]

Additionally, the revised proposal includes a two-step implementation process that would make 2022 a non-binding year where importers would be encouraged but not required to meet the requirements. Full compliance would begin with the 2023 compliance year. Finally, CAISO is proposing that its import requirements would be minimum requirements that must be met in order for CAISO to allow the import to count towards meeting an LSE’s RA requirements.   CAISO claims that setting of minimum requirements will ensure reliable and dependable RA imports and will ensure consistent quality and attributes of RA imports procured by LSEs. CAISO notes that LRAs will continue to have the ability to set additional requirements or restrictions, above and beyond these minimum requirements, applicable to their jurisdictional LSEs.  CAISO also states, “CAISO and CPUC alignment on RA imports coming out of the CPUC’s Track 3B RA proceeding is important to ensure comparable treatment across all LSEs and avoid disconnects between the CAISO’s and CPUC’s RA import rules and regulations.”[4]

Staff has four main concerns with the CAISO’s current proposal.  The first concern is that that the CPUC and CAISO rules will be different if the CPUC choses to not adopt CAISO’s import proposal. This would mean that if LSEs do not meet the minimum requirements under the CAISO’s proposed requirements (including firm transmission) but do secure firm energy delivery under the CPUC’s requirements, they would still be able to count towards CPUC’s requirements but would not count under CAISO import rules (since the resource would not be considered source specific). This could result in backstop procurement to individual LSEs that are deemed compliant by the CPUC.  Staff strongly believes that import rules between the CPUC and the CAISO need to stay aligned to ensure there are not two separate RA programs in California. Two separate programs in CA will lead to confusion in the marketplace and increased costs to ratepayers.

The second concern is that CAISO’s proposal is not compatible with the CPUC’s current import requirements. For LSEs to avoid either a CPUC RA penalty or potential CAISO backstop cost, LSEs will have to meet both the CAISO minimum requirements and CPUC’s firm energy delivery requirement. Meeting both requirements will require LSEs to pair their firm energy delivery contracts (required under CPUCs import rules) with CAISO’s proposed minimum import requirement.

CAISO’s proposed minimum import rule is a capacity requirement that will require RA import capacity to bid into CAISO’s markets (DA and RT) 24 x7.  CPUC’s current import requirement is a firm energy delivery requirement that requires the firm energy to be delivered to the LSE in accordance with the governing contract, consistent with the MCC buckets.[5]

Staff does not see how an RA only 24 x 7 MOO bidding requirement could be compatible with a firm delivery requirement unless the hours of the firm energy requirement are 24 x 7 for the RA compliance month.  This incompatibility undermines the CPUC’s rules and would lead to two set of rules for imports, leading to market confusion and inefficiency.

Third, CAISO has not provided a means for the CPUC to evaluate the impact of the new requirement other than providing that the requirement will not be binding for 2022.  That means CPUC’s firm energy delivery requirement will still be in effect for 2022 along with CAISO’s encouragement of its minimum import RA rules.  Staff is concerned that LSEs will have no incentive to contract for potentially more stringent/expensive import requirements during the non-binding year. Without contracting data (or limited data) on how these resources behave in the market, the CPUC will have no way to assess whether its speculative supply concerns have been addressed by the CAISO’s proposed requirement, prior to becoming binding in compliance year 2023. 

Additionally, even if LSEs do contract for resources with the more stringent requirements, Staff does not see how the Commission would be able to evaluate and approve CAISO’s proposed requirement prior to relaxing its firm energy delivery requirement under the proposed two step implementation timeline.  If CAISO intends to make the rules binding in 2023, then the Commission will not be able to assess the bidding behavior of new requirement until late 2023 (at the earliest). Therefore, changes to the CPUC’s rules would not be able to be evaluate until 2024 and not be adopted until 2025 compliance year.

One way of addressing these concerns is to allow LSEs to meet their import requirements with either CPUC rules or CAISO rules beginning in 2022 and through 2023. This would allow the CPUC to evaluate data from 2022 in late 2022 and early 2023. However, the downside of such an approach would be that LSEs will likely still gravitate to the lesser stringent and lower cost requirements which may leave limited data on evaluating the CAISOs minimum requirements.  This could potentially be addressed by limiting the amount of imports that could utilize CPUC’s requirements to a certain percentage so that enough data on the new CAISO import product could be obtained and evaluated.

Finally, Staff is concerned that CAISO’s proposed minimum import requirement is a new product, one that has not yet been transacted in the market.  This new product will take time to develop and it is not clear yet how liquid of a market will form for this new product. In addition to this new product, LSEs will still be required to provide firm energy delivery paired with the new product (unless the Commission chooses to relax its firm energy delivery requirement).  Therefore, there are two layers of uncertainty with regards to a future import product that must come to market by 2023; one with regards to CAISO’s minimum import requirements, and one with regards to pairing this requirement with firm energy delivery. Staff is concerned that putting both these requirements in place for 2023 compliance year may result in lower levels of imports being available to meet peak RA needs in California. 

Staff encourages the CAISO to address these four concerns before it moves forward with its proposal which is currently scheduled for Board approval in March 2021.

[1] D.20-06-028 FOF 4

[2] D.20-06-028 at 39

[3] CAISO 6^th Revised Draft Final Straw Proposal at 30

[4] CAISO 6^th Revised Draft Final Straw Proposal at 22

[5] D.20-06-28 FOF 9

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

CAISO's proposed Minimum State of Charge constraint will severely limit the opportunities for storage resources to participate in the real time market. Staff is concerned that:

• this proposal is discriminatory against a single class of resources;
• will lead to operational challenges; and
• will likely degrade profitability for storage resources.

The proposal would take each storage resource’s day ahead schedule and lock that capacity so that that energy cannot be sold in the real time market before the time that it was paid in the day ahead market. No other resources are limited in this way. Potential decreases in storage resource profits can hinder the state’s progress towards renewable energy and carbon reduction goals by damaging the business case for storage resources.

Large amounts of new storage resources are expected to come online in the next few years, with relatively little capacity expected from other types of resources. In the wake of CAISO’s challenges in August of 2021 CAISO stated that they saw the major solution as adding more capacity to the grid. That capacity is coming, largely in the form of energy storage. CPUC staff are concerned that CAISO market policy and market design is not moving in a direct that would operate storage in the most efficient and optimal manner. 

Storage transactions have two parts

In order to participate in the market for electricity, a storage resource must buy energy (charge) and then sell that energy at a later time (discharge). These two actions are not independent. The market outcome of the storage transaction depends on the difference between the two prices. Efficient scheduling of storage transactions requires consideration of both sides of the transaction.

Lowest prices and peak net demand often occur more than 4 hours apart. Because of the maximum 4 hour outlook of the real time market, current CAISO real time market systems can generally only see one side of the storage transaction at a time. Dispatch of storage resources will be most efficient and effective when the real time market can optimize both sides of the storage transaction at once. Instead of expanding the ability of the real time market, CAISO is taking the results of the day ahead market and carry that solution into the real time market.  The day ahead market sees both sides of a simplified version of the storage transaction, using older data and different prices. If the current proposal is meant as a temporary stop gap measure for managing storage in real time it could be feasible for a short time, but it is not clearly better than relying on manual dispatch. Using the MSOC requires acknowledging that unintended consequences of increased self-scheduling of storage resources could negatively impact reliability and planning for that potential.  For the long term we urge the CAISO to adopt a market design that would extract maximum value from storage, which we believe will also improve reliability by ensuring that all resources have clear incentives to be available to markets in the real time.

Minimum State Of Charge (MsOC) constraint will incentivize self scheduling of storage resources in the real time market

The MSOC constraint proposed by the CAISO constrains the charge side of a storage transaction. Specifically, the resource must have the appropriate state of charge available to be able to meet its day ahead schedule during real time. This means that the charging side of the transaction is constrained to be similar to the day ahead charging schedule. The discharge side of the transaction is not constrained. This introduces the possibility that a resource will charge according to DA bids and be subject to RT conditions for discharge. The difference between charge and discharge scheduling will create some risk for storage resources who are exposed to that difference. In order to minimize that risk, resources may self-schedule their real time output to be identical to the DA schedule. By self scheduling charge and discharge, the resource can remove real time price risk and only be subject to day ahead prices for those transactions.

If a significant amount of storage resources choose to lower their risks by self-cheduling into the real time market, years of CAISO policy advancements could be undone. The Renewable Integration and Market Product Review initiative, BCR mitigation measures initiatives, FERC Order 764 compliance initiative and others all made changes to ensure that resources which are scheduled in the day ahead have appropriate incentives to continue to be full participants in the real time market. The Minimum State of Charge constraint would substantially undo those incentives for storage resources.

To date the CAISO has not had to manage a significant amount of storage during tight conditions in real time. We expect that the summer of 2021 will bring the first experience with managing these resources during tight conditions. With the current system, we believe that the CAISO would likely use manual dispatches (exceptional dispatch) to ensure that storage resources are charged during the day to be prepared for discharge around net peak. Exceptional dispatches could be issued on the morning of the day in question to prepare for expected needs later that day. These could be issued or modified up to 4 hours before net load peak in order to be available for that time. In contrast, the MSOC would rely on data available at 10AM the day before.

The MSOC will not always decrease the amount or intensity of manual dispatches necessary to manage storage in the real time. Since conditions change between day ahead and real time market runs, manual dispatches will often be necessary to adjust the charging of the storage fleet to adapt to real time conditions. This is true whether or not there is an increase in self-scheduling, but increased self-scheduling will drive an even larger need for manual dispatch under some conditions. For example, if solar production during real time is lower than expectations during day ahead, self scheduled charging of storage may strain the system. Or if net load peaks later in the day than expected, self scheduled storage discharging may be exhausted before peak net load subsides. In either case, CAISO operations will likely have to keep an eye on expected and planned actions of storage resources and determine whether manual dispatches are needed to override the self schedules.

Dependence on day ahead schedule restricts efficiency of real time market

The limited forward outlook of the real time market prevents that market from scheduling both sides of most storage transactions. CAISO portrays the limitations of the real time as differences between the real time market and the day ahead. They proceed to suggest that because of these differences, storage cannot be scheduled in real time. From p. 65: “real-time prices during the lowest priced hours of the day may materialize at higher prices than in the day-ahead market and may result in storage resources not being charged.” And “These high prices could cause storage resources to be discharged prior to the peak net-load period…” These examples show how a storage resource following the dispatch of the real time market may at times not be able to meet its day ahead schedule.

The issue of not meeting day ahead schedules seems to arise because DA forecasts do not accurately reflect real time conditions. However, if the real time software were able to see a sufficient period of time to make the fully optimized storage decision, considering both sides of the transaction, it would not be a problem. Prices in the real time market are not random and are a response to real time market conditions. By forcing the day ahead state of charge, which is based on day ahead prices, onto storage resources the CAISO is forcing a departure from optimal real time actions. These differences between day ahead and real time mean that both system reliability and resource profitability could be degraded when compared to a potential solution involving a longer term real time outlook that can make optimal real time decisions and dispatch for storage resources.

CAISO should start to address the underlying shortcomings of the real time market as soon as possible

CAISO has explained that they do not believe they could develop and implement the significant changes supported by CPUC staff and other stakeholders and described here in time for the fall 2021 activation date set for this initiative. While this may be true, planning for these changes should begin now so that markets are prepared for the coming massive expansion of storage capacity with the goal of fully integrating storage in the real time market. CPUC staff recognizes that the policies that we advocate for here represent significant changes to CAISO markets, and therefore they need to be planned for and developed with foresight to when these new systems will be needed to serve the growing storage assets coming on line.  CPUC staff encourage the CAISO to start developing the systems that will allow full participation by energy storage resources as soon as possible.

In the proposal CAISO explains that they are worried that extending the real time outlook may lead to sub optimal results because “…forecast accuracy degrades over longer time horizons, jeopardizing the operational integrity and dispatch efficiency of the real-time market.” [1] This argument also highlights the weakness of the proposed Minimum State of Charge constraint. CAISO is stating that they are concerned that forecasts made 6 hours in advance of operation may not be accurate. Instead, the CAISO proposal will rely on forecasts made more than 30 hours in advance of operation. It stands to reason if the forecast at 6 hours in advance of flow time is not expected to be accurate enough to schedule energy storage, then the forecast more than a day in advance should not be expected to be accurate either.

While CPUC staff recognize that extending the real time outlook would be difficult, the CAISO did propose to do exactly that a few years ago in the Extended STUC initiative. At the time, the hurdle that could not be overcome was hesitancy on the part of EIM entities to commit to scheduling further in advance. That hurdle seems to have been overcome with the ongoing development of EDAM. CPUC staff  respectfully recommend the CAISO to return to this idea and continue to develop the proposal with an eye toward optimizing storage resources in the real time market.

When explaining the proposal, CAISO relies on the idea that Day Ahead market produces an ‘efficient 24 hour schedule.’ The outcome of the day ahead market may be efficient[2] given the information and parameters of the DA market. However, because the information and parameters in the Day Ahead market are different than that used in the real time market, the day ahead schedule cannot be characterized as an efficient schedule when used in real time market.

In the real time market different forecasts are used for load; import and export transactions are different; convergence bids are not included; other resource bids can be different; and granularity differences exist in the market dispatch and solution compared to day ahead. The granularity alone will cause other resources to be scheduled differently, thereby making the storage resource schedule inefficient.

BCR and settlements questions:

CAISO’s Bid Cost Recovery ensures that resources that operate according to CAISO dispatch will be compensated to cover their total bid cost if the energy market revenue does not reach that level. If Energy storage resources are forced to charge at suboptimal times due to this administrative constraint will there be any compensation? What if they are prevented from discharging at prices above discharge bid?

Example 1: A resource is scheduled to charge in the day ahead market (DA) at $40 for one hour, hour ending (HE) 12 which is the lowest priced hour of the day ahead market. Bids are carried into the real time (RT) market identicaly. RT prices for HE 12 are $45/42/47/50, and the resource charges according to the DA schedule due to the constraint. Next hour RT prices are $32/30/35/38. If resource had been allowed to participate in the RT market charging would have been in the subsequent hour and profits would have increased by about $7 per MWh. In this scenario, the resource would have been fully available for its one hour discharge schedule if dispatch had been governed by bids instead of CAISO’s administrative constraints. The constraint in this scenario causes a loss to the resource with no benefit to reliability. The constraint also causes a decrease in economic efficiency and potentially an increase in GHG emissions by charging at the more expensive time.

Example 2: A resource is scheduled in DA to charge in HE 12 and discharge in HE 18 for an identical amount of energy. RT prices are lower and the resource adjusts its bids accordingly. The resource charges in HE 12 by the constraint, but then prices in the evening fall and never rise above the DA HE 12 price. If the resource had been dispatched by bid it would not have charged and would not have been out any money. As the constraint dispatched it, it charges on DA prices and never has a chance to profitably discharge. The scheduling coordinator will have to decide whether to hold the charge for an extended period of time, contributing to battery degradation, or sell at a loss. Either outcome is less efficient than what would occur were the CAISO to dispatch the resource by its bid.

In both examples, a resource suffers a loss while following CAISO dispatch, due to the CAISO’s administratively imposed constraint. To be consistent with the treatment of all other resources, the CAISO should determine how to award Bid Cost Recovery to these resources if this constraint is imposed upon the market. Alternately, the CAISO could pursue changes to the real time market that would lead to more efficient dispatch of storage resources.

[1] P.66 draft final proposal

[2] There is no real guarantee that the DA market produces the most efficient possible schedule, only that the solution is relatively efficient compared to other schedules that are nearby it in the solution space.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

Under CAISO’s current local backstop authority, it has the ability to CPM for:

1. an individual LSE local annual or monthly deficiency; and  
2. a collective local deficiency in the year-ahead showings to meet the reliability needs for one specific local or sub-local area.

In this draft final proposal, CAISO proposes to seek new CPM authority to procure resources when the CAISO identifies a need to procure local RA after an area or sub-area fails to meet the energy sufficiency test. CAISO asserts that the extended backstop authority will ensure that procured local resources can meet energy needs in each local area and sub-area during the upcoming year.  

Staff views CAISO’s proposal as an extension of the MCC buckets to local areas and sub-local area, to ensure that use limited resources are not overly relied upon to meet local and sub-local area needs. Staff shares this concern.  Consequently, these comments are focused on ensuring that upfront local and sub local needs are identified to LSEs and the Central Procurement Entities (identified in D.20-06-002), prior to making backstop decisions regarding local energy sufficiency. 

In D.20-06-002, the Commission adopted a centralized local RA procurement framework for SCE and PG&E TAC areas. The decision identified a set of selection criteria that the CPE should include in determining its resource procurement.  This selection criteria includes “energy use limitations.”  The decision specifically stated that “resource use-limitations should be used in the CPE selection process and should align with CAISO’s Local Capacity requirement Technical studies (LCRTS) process. The MCC buckets, or its successor, should also be used in the CPE selection process to ensure that use-limited resources are not overly relied upon to meet local and sub-local needs. We find it reasonable to add ‘energy-use limitations’ as a criterion in the selection process, and the decision has been modified.”[1]

Staff notes that upfront RA requirements set by the CAISO’s LCRTS need to clearly spell out what use-limitations exist in each local and sub-local area so that the LSEs or the CPE can use the LCRTS in their procurement decisions. Staff is supportive of CAISO expanding its backstop authority only if it is clear what the upfront RA requirements vetted and adopted in the annual RA proceeding are clear and transparent. These vetted and approved requirements would then be given to the CPE to procure. If the CPE is unable to secure the necessary resources to meet the approved local requirements, then CAISO should be allowed to perform backstop procurement to secure necessary resources are procured. 

[1] D.20-06-002 at 82

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

In its 6^th revised draft final straw proposal the CAISO has modified its current implementation of RA enhancements proposal to divide the proposed elements into two phases. The first phase includes proposals that can be implemented more quickly and are viewed as stand-alone proposals. The second phase is focused on longer term foundational changes to the RA construct that will require more time develop.  Staff appreciates CAISO’s delay in moving forward with some of proposals that will require further development. 

The proposed implementation is summarized below.

Phase One: (2021 for RA year 2022)

•  RA import provisions
•  Planned outage process enhancements – phase 1
•  Local studies with availability limited resources CPM clarifications
• Operationalizing storage

Phase Two: (2022 for RA year 2023)

• UCAP
• Minimum system RA requirements
• Portfolio assessment
• Planned outage process enhancements – phase 2
• Must offer obligations and bid insertion rules
• Availability penalty structure for RMR
•  Flexible resource adequacy

In prior comments, Staff has expressed serious concern with the RA enhancement moving ahead of the CPUC’s processes to adopt similar requirements that would set upfront RA requirements for LSEs.Staff noted that a disconnect in the CAISO and CPUCs rules could result in bilateral market dysfunction and confusion , resulting in higher costs for ratepayers and/or non-compliance. Staff remains concerned with the proposed implementation timeline for the same reason noted above.

In particular, CAISO’s proposed schedule will still seek Board approval on import RA rules in March 2021, prior to the Commission adopting its proposed requirements. The CPUC is not scheduled to release a proposed decision until May 2021 on this issue. Additionally, Phase 2 of CAISO’s proposal still seeks Board approval in May 2021 on its UCAP proposal prior to a final CPUC decision on this issue, which is not scheduled until June 2021. 

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No comments at this time.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Generally support with one exception. That is using the usage of dynamic limit tool as a proxy for forced outage of a hybrid in UCAP. Given that the dynamic limit tool has never been used in practice, and no hybrids that could use the tool are operational in CAISO at this time, CEERT recommends that this subject be deferred until there is operational experience with a commercially significant quantity of hybrid resources before taking this step. There is no history to establish a default value for new resources and no assurance that a project's uage of the tool is a fair represenbtation of availability for NQC purposes. 

2. Provide your organization’s overall position on the draft final proposal – phase 1:

single caveat as explained in (1.)

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

no comment

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

no comment

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

no comment

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

no comment

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

no comment

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

no comment

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

no comment

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

no comment

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

See Response to Question 5.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

As noted by VEA in comments filed in the CAISO’s Maximum Import Capability Stabilization and Multi-year Allocation Initiative, VEA has a 20-year contract for the purchase of unbundled energy, System RA Capacity and Flexible RA Capacity.  VEA plans to import the RA into the CAISO at Mead.  The contract requires the supplier to identify the specific resource or resources providing System RA Capacity and Flexible RA Capacity each year prior to the annual RA Plan submission date.  Therefore, the supplier can change the specified RA resource each RA year.

The Draft Final Proposal- Phase 1 (“Final Proposal”) states:  “Accordingly, contracts that do not identify or specify resources in support of the RA contact should not count as RA resources.”   Final Proposal at 35.  According to the Final Proposal, “[s]ource specification information will be required at the time of submission of the annual and monthly RA supply plans by the Scheduling Coordinator submitting the supply plan.”  Final Proposal at 31.  Since VEA’s supply contract creates a contractual obligation for the supplier to identify specific resources that are used to provide RA on an annual basis, VEA can satisfy the proposed requirement to provide source information at the time of submission of the annual and monthly RA supply plans, even though the contract itself does not specifically identify the resource.

VEA requests that the CAISO confirm that long-term contracts that provide for the identification of specific RA resources on an annual basis at the time annual RA plans are due qualifies as an RA Resource, as long as the attestation, firm transmission and other requirements of the CAISO Tariff are met.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Direct Energy is commenting on three areas: stressing alignment of CAISO and CPUC RA actions, opposing the requirements for resource specific units on firm transmission for imports, and questioning the need for the minimum state of charge requirements for CPUC jurisdictional entities due to the recent changes in MCC bucket designations.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

CAISO does not appear to have provided sufficient data to demonstrate that only imports of resource specific units on firm transmission are necessary to enhance reliability.  Before making a change of this nature, there should be analysis demonstrating that non-resource specific units and the lack of firm transmission has impacted import RA flows.  Even during the most stressed times on the grid, imports appear to be meeting their RA obligations, as demonstrated in the Root Cause Analysis report on the August 2020 blackouts.  In addition, data should be gathered to determine if the recent changes made by the CPUC that will require non-resource specific imports to flow energy during the AAH hours have been beneficial before making these changes.

With regards to market power, CAISO’s own analysis shows some market power under HHI tests, but it does not appear that a historical pivotal supplier test has been performed.  This analysis should be done to be consistent with other market power tests being performed on supply.  Comments by the CAISO that if there is market power that the concern should be taken up at FERC or under a utility’s OATT are lacking.  The fact that some market power may exist implies a likelihood of higher RA costs in the future for customers.  Because of this, at a minimum, more analysis should be performed to determine if the changes will actually will enhance reliability to justify the costs it will likely impart.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

Changes to the CPUC MCC buckets make the minimum state of charge issue less necessary for CPUC jurisdictional entities.  The must offer requirements from 4 to 9 PM in the day ahead will provide a strong incentive for storage to bid in and be available during those hours.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

The initiative's proposals that may set RA requirements higher than that of LRAs will put LSEs in the difficult position of potentially being compliant with the LRA but not with CAISO requirements.  While it is appreciated that CAISO is working with LRAs in an attempt to align proposals, if this alignment is not acheived, Direct Energy would prefer that those proposals are not enacted.  Failure to do so would create increasing complexity for RA compliance.  Even the proposal as currently written appears to be inconsistent in what aspects the CAISO will mandate and what will be left to the LRAs—CAISO is proposing establishing minimum requirements for PRM, imports, and DR NQC, but allows the LRAs to set the QC definitions.  

Direct Energy would like to see more data for how the proposed changes that will create requirements above existing LRA mandates, such as the increase in the PRM and resource specific imports on firm transmission, will actually improve reliability through LOLE analysis evaluated on industry standard metrics.  When asked during the workshop how much analysis has been performed of this nature, CAISO staff stated that it should be up to LSEs to demonstrate that these changes will not enhance reliability.  Direct Energy does not feel that the burden of proof should lay with the LSEs and also feels that this type of discussion is exactly what is going on in the CPUC RA proceedings where different approaches are being evaluated.  CAISO should continue to make their case for these changes in the CPUC docket for RA changes such that agreement for a path forward can be established, not by unilaterally setting new requirements.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

EDF-R does not support the CAISO’s proposal to amend the planned outage process to require all RA resources requesting planned outages to provide substitute capacity, nor the Minimum State of Charge proposal. 

EDF-R has a comment on the Backstop Capacity Procurement or RA Import Requirements topics at this time.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

EDF-R opposes the planned outage and operationalizing storage proposals.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

EDF-R does not support the CAISO’s proposal to amend the planned outage process to require all RA resources requesting planned outages to provide substitute capacity. With this proposal the CAISO achieves its goal of avoiding “cancellation of any approved planned outages to the extent possible” by blunt force: the CAISO’s outage cancellation ratio will drop by virtue of the CAISO never approving such outages in the first place.

Furthermore, the proposal will not serve the CAISO’s goal of “reduc[ing] reliability risks during future summer months.” As has been outlined on many occasions to the CAISO, including in the CAISO’s Business Practice Management Proposed Revision Request 1122 appeals committee answering briefs and the February 19, 2020 appeals committee meeting[1], providing substitute capacity for a planned outage is a is a false option, as there is not readily available substitute capacity to be had. The CAISO acknowledges as much with the admission that the CAISO’s existing Power Contracts Bulletin Board[2] has never been used, and with the Phase 2 of the proposal being the creation of a Planned Outage Replacement Pool.

This proposal does not increase reliability or supply, it forces planned outages into being labeled as “forced outages”, and in the event summer load shedding occurs, creates the opportunity for a false narrative that pointing to a root cause of supply shortages as attributable “forced outages.”  

[1] http://www.caiso.com/Pages/documentsbygroup.aspx?GroupID=D8E40756-EA62-4851-B528-3F2D6DD04728

[2] http://www.caiso.com/market/Pages/PowerContractsBulletinBoard/Default.aspx

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

  EDF-R does not have a comment on this section at this time. 

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

EDF-R opposes the Minimum State of Charge proposal. The proposal is discriminatory to storage resources and erodes at market efficiency by forcing reliability outcomes with an out of market solution. EDF-R does not believe there needs to be additional requirements for energy storage resources during tight system conditions.

EDF-R does not support a proposal (temporary or permanent) that specifically limits energy storage generators. EDF-R supports a reliability-via-markets approach where possible, and CAISO has not demonstrated with empirical evidence that economic signals alone are insufficient. The August 2020 rotating outages were not caused by any single generator or resource type. If the CAISO insists that some form of generator command measure is needed to prevent future blackouts, then the measure should be applied equitably. Energy storage resources are no less predictable than “traditional generation” nor are energy storage resources specifically responsible for causing or solving supply problems. The MSOC proposal would apply restrictions to storage when traditional resources cannot meet 110% of demand. Where energy storage resources are uniquely suited to solve supply problems, they should be compensated for doing so, rather than being corralled into forgoing revenue opportunities. 

Should the CAISO choose to proceed with Minimum State of Charge proposal, or any policy designed to limit storage generators’ autonomy for reliability’s sake, EDF-R requests CAISO do so temporarily and outline specific sunset provisions in its tariff implementation. In this instance where the CAISO asks for stakeholder support on serious austerity measures, the CAISO must make an equivalent commitment. 

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

EDF-R does not have a comment on this section at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

LS Power agrees with CAISO on the importance of maintaining grid reliability, however the currently proposed “operationalizing storage” solution is not workable. LS Power emphasizes that CAISO should seek to implement in-market solutions and use transparent prices to achieve desired reliability goals, such as meeting evening peak demand. Proposed solutions such as the Minimum State of Charge Requirements (MSOC) cause market inefficiency, drive up ratepayer costs, and deprive CAISO from accessing flexible resources in Real Time which could pose additional reliability risks; exactly opposite of the desired outcome of MSOC. In addition, the proposed MSOC discriminates against, and penalizes storage resources, reduces their value to the market, and its use without making resources whole for the lost opportunity cost from Real Time revenues will send the wrong signals and impede development of new storage projects.

MSOC should be changed to Summer 2022 implementation. LS Power strongly recommends that the MSOC requirement currently in Phase 1 be held to a later date to provide more time for stakeholder review and proposal adjustments, such as changes LS Power proposes below. In the January 6 meeting, stakeholders raised several significant questions and concerns that have not been addressed from previous iterations. Phase 1 will not be implemented until Fall 2021, so it is already not available to address Summer 2021 system concerns. Therefore, CAISO should create a Phase 1B to further revise MSOC for approval in late 2021 and target its implementation by Summer 2022. LS Power is aware that CAISO has noted the potential to accelerate the implementation of MSOC to Summer 2021 and strongly opposes this given the concerns with the current proposal.

Multi Interval Optimization (MIO) must be adjusted to improve storage state of charge (SOC) outcomes. LS Power recommends CAISO immediately start reviewing the MIO tool to see if its continued use for storage resources is appropriate. While MIO works for traditional generators, LS Power’s experience is that MIO for storage causes reliability concerns due to undesired discharge of storage resources ahead of evening peak, at prices not in line with the storage resource’s bid curve. Since MIO does not adhere strictly to a resource’s bid curves, it makes it nearly impossible for resources to manage their own SOC effectively. LS Power recommends that Real Time Dispatch (RTD) instructions for storage should strictly be made based on the Binding interval and not any advisory intervals. Alternatively, MIO could be constrained to a much smaller number of advisory intervals for NGRs (maybe 2-3 intervals, i.e. 10-15 minutes, instead of the current 13 intervals, i.e. 65 minutes). Given that the financial incentives of resource owners are already strongly aligned with reliability, fixing MIO will improve reliability by allowing storage resource owners to determine what prices their resources are charged and discharged at, and put the burden of performance primarily on them through a transparent market mechanism.

LS Power’s alternative MSOC recommendation:

While LS Power appreciates the direction of CAISO’s changes in this proposal, the current MSOC is still overly broad and discriminatory to storage. Minimum SOC requirements are triggered by market conditions, but effectively are out-of-market actions as they remove a single class of resources from the real time market in order to ensure reliability. As such, CAISO policy should be to minimize the application of MSOC, such that it only applies during rare instances when there would be a genuine reliability risk that could lead to a System Emergency. LS Power’s recommendation for ensuring storage has the required SOC to meet resource obligations and system needs is as follows (details are below in response to Question #6):

1. CAISO should focus on market-based tools first. Out-of-market tools such as MSOC should only enforced when CAISO sees a reliability risk or an imminent System Emergency in Real Time. While CAISO’s currently proposed 110% threshold would reduce the need to enforce MSOC on some days, the proposed threshold is arbitrary, too broad and not tied to reliability risks.
2. Run sufficiency tests on a regular basis throughout the day to determine if MSOC is still needed. The decision to enforce MSOC should not just be made based on Day Ahead data as currently proposed. Market conditions can change significantly between Day Ahead and Real Time. CAISO should run the sufficiency test on a regular basis, first after the Day Ahead awards are calculated, and again regularly throughout the day in Real Time to determine if MSOC is needed.
3. Set MSOC to the minimum amount and time needed. MSOC should be enforced on a pro rata basis such that only the minimum amount of capacity and time required to maintain grid reliability is affected. As currently proposed by CAISO, MSOC in Real Time would be enforced on all storage resources for every MW/MWh scheduled in Day Ahead, which is excessive and unnecessary.
4. MSOC requirements should be ramped up smoothly to allow grid and resource flexibility. MSOC requirements should be ramped up linearly and gradually from 0 MW to the quantity necessary that day to in order to allow storage resources to provide maximum flexibility to the grid operators in the afternoon while still guaranteeing that they are full when needed.
5. Storage resources should be compensated for the reliability service. Storage resources should be compensated for the reliability service they offer while on MSOC. At a minimum, the storage resource should be made whole through a revised Bid Cost Recovery for the lost opportunity cost from not being able to participate in Real Time market despite being physically available.
6. Track and report MSOC usage. CAISO Market Ops and the DMM should track and report operational statistics of how often MSOC constraints are enforced, and how many MW of resources are removed from the real time market and its impact on incremental cost to serve load, similar to how Exceptional Dispatches are tracked and reported.

Planned Outage Process Enhancements: LS Power supports CAISO’s Phase 1 proposal to require resources requesting planned outages to submit substitute capacity. On extension requests, LS Power has concerns with Option 1 and supports Option 2 to facilitate extensions. LS Power also supports CAISO’s direction in Phase 2 to develop a longer term solution that includes a planned outage capacity pool to provide substitution capacity.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

 LS Power does not have feedback at this time.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

LS Power agrees that adjustments are needed to the Planned Outage Process to allow resources to appropriately plan for this important activity. As such, LS Power supports solutions that will improve transparency on approval/denial of outage requests, outage coordination, and outage planning certainty.

In Phase 1, LS Power supports CAISO’s proposal to require all RA resources requesting planned outages to submit substitute capacity. For outage extensions, LS Power is concerned that Option 1 is a significant departure from current practice and could make it much more difficult to extend an outage if the resource will no longer be able keep the original outage card. If a new outage card must be created for the extension and the outage extension, it could be more likely to be denied if RA Substitution is not provided and the plant will be in a forced outage. LS Power supports Option 2 where if planned outage is extended it remains a planned outage, the original outage card stays in place and the outage will still have a substitution obligation. Alternatively, we support Option 3 under which the outage will still be treated as long as substitution capacity be provided. We understand the concerns expressed by CAISO under the status quo where an SC can request a planned outage extension at the last minute. We encourage CAISO to address this situation by perhaps proposing additional notification requirements by resource SC to CAISO should there be a need to extend the original planned outage.

LS Power supports the Phase 2 plan to develop a longer term solution that accounts for needed planned outages in initial procurement, develops a planned outage capacity pool for procuring replacement/substitution capacity, and ultimately eliminates the need for all planned outage substitution. LS Power encourages CAISO to develop a planned outage pool that includes summer months since, while most outages occur in off-peak months, summer outages may still be necessary. A CAISO calendar that shows in advance on a daily basis the potential availability of system RA headroom in the planned outage pool will make it much easier to plan outages.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

LS Power supports CAISO’s principles and proposal elements on RA imports, including that the resource must be verifiable and resource specific, capacity must be dedicated solely to CAISO, and delivered on firm transmission. CAISO needs assurance that transmission will be available before it can count on an Import RA resource. We support the requirement of firm transmission all the way from location of generation resource to CAISO delivery point.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

LS Power recognizes that CAISO has attempted to incorporate stakeholder feedback to previous versions of the proposal by limiting the Minimum State of Charge (MSOC) to not apply to every day and hour. Nonetheless, in the January 6 meeting, stakeholders raised several significant questions and concerns that have not been addressed from previous iterations. In light of stakeholder concerns on CAISO’s current MSOC proposal, LS Power recommends CAISO not to implement it as is. CAISO should have further discussions with stakeholders until an agreeable solution is developed. LS Power has proposed a few changes to CAISO’s MSOC proposal as noted below.

CAISO is concerned about energy storage resources not having enough charge in Real Time to meet their Day Ahead schedules. Storage owners are entirely aligned with CAISO’s goals in this proposal. Resource owners have every incentive to ensure their resources are full and ready for any discharge periods based on Day Ahead schedule. If a storage resource is not able to discharge to its Day Ahead discharge schedule this could lead to potentially massive financial losses for the resource. However, CAISO’s solution of the MSOC relies on a series of assumptions about poor storage operations while failing to address existing market issues that create SOC concerns. LS Power recommends that MSOC should be limited to specific reliability needs for a specific number of megawatts (MW) over a discrete time and resources should be appropriately compensated for this mandatory reliability service.

LS Power strongly recommends that the MSOC requirement currently in Phase 1 be held to a later date to provide more time for stakeholder review and proposal adjustments, such as LS Power’s proposed solution.

CAISO storage market mechanics including MIO adversely affect SOC today and should be adjusted

Storage owners like LS Power do and will always attempt to ensure that their units are full going into any periods where a discharge is scheduled in Day Ahead. Specifically, this takes the form of submitting bid curves offering to charge at higher prices in the intervals leading up to a Day Ahead award. These prices take into account the risk of severe losses that would result from not being full. However, current CAISO market mechanics that worked for traditional generators are creating challenges for storage to meet its desired SOC. LS Power recently submitted detailed comments on this in the Market Enhancements for Summer 2021 Readiness stakeholder initiative.[1] Multi Interval Optimization (MIO), in particular, does not work for storage and is creating a reliability risk today. Briefly, MIO is a design aspect of the Real Time market that estimates market conditions several intervals in the future, known as the advisory intervals, in order to optimize the dispatch signals given to resources in the immediately following interval, known as the binding interval. Storage resource dispatch signals (DOTs) are moved up and down in the binding interval in a way that is beyond the control of resource owners, any time CAISO estimates a very low or high price materializing in the advisory intervals. The algorithm also does not consider Day Ahead schedules in any way when determining Real Time market dispatches and DOTs are often awarded at LMPs outside of the resource’s bid curve in any given interval. This creates both reliability risks to CAISO, with storage being dispatched at a time that makes it difficult to meet the Day Ahead award, and financial risk to storage owners. This is the most urgent reliability risk and a prompt market fix should be implemented such that CAISO Real Time market can dispatch storage resources in line with their bid curves. Doing so will provide control to the resource owners and should eliminate or at least significantly minimize the need for MSOC.

MIO Recommendation: Fixing MIO, which could be as simple as only charging and discharging storage resources at the prices they have indicated in their bid curve, is the most straightforward and market oriented way to ensure storage is full when you need it. Real Time Dispatch (RTD) instructions for storage should strictly be made based on the Binding interval and not any advisory intervals. Alternatively, MIO could be constrained to a much smaller number of advisory intervals for NGRs (maybe 2-3 intervals, i.e. 10-15 minutes, instead of the current 13 intervals, i.e. 65 minutes). Fixing MIO is an in-market action that will improve reliability by allowing storage resource owners to determine what prices their resources are charged and discharged at, and put the burden of performance primarily on them. The incentives are already there and are strongly aligned between system reliability and financial risks and rewards. This fix could resolve the need for a MSOC.

Comments on CAISO’s proposed changes from the previous version:

In this Draft Final Proposal, CAISO has proposed to limit its application of MSOC to only being active under specific criteria. We commend CAISO for moving in the right direction here. However, the specific limitations proposed in the Draft Final Proposal are still overly broad, are not supported by clear analysis or explanation, and do not appear go far enough toward the goal of limiting MSOC to only applying when there is a genuine reliability concern at stake.

• CAISO proposes a MSOC threshold of non-storage resources being able to meet 110% percent of net-load in the Day Ahead market (page 68). LS Power asserts the 110% number is excessively conservative and implicitly assumes that nearly all energy storage resources will simultaneously turn up empty just prior to the evening peak, thus needing the MSOC. As noted above, this is an unlikely scenario due to the financial risks involved and could be reduced further with MIO fixes. LS Power requests CAISO sensitivity analysis on why this 110% was chosen, and an estimate of how many days it could be triggered today and in coming years. LS Power is also concerned that as more storage comes online, this 110% test would be binding nearly every day in the not too distant future. Rather than relying on a metric such as 110%, we recommend CAISO exercise MSOC based only for reliability reasons that could lead to System Emergency.
• CAISO’s second change is that the resource will be required to charge at the later of that time or the time when day-ahead prices are lowest at that resources location. This is a move in the right direction. However, CAISO should still go further, and can easily do so without any risk to system reliability. This proposal still removes flexible storage resources from the hours when flexibility is most needed, i.e. the start of the evening when solar ramps down, creating the so-called “neck of the duck”. This is when the market is often unpredictable, and fast responding resources are needed most by CAISO in the real time market. CAISO staff acknowledged in the January 6 meeting that a resource held in MSOC may be needed for flexibility and responded that it could put the storage resource back in the market. However, this continual use of out-of-market solutions should not be the answer. Battery storage’s fast response and flexibility is an asset to CAISO that improves reliability and lowers the overall cost to serve load. CAISO should seek to minimize the number of hours, MW, and MWh over which MSOC rules that take a storage resource out-of-market are enforced.
• Third, CAISO recommends a criteria for MSOC to maintain reliability in a local area in the event of an N-1 or an N-1-1 contingency. This overly broad wording could cast a cloud of uncertainty over battery storage investment. A financier looking at investing in storage will have to make severe assumptions that their resource is in the wrong local reliability area and will be taken out of the real time market nearly all the time. CAISO must add more detail to make clear how this works, how often, to whom it applies, and most importantly how they will be made whole for being removed from the real time market to provide a local reliability service. The proposal as stated risks raising the cost of storage and undermining the ability of storage developers to build the dispatchable capacity resources that it needs, especially in local reliability areas, in the coming years.

CAISO policy should be to minimize the application of MSOC, such that it only applies during rare instances when there would be a genuine reliability risk. These instances will be rare for the reasons discussed above: market incentives already strongly incentivize the desired outcome from resource owners.

MSOC is discriminatory and does not compensate storage for the market restriction or reliability service: Fundamentally, the MSOC proposal still centers around one mechanism: removing Resource Adequacy energy storage resources, which in practice is ALL energy storage resources getting built in CAISO for the foreseeable future, from the real time market if they have a Day Ahead award coming up later, in order to be sure they will be full and able to deliver. There is no proposal to make storage whole for being removed from the real time market, despite requests from many stakeholders in previous iterations of this proposal. In effect, MSOC means that storage is providing an unpaid reliability service, being placed on reserve for hours prior to a day ahead discharge. As LS Power discussed in its Market Enhancements comments,[2] Bid Cost Recovery currently does not work for storage and does not make these resources whole.  No similar market restriction has ever been proposed for other types of resources that we are aware of; the market incentives alone are trusted to ensure a generator shows up when needed.

MSOC applied overly broadly risks reducing storage investment in CAISO’s footprint: Energy storage is essentially the only new build dispatchable resource being brought online in California and many gigawatts of storage are needed in coming years to meet the state’s reliability and environmental goals. The MSOC makes storage less valuable for both resource owners and their contract counterparties (load serving entities) who would contract with storage to hedge against their own exposure to market prices. Right now it is impossible to build an energy storage resource with Resource Adequacy revenue alone, and energy market-derived revenue is essential for building new storage resources. The CAISO MSOC proposal undermines the economic case for an entire class of resources upon which CAISO and California is relying upon to integrate renewables and replace GHG producing capacity alternatives.

LS Power’s alternative MSOC recommendation

Principles for any MSOC proposal: Minimum SOC requirements are triggered by market conditions, but in reality are an out-of-market action as they remove a single class of resources from the real time market in order to ensure reliability. As such, to enforce an MSOC constraint should not be taken lightly. Any MSOC proposal should adhere to the following three principles:

1. Use market-based tools to achieve the desired outcome first.
2. MSOC constraints should be limited to the minimum possible quantities of time, power, and energy (hours, MW and MWh) across the fleet of energy storage resources in CAISO.
3. MSOC should be tracked similar to Exceptional Dispatch, with regular public reporting on how heavily CAISO is using it. This can help CAISO and stakeholders evaluate its use over time.

The proposed framework: In line with these principles and the discussion above, LS Power’s recommendation for ensuring storage has the required SOC to meet resource obligations and system needs is as follows:

1. CAISO should focus on market-based tools first such as a revised MIO. Out-of-market tools such as MSOC should only enforced when CAISO sees a reliability risk or an imminent System Emergency in Real Time.
2. Run sufficiency tests on a regular basis throughout the day to determine if MSOC is still needed. CAISO should not limit its sufficiency tests to after the Day Ahead schedules are determined, it should also run the test again on a regular basis throughout the day based on the latest and most accurate load forecasts. This is necessary because needs in Real Time are frequently significantly less than scheduled in the Day Ahead, and more accurate load and resource information is available to CAISO closer to the actual trade hours.
3. Set MSOC to the minimum amount and time needed. The sufficiency test should look to determine both the minimum quantities of charge power (in MW) and stored energy that must be maintained across the storage fleet (in MWh) to serve the day’s evening peak. CAISO could count the MW of Day Ahead storage awards in each hour and sum over the appropriate time scales. Then the appropriate fraction of a resource’s storage capacity can be reserved from the real time market, as opposed to all of it.
4. MSOC requirements should be ramped up smoothly to allow grid and resource flexibility. On a day where the sufficiency tests described above indicate that a certain MSOC is needed across the storage fleet for system reliability, CAISO should smoothly and linearly ramp up each resource’s MSOC requirements leading up to the time when the resources are scheduled to begin discharging per their Day Ahead award. The fraction of each resource’s capacity subject to the MSOC requirement should be proportional to its maximum energy capacity relative to the total storage on the grid. The ramp should take place over X hours immediately preceding the start of that resource’s Day Ahead schedule, where X is the number of hours it takes to charge that resource to achieve an SOC equal to the quantity of MWh it is scheduled to discharge in Day Ahead, plus a safety factor that could be quite large (i.e. 20%). Under this construct, when the MSOC becomes a binding constraint in a resource’s real time dispatch, that resource will be made to charge as a price taker at the real time LMP. This approach achieves full batteries when CAISO expects them, while still enabling flexible storage resources to meet short duration needs of the CAISO operators during periods of high volatility during the day. Discharging in real time ahead of a day ahead award continues to carry substantial risk for resource owners, but they are not removed from the market.
5. Storage resources should be compensated for the reliability service. The MSOC still removes the storage resource from the real time market at times the resource is physically available, meaning storage is providing an unpaid reliability service and creating lost revenue opportunities. As LS Power discussed in its Market Enhancements comments,[3] Bid Cost Recovery currently does not work for storage and does not make storage resources whole for losses in the Real Time energy market.
6. Track and report MSOC usage. The CAISO Market Ops and DMM should track operational statistics of how often MSOC constraints are enforced, and how many MW of resources are removed from the real time market daily as a result. This will help inform future discussions around storage, resource adequacy, and CAISO’s needs for flexible resources available in real time.

Example day:

• Sufficiency Test (recommendations part #2 and #3 above):
  • CAISO determines through its latest sufficiency test on a given day that 6000 MWh of stored energy is needed in the evening peak, to be delivered from HE 18 to HE 21. This assessment remains true when revisited in real time.
  • The storage fleet consists of 2000 MW of batteries with 8000 MWh of usable energy storage capacity. As a result, MSOC requirements are turned on, with magnitude of 75% of the state’s maximum usable energy storage capacity.
• Application to a specific resource:
  • An example 100 MW / 400 MWh storage resource has a round trip efficiency of 85%.
  • This resource shall have an MSOC that ramps from 0 MWh to 300 MWh (75% of the resource’s maximum usable capacity) over the course of X hours, where X = (300 MWh / 100 MW) / 85% * 1.2 = 4.2 hours.
  • At 17:00, the MSOC = 300 MWh. At 17:00 – 4.2 hours = 12:15, the MSOC = 0 MWh. It ramps up linearly in each 5 minute increment over that period.
  • If the resource’s SOC is less than its MSOC in any interval, it receives a charge award regardless of its bid curve and the current LMP. If the resource’s SOC is greater than the MSOC in an interval then operations are normal and its dispatch is determined by the resource’s bid curve and LMP.

[1] LS Power comments on the Market Enhancements for Summer 2021 Readiness stakeholder initiative, January 14, 2021. https://stakeholdercenter.caiso.com/StakeholderInitiatives/AllComments/f52085c0-419a-46c1-a1e9-9e8d028049c4#org-18e10af0-0f17-4cf0-9f51-b24cbb522695 

[2] LS Power comments on the Market Enhancements for Summer 2021 Readiness stakeholder initiative, January 14, 2021. https://stakeholdercenter.caiso.com/StakeholderInitiatives/AllComments/f52085c0-419a-46c1-a1e9-9e8d028049c4#org-18e10af0-0f17-4cf0-9f51-b24cbb522695 

[3] LS Power comments on the Market Enhancements for Summer 2021 Readiness stakeholder initiative, January 14, 2021. https://stakeholdercenter.caiso.com/StakeholderInitiatives/AllComments/f52085c0-419a-46c1-a1e9-9e8d028049c4#org-18e10af0-0f17-4cf0-9f51-b24cbb522695 

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

LS Power does not have feedback at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

As noted above, LS Power strongly recommends that the MSOC requirement currently in Phase 1 be held to a later date to provide more time for stakeholder review and proposal adjustments. In the January 6 meeting, stakeholders raised several significant questions and concerns that have not been addressed from previous iterations. Phase 1 will not be implemented until Fall 2021, so it is already not available to address Summer 2021 system concerns. Therefore, CAISO should create a Phase 1B to further revise MSOC for approval in late 2021 and target its implementation by Summer 2022. LS Power is aware that CAISO has noted the potential to accelerate the implementation of MSOC to Summer 2021 and strongly opposes this given the concerns with the current proposal. LS Power offers the following revised schedule for the present initiative:

Phase 1A (Fall 2021 for RA year 2022)

March 2021 Board of Governors

• Planned outage process enhancements – phase 1 (Applicable prior to Summer 2021)
• RA Import requirements
• Operationalizing storage
• Backstop capacity procurement – CPM for local energy sufficiency

Phase 1B (Summer 2022)

September 2021 Board of Governors (Phase 1B)

• Operationalizing storage

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

LS Power does not have feedback at this time.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

LS Power does not have feedback at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

LSA and SEIA’s Draft Final Proposal comments focus on the following topics:

• Planned Outage 100% substitution requirement:  LSA and SEIA oppose the requirement generally, because there is no evidence that the benefits exceed the cost.  We also oppose the provision that could classify a Planned Outage extension where substitute capacity is provided as a Forced Outage if the request is submitted late in the outage timeline.

• Operationalizing storage resources/Minimum SOC requirement:  LSA and SEIA understand the CAISO’s concerns but believe that the need for this policy, and its impacts and details,are simply not developed well enough for implementation in Phase 1.  The CAISO has not provided any information about the need for the requirement, how many days it might apply, the reasonableness of the 110% “non-storage” threshold, the consequences of not dispatching storage discharge when it might be needed in hours not scheduled in the DA Market, or the potential economic impact on storage resources.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Oppose, for the two proposals above. 

No Position on the remaining Phase 1 issues.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

Not clear what’s meant by this question – Section 5 goes right into Section 5.1.1 (Planned Outage Process Enhancements) below, with no intervening text.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

LSA and SEIA oppose this 100% substitution requirement for several reasons, mainly related to lack of information on whether the benefits would exceed the costs.  This overall question includes the elements those listed below.

• Lack of  cost information.  The CAISO has presented no research on the cost of this proposal (i.e., cost to resource owners to acquire substitute capacity) and, without that information, it cannot tell whether the benefits exceed the cost, i.e., whether  the proposal is just and reasonable.

• Lack of benefit information.  This requirement could help ensure that CAISO has substitute capacity when needed, but the CAISO has presented no information about the nature or extent of the problem under current rules, i.e., the benefits of this blanket rules.  For example, no data were provided about:

• When or how often substitute capacity is required under the current rules.  For example, it seems likely that Planned Outages in off-peak months would be much less likely to require substitute capacity, so the proposed requirement would cause unnecessary costs without any benefit.  In addition, in Local Capacity Areas, all or most of the generation may already be committed to meet LSE RA Requirements, i.e., there may not be available substitute capacity to meet what may be an unnecessary requirement.

• How often substitute capacity is required under the current rules but not provided, e.g., whether it is common or just occasional for Planned Outages to need rescheduling to meet the current requirement (or how often the resource proceeds with the outage, now classified as a Forced Outage).  

• Lower incentives to submit Planned Outages early, since the substitute capacity requirement will be imposed regardless; under the current rules, outage requests submitted early are less likely to incur substitution requirements.

• Logical disconnect for Planned Outage extensions:  The CAISO proposal provides that, if a Planned Outage must be extended: (1) A new outage card must be submitted, with substitute capacity; and (2) if the outage card is submitted after the short-range Planned Outage window, the extension would be classified as a Forced Outage and count against UCAP. 

LSA and SEIA understand that the CAISO wants to provide incentives to submit new outage cards for extensions early in the original Planned Outage timeline.  However, there is no logic to classifying an extension submitted late in the timeline as a Forced Outage if substitute capacity is provided, since there is no additional burden on the CAISO system from the extension.  In other words, Planned Outage extension requests (or, indeed, Planned Outages generally) should routinely be approved if substitute capacity is provided.

As a separate matter, stakeholders requested establishment of an improved Bulletin Board for listing available RA substitute capacity.  Such a Bulletin Board would be especially useful if the CAISO implements the 100% substitution requirement for Planned Outages (for summer 2021 and/or afterwards), since there is no organized capacity market in the CAISO BAA.  LSA and SEIA urge the CAISO to adopt and implement this proposal.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

No comments.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

As much as the CAISO would like to implement this proposal in 2021, it is not sufficiently developed to be included in Phase 1.  As a foundational matter, the CAISO has not provided information establishing that this is actually a real concern, i.e., that storage resources active in the RT Market are actually depleting their SOC such that they cannot meet their DA Market schedules, and that this is causing CAISO reliability problems.  Other problems are described below.

• 110% trigger:” The Minimum SOC would only apply when “available non-storage resources” were less than 110% of forecasted load.  However, the CAISO has not presented key details supporting the reasonableness of that threshold, e.g.:

• Which non-storage resources would count (e.g., only RA resources or all resources); and

• Whether that “availability” determination would be based on market bids, outage cards, or other methods. 

Moreover, the 110% threshold seems to assume that no storage resources would be available to meet their DA Market discharge schedules – i.e., that 100% of storage resources would be depleted before discharge (e.g., during the NLP) – which seems like a very extreme assumption. 

Finally, the CAISO has provided no information about the impacts of the 110% threshold (or lower, perhaps more reasonable thresholds), e.g., the number of days when this restriction would apply, based on either historic or projected future data.

• Storage operating assumption:  LSA and SEIA agree with Agree with WPTF’s comment in the meeting that the proposal seems to based on the assumption that storage will only have one charge-discharge cycle a day and then needs to keep that charge until the evening NLP discharge.  The CAISO’s own data show that storage might be needed in the morning and evening, and doesn’t appear to work well with multiple daily cycles.

• Market need:  The CAISO proposal assumes that the DA schedules are always accurate and optimal, but high prices in the late afternoon (or other hours) could signal high market need then, perhaps even higher than the expected NLP hours. 

For example, high 5-6pm prices could signal that the NLP is occurring a bit earlier on a given day, or that a local or system unit has suffered a forced outage and must be replaced quickly; the CAISO proposal might actually cause reliability problems if storage isn’t dispatched to discharge in response to that market need.  (While CAISO clarified that operators could override the Minimum SOC restriction, if necessary, through an Exceptional Dispatch instruction, that is a burdensome process that could be made more so if such instructions become frequent.) 

LSA and SEIA also share PG&E’s concern that restrictions on dispatching storage (a fast resource) when needed might cause the CAISO to lean on Regulation, and deplete those resources.

• Best solution:  LSA and SEIA agree with the CPUC Energy Division that the proposal could restrict storage from fully participating in RT markets, and keep the CAISO from fully receiving the benefits that storage can provide.  We also agree with the ED that the CAISO should instead extend the 65-minute RT market look-ahead time horizon so this proposal is not necessary.  At best, this proposal could be a temporary bridge until that market improvement can be deployed, but it should be no more than that.

• Operator/SC notice:  The CAISO proposal doesn’t include any provision to notify storage SCs that the Minimum SOC requirement is in effect, leaving them to wonder when their apparently economic bids aren’t clearing the market.  The proposal should be revised to include such notice at the close of the DA Market, when that determination should be made.

• Hybrid Resource applicability:  The CAISO said in the meeting that the Minimum SOC proposal would not apply to Hybrid Resources, but it would apply to storage Co-located Resources.  This clarification should be included in the next version.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No comment.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

LSA and SEIA recommend moving the "Operationalizing Storage" topic to Phase 2.  This concept , and its implementation, need a lot more development.  The need for this provision has not been demonstrated based on information provided thus far, and there are too many policy and operational details still unresolved for this proposal to truly be a "Draft Final Proposal."

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No comment.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Our feedback is all contained in the above comments.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Metropolitan opposes the proposed interim real-time offer obligation for RA requirements and the enhanced attestation requirements unless modifications are made to these two proposals to include certain exceptions.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Resource Adequacy Import Requirements – Interim real-time bidding requirements for RA imports

Metropolitan supports the current must-offer construct for non-dynamic resource specific RA imports where day-ahead market bids awarded or self-schedules are carried over into the real-time market. However, Metropolitan does not agree with CAISO’s interim proposal to extend the must-offer obligation into the real-time market irrespective of the day-ahead market awards or self-schedules. The CAISO should revise its proposal to address non-dynamic resource specific RA import resources that are operationally constrained from offering full RA capacity into the real-time market when it is untethered to day-ahead market awards.  Exceptions for these resources are reasonable so CAISO can accommodate their unique operational attributes – attributes that do not otherwise make these resources less able or committed to providing RA. 

As an alternative to an exception, the CAISO could permit a SC to submit an annual attestation as to the resource and fuel type of a non-dynamic resource specific RA import resource in cases where a single resource of known fuel type is the only resource in a SC’s import portfolio. This would allow a non-dynamic resource specific resource to have a bidding requirement specific to its resource type, which should better reflect the resources operational constraints.  In comments on the 6th Revised Straw Proposal that are due next week, Metropolitan is proposing a similar attestation process for non-dynamic resource specific RA import resources to receive UCAP treatment specific to the resource type.

Take for instance a resource that can only be scheduled on a day-ahead basis due to operating constraints.  This resource would not be able to increase its generation up to the RA quantity in real-time assuming the day-ahead schedule was not already at the maximum RA value. The CAISO’s proposal could ultimately lead to artificially reduced resource UCAP values because the Scheduling Coordinator would submit outage cards to avoid infeasible real-time market awards for the difference between day-ahead and real-time market schedules.  These outages would be taken and the UCAP penalty assessed even though the resource was online meeting system needs based on day-ahead market schedules.  The unintended consequences of this action could result in historically reliable non-dynamic resource specific RA imports no longer being able to provide their full amount of day-ahead dependable RA capacity to the CAISO balancing authority area at a time where every megawatt of RA capacity is needed.

The CAISO has not properly justified the interim offer obligation that excludes any exceptions for operationally constrained resources.  The CAISO justifies its position based on the “…CPUC Track 1 decision, and trying to balance market efficiency and liquidity…”.[1]  This provides insufficient justification for the disruptive interim proposal.  The CAISO also discusses how non-dynamic resource specific resources are not modeled in the full network model to show why it is not adopting technology-specific offer obligations.[2]  That explains why technology-specific offer obligations are not proposed but does not support the need for the interim offer obligation.  Finally, the CAISO raised concern about potential import bidding practices intended to avoid market awards.   However, this too seems insufficient to justify the interim non-dynamic resource specific resources offer obligation because the CAISO later notes that “bidding high does not necessarily indicate an intent to avoid an award”,[3] as well as pointing out that a host of other RA Enhancements proposals should mitigate the bidding practice concern by providing incentives to bid at marginal cost.[4]

The interim must-offer obligation would be a disruptive and costly requirement that would unfairly prevent some resources from providing RA. The interim period is also problematic because it is tied to the Day-Ahead Market Enhancement initiative, and that initiative’s timetable is uncertain. The CAISO should remedy its proposal to recognize operational constraints so to avoid unfairly prohibiting some resources from providing RA during the interim period.

[1] Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, at p. 57, Dec. 21, 2020.

[2] Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, at p. 59, Dec. 21, 2020.

[3] Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, at p. 59, Dec. 21, 2020.

[4] Id. at 62-63.

Resource Adequacy Import Requirements – Attestation Requirement

Metropolitan generally supports the four attestation requirements included in the CAISO proposal;[1] however, we have concerns about the CAISO proposed process for attestation as CAISO explains it relating to attestation requirement #2.[2]  CAISO should create a grandfathering element to its proposal to avoid excluding RA resources under existing contracts from the RA program based on existing contracts being unable to require information CAISO now wishes to have to support the RA program.  Pointing to a 2023 RA year implementation for existing contracts that puts the onus on existing contract holders is not sufficient consideration of existing contracts.[3]

The CAISO’s proposal places attestation requirements on the Scheduling Coordinator, but where the import RA resource is owned by a third-party supplier the SC is ultimately required to “coordinate” with the supplier and receive the information needed for the attestation.[4]  This entails the SC needing the supplier to provide new information on existing contracts in order for the SC to continue to show the imported resource on the RA supply plan. This proposed requirement would impact existing contracts despite CAISO being unable to obligate the supplier to provide additional information, and the contracting LSE may similarly be unable to request additional information under existing contracts.

Metropolitan strongly disagrees with the CAISO proposal that agreements may require modifications to meet the attestation requirements with the only alternative being to no longer show that import RA resource on a RA supply plan.  If an SC representing a third-party seller is required to provide an attestation which was not envisioned in the agreement and the third-party seller is not willing or able to provide an attestation, this would invalidate the resource from providing RA capacity.  This would likely result in Metropolitan having to secure new capacity resources at a greater cost than its existing agreements to meet its RA obligation at a time when capacity resources are scarce.  At a minimum, legacy agreements should be grandfathered from the proposed attestation requirements if the expectation is that a third-party seller would be required to provide information to inform the attestation.

[1] Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, at p. 33, Dec. 21, 2020.

[2] Resource Adequacy Enhancements, Day 2: RA Enhancements Draft Final Proposal and Sixth Revised Straw Proposal, at slide 35, Jan. 5-7, 2021: http://www.caiso.com/InitiativeDocuments/Day2Presentation-ResourceAdequacyEnhancements-DraftFinalPropsoal-SixthRevisedStrawProposal.pdf.

[3] See Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, at p. 37, Dec. 21, 2020.

[4] Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, at p. 34, Dec. 21, 2020.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Middle River Power, LLC ("MRP") has concerns about the CAISO’s proposal to require generators to provide substitute capacity for all planned outages.  Instead of conforming California’s unique monthly RA program to the best practices of other ISOs, this proposal will impose a substitution requirement on generators in an increasingly tight market – the effects of which on generators’ ability to take needed planned maintenance are not fully known. 

MRP supports all aspects of the CAISO’s RA import proposal except for the CAISO’s proposal to allow RA importers to use non-firm transmission for all but the last delivery leg to the CAISO.  

MRP supports the CAISO’s proposal to expand its CPM backstop authority to allow it to procure capacity where load-serving entities (“LSEs”) have not secured resources capable of provided needed energy with a local area. 

In these comments, MRP will refer to the Draft Final Proposal Phase 1 as the DFPP1.    

2. Provide your organization’s overall position on the draft final proposal – phase 1:

 MRP supports some aspects of the Phase 1 proposal and does not support other aspects of the Phase 1 proposal. 

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

MRP’s comments on the topics discussed in Section 5.1 (Planned Outage Process Enhancements, RA Imports and Operationalizing Energy Storage) in the individual subsections below.  

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

The CAISO observes the CAISO’s planned outage options are constrained by the monthly nature of the [CPUC’s] RA program.  (DFPP1 at page 12.)   MRP agrees.  The CAISO, however, proposes to further enhance its uniqueness among ISOs by not addressing the core problem (the monthly nature of the RA program) but by requiring substitute capacity for all planned outages.   While MRP understands why the CAISO is proposing this solution, the DFPP1/6RSP includes no discussion about the possible effects of requiring substitute capacity for all planned outages in a system with shrinking capacity margins.  The CAISO is certainly aware of the tightening supply conditions in the West and the increasing displacement of duration-unlimited resources with intermittent, duration limited resources – resources that may or may not be suitable for substituting for dispatchable, duration unlimited resources.   MRP respectfully encourages the CAISO to not move forward on this aspect of the proposal until the CAISO more fully discusses what the likely effects of requiring substitute capacity for all planned outages will be on generators’ ability to take planned outages.   MRP also encourages the CAISO to address the fundamental problem (the monthly nature of the RA program) by advocating for or adopting annual RA requirements. 

MRP would also like the CAISO to discuss whether, and to what extent, requiring generating unit owners to provide substitute capacity for planned outages creates an incentive for those owners to hold back capacity from the market, in seeming contradiction to principle 3 (DFFP1 at page 6; holding back capacity to cover substitution obligations has the same effect as not showing the capacity – the held-back capacity is unavailable for anyone else’s use.) 

On the January 5 call, the CAISO seemed receptive to the idea that, if a generator demonstrates that it has already secured substitute capacity when it requests a planned outage, when that generator is required to meet a system need, the CAISO should immediately approve that planned outage request.   While MRP understands that certain resources may be uniquely needed under certain conditions such that the CAISO cannot approve a planned outage request even if the generator provides substitution at the time of the request, the CAISO should develop a framework that approves planned outages at the time the request is made if substitute capacity is provided at the time of the planned outage request.  Further, once a planned outage is granted, it should not be cancelled exept for extraordinary, unanticipated conditions.  If the planned outage must be cancelled, the generator should be compensated for any additional costs incurred, including the cost of securing substitute capacity at a different time. 

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

MRP strongly supports most of the CAISO’s RA import proposal, namely, requiring that:

• RA imports to be verifiable and resource-specific;
• RA importers attest that the capacity is dedicated solely to the CAISO; and
• RA imports must offer in the real-time market, even if they do not clear the day-ahead market, and the CAISO will insert bids for these imports if necessary. 

MRP remains concerned that the CAISO’s proposal continues to allow RA import suppliers to use monthly non-firm transmission capacity for all but the last delivery leg to the CAISO.  MRP understands that the CAISO has taken this position as a compromise because of concerns about impacting the liquidity of the RA import market (e.g., DFPP1 at page 40).  However, the CAISO also acknowledges that the firmness of transmission service bears strongly on the dependability of the RA import:

• “RA import deliveries on Non-Firm transmission, of lower transmission priority, are particularly problematic because a transmission curtailment across the path first affects deliveries on Non-Firm transmission.”  (DFPP1 at page 41)
• “Depending on CAISO system conditions, the potential non-delivery of RA imports because of a failure to secure proper transmission service prior to delivery could jeopardize the CAISO’s ability to manage system conditions.” (DFPP1 at page 43)
• “Nevertheless, the CAISO also recognizes the importance and reliability benefit of RA imports being deliverable on a higher priority transmission service.”   (Id.)

Given the lengths that the CAISO goes through to ensure that energy from internal resources is deliverable to load under high (and low) load conditions, MRP does not support the CAISO allowing RA imports to deliver power that California depends on under stressed system conditions across non-firm transmission.  MRP also remains unconvinced of RA importers’ ability to demonstrate that they have secured adequate transmission to reach the last firm transmission leg when they are sourcing RA import power from a large and dispersed pool of resources (MRP interprets this proposal to mean, and strongly supports the CAISO’s proposal to require, that RA importers identify all the spcific generating resources that could potentially source the RA import power,).  While allowing RA import power to come from a dispersed pool of resources increases the likelihood that such power can be provided, even when some of the sourcing resources are restricted, doing so also complicates ensuring that reliable transmission service has been secured in advance.  On this issue, MRP encourages the CAISO to err on the side of reliability rather than liquidity.   

The CAISO proposes that transmission arrangements supporting RA imports be secured by the time monthly RA supply plan showings are due 45 days prior to the start of the month (T-45D).  Given the timing for submitting annual RA plans – which must cover 90% of a supplier’s RA next-year requirements – does the CAISO also intend that RA imports shown on annual RA plans demonstrate that they have secured transmission of sufficient firmness at the time of the annual showing?   

Finally, MRP supports the CAISO’s proposal to require RA imports to offer to the CAISO’s real-time market even if the imports have not cleared the Day-Ahead market.  This change should help discourage RA imports from submitting high-priced Day-Ahead energy bids to extinguish any obligation to offer or provide energy to California and will provide for more equitable treatment between RA imports and internal RA resources.  

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

MRP supports the CAISO’s proposal to enforce a minimum charge requirement on energy storage resources in the real-time market to require energy storage resources to adhere to their day-ahead schedules on days in which non-storage resources cannot meet at least 110% of the net load.  MRP views this as a prudent accommodation to ensure that the duration-limited energy storage resources, which count towards RA requirements at their nameplate values (the same as other duration-unlimited resources) with as little as a four-hour duration, are available for their RA duration across the most operationally challenging hours of the day.  

On the CAISO’s call, it was suggested that increasing the horizon of the look-ahead for the CAISO’s real-time market was the key to operationalizing storage through some means other than the minimum charge requirement.  MRP disagrees.  Extending the real-time look-ahead will invariably degrade the accuracy of the later hours, which increases the operational risk associated with allowing duration-limited resources to discharge in the earlier hours.  Moreover, unless the CAISO's look-ahead accounts for contingencies, and ensures sufficient recharge time, allowing duration-limited resources that are set up to operate in later hours to respond to contingencies in earlier hours will not optimally set up the system market for later hours.   

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

MRP supports the CAISO’s proposal to extend its CPM backstop authority to procure additional capacity within a local area that fails to meet the energy sufficiency test.   This is a common-sense expansion of the CAISO’s CPM authority, given the increasing reliance on duration-limited resources.  In fact, the CAISO should be required to use its backstop authority to procure where there is insufficient energy within a local area.  

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

The CAISO’s phased implementation plan – in particular, proposing to defer more controversial and complex items until 2023 – is reasonable.  It will take significant effort to develop some of the phase 2 elements (e.g., the planned outage pool and modifications to flexible resource adequacy).  

While it goes without saying, MRP will say it: the 2022 implementation of some of the Phase 1 elements (In particular, RA import rules) will hinge on whether and how quickly the CPUC also embraces those proposed changes.  The same can be said of the Phase 2 proposed changes for 2023, but with those elements there is more time available to finalize and implement those changes. 

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

MRP has no comments on the decisional classification.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

MRP has no additional comments.  

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

2. Provide your organization’s overall position on the draft final proposal – phase 1:

MSCG appreciates the efforts put forth by the CAISO and contributing stakeholders and applauds the advances and coordination to arrive at the final straw proposal. We are encouraged by the progress achieved, but are concerned by the direction taken on a few of the initiatives.

CAISO contends the greater WECC landscape is in a capacity constrained environment. Individual balancing authorities are experiencing stressed conditions coincident with neighboring balance authorities. Conditions on the ground this past August and September appear to prove that contention. As such, MSCG believes it is vital, and in WECC-wide interest, to encourage participation that leads to robust generation diversity and is conducive to market liquidity.

MSCG transacts with a proven track record, ample intertie transmission and a diverse generation suite. The ability to continue to perform effectively relies upon clear guidance from market operators and regulators, most notably CAISO and the CPUC. This guidance historically has displayed distinct linkage between the two entities and allowed for clarity of purpose. In this RA process, it was understood that CAISO would introduce new rules and parameters to inclusively replace CPUC guidance. However, it is becoming clear that CAISO’s track will establish separate requirements in addition to the CPUC rules. Potential confusion and repetition risks a dampening effect on the import RA market at a particularly crucial time in WECC RA planning and standard setting. It is already evident that recent rules implemented by CPUC (namely self-scheduling requirements) are causing assets outside of the CAISO BAA to be underutilized from an import RA perspective. The additional minimum upstream transmission requirement being considered by the CAISO without coordination with the CPUC will blur guidance and create confusion and uncertainty. This will undoubtedly lead to reduced participation from bona fide physical suppliers and lead to inefficient results. MSCG urges CAISO and the CPUC to align rules to best facilitate the planning and delivery of much needed reliable capacity from imports.

The final straw proposal has landed upon requiring firm transmission on the final transmission leg with a minimum of monthly non-firm on all other intervening legs. The firm requirement on the last leg is warranted as the data has shown that the last leg to CAISO can become constrained. However, there is no evidence that a minimum upstream requirement is useful to ensure delivery of imports. In fact, the late summer 2020 RA import delivery rates indicate the opposite. In the DMM analysis released on November 24, 2020, RA imports were well within reasonable expectations for historical delivery norms, even in the most stressed conditions seen in decades. The DMM went on to state that intertie transmission constraints and congestion (i.e. on the last line of interest) were the primary drivers of any reduced awards and imports. Imports that utilized non-firm transmission on upstream legs saw no detriment to the fulfillment of the schedule. The priority level on upstream transmission is irrelevant to the security of the final leg of transmission. If needed, intertie curtailments on the BPA system are administered on a pro-rata basis to firm holders on the Southern intertie portion (last leg of interest) and are not interested in any upstream priority levels. Therefore the CAISO’s proposed rule to require firm transmission rights on the last line of interest is sufficient to ensure reliable flows.   Further, such stringency on upstream paths will diminish the ability of importers to promptly respond to forced generation outages or other constraints and still provide rational substitution alternatives to support CAISO needs.  In the current paradigm, CAISO leaves uncertainty around the preferred course of action should real time conditions warrant reasonable substitution from an alternative generator or transmission path. The notion of minimum upstream transmission requirements provides little flexibility to proactively manage suboptimal conditions and continue to provide much needed energy deliveries.  In this vein, CAISO must also reconsider the suggested inclusion of DMM and FERC scrutiny in the face of successful energy deliveries that do not meet the new upstream transmission requirements. The specter of a tariff violation, or DMM and FERC intervention, for scheduling and successfully delivering on incorrect transmission priority seems a disproportionate response and will inhibit market participants from fully engaging the RA import process. The existing penalty structure for non-delivery, and risk of reduction or prohibition of future RA import participation through UCAP reduction, is significant enough to avoid additional interdiction. While it is fair to inspect the question of transmission reliability, it is MSCG’s belief that the actions, penalties and added oversight proposed will come at the cost of genuine solutions, flexibility and liquidity, and in effect, decrease the overall participation of the RA import process and drive up collective cost.

MSCG, along with other participants, advocates for a re-evaluation of the single source BAA decision for import RA. Use-limited resources that can provide reliable capacity for defined hours in a day or seasons in a year will be left out of the mix and become wasted utility without a change to the guidance. Examples include run of river hydro projects and generators with a split in light-load and heavy-load capability. These types of firm generation sources would benefit the CAISO if viewed as complementary to other generation sources, including those situated outside a particular BAA. Current BAA aggregation principles solve for some generation combinations, but it needlessly restricts full utilization of the diverse portfolio that the WECC possesses. The evolution of the WECC market suggests that rather than prohibit usage of a multi-BAA structure, CAISO should expect the proliferation of use-limited resources and encourage tariff language that can help promote the cooperation between these types of resources and the more traditional generation portfolio. The administrative burden of monitoring any number of BAAs is admittedly cumbersome, so MSCG would welcome the ability to list up to two (2) BAAs to backstop an import RA contract. This should allow for the flexibility required to supplement use-limited resources in the new RA environment.

By way of example, there are resources that can generate more in heavy load hours (and evening peaks (i.e. 100MW) but less during light load hours (i.e. 20MW).  Under CAISO’s proposed must offer rules a resource has to be available 24 x 7.  If these new rules are enacted, the resource in the example above can only offer 20MW as import RA.  It cannot offer 100MW because it cannot generate at that level in light load hours.  The single BA restriction prevents this particular resource (that is in its own separate BA) from being supplemented by another resource in non-peak hours.  

The single BA restriction is not only inefficient, it is discriminatory. MSCG has pointed out previously that vertically integrated utilities can freely substitute many different sources in their BAA to backstop an import RA contract. However, a marketer that aggregates resources cannot do the same as its sources may reside in different BAAs.  MSCG strongly recommends to CAISO that import RA suppliers be allowed to list up to two (2) BAA sources to backstop an import RA contract. This would not only increase reliability, but would also increase liquidity and allow more physical resources to participate in the import RA program. Most importantly, it will not violate CAISO’s concerns of suppliers making commitments without supply as that concern is already addressed through the attestation elements of the CAISO proposal. The attestation would still show that the resources across two (2) BAs are surplus but it will allow the resources to supplement one another in case one resource is use-limited across certain hours as in the example above.   It will do no harm to the RA program to allow import suppliers to list up to two (2) BAAs to backstop their import RA contracts.

MSCG appreciates the considerable efforts in the RA process thus far. The CAISO has been receptive to comment and has shown a laudable willingness to engage stakeholders. MSCG respectfully requests that CAISO and the CPUC align more closely in decided rulings and language. We respectfully request dismissal of the minimum upstream transmission requirement and heightened scrutiny and penalty for successful deliveries. Firm transmission on the final leg should be sufficient. Finally, MSCG respectfully requests consideration of up to two (2) designated BAAs for an RA contract to allow for use-limited resources or a combination of complementary resources.  This will allow for a more level playing field with vertically integrated utilities that can freely substitute resources and will provide more competition and increased liquidity in the import RA market.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Please see NCPA’s responses to questions 3, 4, 5, 6 and 7.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

NCPA generally supports the CAISO’s principles for achieving reliability through the RA program, but believes that an important criterion is missing. That principle is affordability. NCPA’s responses to questions 4, 5, 6 and 7 reflect NCPA’s experience as a load serving entity responsible for providing reliable and cost-effective service to its member customers in real-world operating situations where very few resources actually run 24-7-365. CAISO’s proposals must recognize and incent appropriate resource behavior in real-world operating situations where entities must operate cost effectively, and where CAISO’s operators have historically had discretion to accommodate generator needs to take outages in urgent situations when operating conditions allow.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

NCPA supports retaining the planned outage process that is currently in place.  The proposed phase 1 revisions to the planned outage procedures will not incrementally improve reliability compared to the current procedures, will reduce operator flexibility, and will disrupt contracts that were negotiated under the existing rules.

NCPA believes that the current planned outage process will continue to be sufficient until CAISO is able to fully evaluate and develop the longer-term phase 2 enhancements projected to be implemented for RA year 2023 and beyond.  The current process already allows operators to require substitution before approving outages whenever it is needed; based on NCPA’s understanding of the phase 1 proposal, implementing the phase 1 enhancements proposed by CAISO would potentially limit the CAISO operators’ discretion and flexibility to review and approved outages as system conditions may permit.  Furthermore, requiring SCs to provide substitution capacity even when an operator determines that system conditions do not require substitution could be detrimental to system reliability: unnecessary deferral of maintenance that may otherwise be timely completed when system conditions allow, could result in such capacity not being available for a longer period of time in the future. Also, a significant amount of the RA capacity for calendar year 2021 has already been contracted, and the balance of benefits and burdens associated with such arrangements were likely crafted with the current rules in mind; therefore, implementing new enhancements could have unanticipated consequences on such arrangements.

Regarding the CAISO’s process for handling requests for extending planned outages, NCPA generally supports the practice of creating a new outage card for an extension. NCPA believes this practice will limit risks associated with altering or changing the status of the original outage card.  The process of creating a new card will be a cleaner approach in the event conditions change between the original outage submittal and any required updates.

Substitution capacity is expensive, when it is available at all. A request to extend a generation outage generally means that the generator has opened the unit and found more difficulty than anticipated. At that point, a substitution requirement sets up undesirable incentives. If the unit is truly inoperable, no requirement the CAISO imposes will prevent it from declaring a forced outage. If the unit can be nursed along for a time, a substitution requirement that cannot be fulfilled gives the operator the incentive to run the unit until it breaks. Neither of these choices helps CAISO maintain long-term reliability. CAISO should clarify that if a planned outage extension request is denied, and a unit is unable to secure replacement capacity for the extended period, a generator should still be allowed to complete the maintenance underway during the extended period by classifying the outage as a Forced or Urgent outage.

NCPA is interested in working with the CAISO to further develop the concept of a planned outage replacement pool.  NCPA previously offered tentative support for the concept of a planned outage reserve margin, and NCPA would like to better understand the similarities and differences between the two concepts.  These concepts may help alleviate some of the current complications that arise when a resource must take a brief outage during a period when the resource has been committed as RA, and may also help address some of the current challenges associated with planned to forced outage reporting. NCPA also supports the concept of a planned outage outlook calendar, as this would be a useful tool to enable SCs to more effectively plan the timing of future outages.

While NCPA understands CAISO’s reasoning for its proposal to reclassify October as a summer month for outage coordination purposes, NCPA strongly believes CAISO must exempt hydroelectric resources from this proposed requirement due to the fact that many hydroelectric units are forced to perform critical maintenance in October due to a variety of factors that are outside of the resource owner’s control.  For example, many hydroelectric facilities are located in geographic regions that are impacted by environmental factors (e.g., snow).  October has historically been the period of time when reservoirs are at their lowest storage levels due to flood control and other water management activities.  As such, critical infrastructure is more readily accessible at this time.  Prohibiting hydroelectric resources from performing maintenance during the month of October, the only time when many of these units can be effectively shut down for maintenance, could result in key maintenance not being performed, which could ultimately negatively impact longer term reliability (especially for a grid that is dependent on the flexible operations of the hydroelectric fleet).

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

NCPA’s import RA resources comply with CAISO’s proposed definition of a Non-Dynamic Resource Specific RA Imports encapsulating (1) a single resource, (2) a specified portfolio or aggregation of resources within a single BAA, or (3) a BAA’s pool/system of resources.  This definition will prevent potential resource double counting without unduly disqualifying reliable systems and/or pools of resources. These resources can also satisfy the other required attestations.

With regard to the must-offer requirement, NCPA appreciates CAISO’s recognition of the unique operating characteristics of a Load-Following Metered Subsystem (LF-MSS) and its commitment, stated on page 107 of the proposal, not to modify how resources that serve an LF-MSS are treated under the existing tariff.  Consistent with that commitment, as a LF-MSS NCPA is contractually required to balance its demand and supply in real-time during each 5- minute interval. If an LF-MSS fails to provide sufficient supply to meet its demand requirements in real-time, the LF-MSS is subject to significant deviation penalties. To perform its duties as a LF-MSS, NCPA is required to maintain sufficient capacity in real-time that it can move up or down to balance its portfolio. As a result, since the inception of the RA program, CAISO has exempted RA resources claimed by a LF-MSS, including RA imports, from the must-offer obligation. Because NCPA is responsible for maintaining its own supply balance and load following, it reduces the CAISO’s collective need for real time access to capacity. This unique operating practice has been historically recognized by CAISO in the context of Resource Adequacy, and how must offer and bidding requirements may (or may not) apply to a LF-MSS.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

No comment at this time.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No comment at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

No comment at this time. 

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

NCPA supports the proposed decisional classification for this initiative. The CAISO RA program does not currently apply to EIM entities, therefore only CAISO Board approval is required.  

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

No comment at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

PG&E’s comments are summarized as follows:

1. Planned outage process enhancements: PG&E continues to have concerns that CAISO’s POSO enhancements will drive additional artificial scarcity in the RA markets and could have the unintended consequence of not allowing timely maintenance. Additionally, PG&E   requests clarification on specific implementation details of the Phase 1 Planned Outages process enhancements. In phase 1, for summer 2021, the CAISO proposes to implement a short-term full substitution requirement for RA resources on planned outages. PG&E raises some practical implementation questions not addressed in the proposal and requests urgent clarifications (e.g., the tool to submit a planned outage and to provide substitution; the type of resources that can be used to provide substitution; the timeline for BPM and tariff changes etc.).
2. RA import requirements: PG&E still opposes requirements that import RA resources must be resource specific beyond identifying the source BAA, have firm transmission to support the transaction and require an attestation. PG&E opposes the attestation proposal due at the time of the submission of the supply plan. PG&E requests a revised implementation timeline with an assessment of the step 1 of the phase 1 before implementing any mandatory requirements as proposed.
3. Operationalizing Storage Resources: PG&E welcomes the revised proposal to apply the minimum state of charge requirements only on the most critical days - when non-storage resources cannot meet 110% of net load. However, PG&E believes that the implementation of the minimum SOC requirement by the end of 2021 is too aggressively scheduled. PG&E also asks clarification questions of the implications of the minimum SOC implementation on the UCAP counting and asks CAISO to address the bid cost recovery (BCR) calculation for storage.
4. New CPM authority: The CAISO proposes the implementation of a new CPM authority in Phase 1, to procure local RA after an area or sub-area fails to meet the energy sufficiency test. The current proposal lacks many details that must be clarified prior to implementation (e.g., energy sufficiency test).

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

See the answers below (questions 4 to 6).  

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

The CAISO proposes to move forward with a full substitution requirement for RA resources on planned outages. From a reliability standpoint, PG&E understands the need to move forward with an interim solution for summer 2021.

However, PG&E raises here some practical implementation challenges/questions not addressed in the proposal and requests urgent clarifications:

• Which tool LSEs will use to submit a planned outage and provide the substitution?
• Are there any requirements for resources to be used to substitute a resource on a planned outage? Could a local resource replace a system resource on planned outage?
• What if an LSE has to change the substitution resources after a planned outage has been approved by the CAISO? Under what timeframe should the LSE notify the ISO? Through which tool?
• What if the planned outage is denied by the ISO? Could the LSE submit another replacement? In which timeframe? Through which tool?

• PG&E has concerns over committing specific resources far in advance given that many changes can occur within an RA portfolio between T-45 and T-8. If a planned outage is submitted before T-45 and conditionally approved, what will the specific requirement on T-45 be for the scheduling coordinator (SC) to demonstrate substitution is available? Could the SC provide a list of resources with available substitution capacity or must they commit a specific resource in CIRA? If an SC is required to commit a specific resource at T-45, and there are multiple changes to outages and the RA portfolio, an SC may be incentivized to both (a) create additional “padding” to the duration of planned outages to account for contingencies and (b) wait until T-8 or later to make any substitution changes in OMS in order to avoid having to do so multiple times. These resulting behaviors are opposite to the CAISO’s objectives of encouraging early outage notifications and minimizing the need for substitute capacity. PG&E recognizes the CAISO’s goal of ensuring substitution is available but urges an approach which offers flexibility in meeting these requirements.

• The CAISO should consider the effect substitution requirements have on operations/reliability and prioritize development of a longer-term proposal that allows for certainty generators can perform timely maintenance. PG&E requests that the CAISO recognize that power generation/O&M prioritizes its work in certain ways under the current definitions/timelines which may be disrupted by this change. Fast-tracking this policy may have the unintended consequence of the SC forgoing small outages to keep resources operational and then be pushed into taking a larger forced outage as a result, even if there were periods where the outage could have been taken with no reliability risk.   

• PG&E requests that the CAISO make it explicit that substitution capacity can be provided in any form (i.e., system can be substituted for local).

• PG&E requests CAISO to specify which months will be considered for summer 2021.

• The CAISO should clarify that the planned outage process changes being fast-tracked in Phase 1 are temporary and will sunset at the end of the summer of 2021. PG&E understands the CAISO’s desire to implement Phase 1 in accordance with its 2021 Summer Readiness initiative, however, it is unclear whether the improvements are to be in place only for summer 2021 or if they will extend later in the year and/or indefinitely. PG&E requests that the tariff change that the CAISO will file at FERC clearly states the interim aspect of the proposal and specifies an end date.

Options for planned outages extensions:

• PG&E requests more information on the CAISO’s ‘Option 3’, which is to allow extensions of planned outages so long as substitution is provided. PG&E likes this approach since the existing definitions of planned and forced outages are familiar to both the scheduling coordinator (SC) and the power generation/O&M roles within the utility. However, the functionality to provide substitution for the extended portion of a planned outage currently does not exist in CIRA. Can CAISO comment on which modifications to CIRA would be required in order for this option to be feasible?

• The CAISO’s ‘Option 1’ proposal for extending planned outages requires more clarification and implementation details. PG&E recognizes that switching to a forced outage card does have the added benefit of accessing substitute capacity for the extended portion of the outage. However, there may be potential issues with the granularity of this requirement. If a planned outage needs to be extended for 15 minutes, would the SC still be able to extend the outage under the current practice, or would it be required to submit a forced outage card for the additional 15 minutes? PG&E requests more detail on whether this is a daily, hourly or sub-hourly requirement.

Consistency issue with the phased implementation:

On page 16 of the Proposal and on slide 10 of Presentation Day 2, the CAISO stated that “All outage requests submitted after the short-range study window submission deadline will be treated as forced, urgent, or opportunity outages.”

PG&E understands the interim planned outage process enhancements for summer 2021 will be implemented with the existing outage definitions in place since the outage definitions proposal (introducing urgent, or opportunity outages) are within UCAP in phase 2 and the CAISO will clarify this in the coming proposal.

Timeline for tariff and BPM changes and CIRA guide:

PG&E requests the CAISO provide a very specific timeline for when tariff and BPM updates and the new CIRA guide will happen for the phase 1 of the planned outages process proposal. PG&E also requests that CAISO holds a workshop to discuss how this change would be operationalized.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

PG&E still opposes requirements that import RA resources must be resource specific beyond identifying the source BAA, have firm transmission to support the transaction and require an attestation.

PG&E offers comments on the implementation plan and the RA import requirements.

Implementation timeline:

PG&E is concerned with the implementation timeline proposed by the CAISO and requests step 2 to be postponed for RA compliance year 2024 after an assessment of the step 1 is performed.

The CAISO proposed to implement the RA import requirements in phase 1 “through a 2-step process:

• “The step 1 for RA compliance year 2022 will be a bridge year with suppliers encouraged, but not required, to meet the identified policy requirements for RA imports to allow for the review of contracts to ensure compliance with requirements and allow for acquisition or development of a strategy for transmission acquisition to support RA imports.
• Then the step 2 will implement mandatory compliance with RA import rules starting with RA compliance year 2023.”

Due to the recent changes in RA rules implemented by the CPUC and many stakeholders’ concerns on the RA import requirements proposed by CAISO, the proposed timeline should include an assessment of the first bridge year to evaluate any benefits of recent rules before implementing mandatory RA import requirements proposed by the CAISO.

Consequently, to allow enough time to evaluate rules changes in place and assess any benefits of the “step 1, the step 2 of the timeline must be postponed to fall 2023 for RA year 2024, any decision making the CAISO RA import requirement mandatory should be delayed to 2023 (instead of 2022).

Resource specific requirement:

PG&E opposes a requirement that import RA resources must be resource specific.

CAISO has shown that the vast majority of the import RA resources are non-resource specific (see matrix 5 - link CAISO to CPUC document). As noted in previous PG&E’s comments, the CAISO’s proposal therefore risks significant disruption to the market.

Additionally, and as noted above in the comments on the timeline, the CAISO’s proposed changes go beyond those recently adopted by the CPUC. The CAISO should provide a clear demonstration that the CPUC’s rule changes are not already sufficient to address concerns with import RA resources before introducing a divergence in the RA rules between the CPUC and the CAISO.

Prior to implementing mandatory requirements, preventing non-resource specific import resources from qualifying as RA, a transition plan must be developed by the CAISO. The transition plan should provide clear guidance on how existing import RA resources (mainly non-resource specific resources) can continue to provide RA. As proposed in the timeline comments above an assessment of step 1 should be performed.

Firm transmission requirement:

As PG&E noted previously (see PG&E's comments to the 5th RSP and the September workshop) and as noted by many other stakeholders, a firm transmission requirement could result in only a few market suppliers making import RA available due to market power associated with firm transmission rights. Transmission holdings should not be able to be used as a lever to limit competition in the capacity market. PG&E believes the CAISO should further evaluate the impact of requesting firm transmission on RA markets and the overall cost of RA imports given the current structure of firm transmission and requests an assessment of the step 1 is done before implementing the mandatory firm transmission requirement.

Attestation:

PG&E generally supports the CAISO’s current import RA proposal to specify the source BAA.

PG&E believes more details are needed to understand how the CAISO will validate and enforce whether the source BAA identification will be consistent with e-tags. What will be the consequence if the identification of Source BAA is not maintained through the CAISO energy markets?

In the proposal (page 33), the CAISO proposes that “Scheduling Coordinator submitting the supply plans, which include RA import resources, must attest to the following elements at the time of submission of the supply plan: 1. The capacity shown is owned or has been contractually secured; 2. The capacity shown has not been sold or otherwise committed to any other party than the LSE identified on the plan; 3. The capacity can only be interrupted for reliability reasons as determined under the host BAA’s tariff, a transmission curtailment, or a plant outage; and 4. Transmission service of proper firmness (cite tariff section) has been reserved for the delivery of the RA import resource(s) to the CAISO.”

PG&E believes at a minimum the attestation requirements should only be due when e-tags are submitted in the Day-Ahead timeframe. PG&E’s opposition to the attestation due at the time of the submission of the supply plan is due to the need for the CAISO to modify its timeline for attestations to account for when firm transmission is released in other BAAs. PG&E could support the attestation requirements at the time of the submission of the supply plan if the firm transmission requirement is removed.

Without a better understanding of when firm transmission is released in other BAAs and adjusting the attestation requirement associated with firm transmission to accommodate these other BAAs' schedules, the implementation of this proposal is likely to cause CAISO to lose several thousand MWs of imports that have been reliable for decades.

Instead, of focusing on the attestation provisions, PG&E also reiterates its previous comments asking CAISO to work with other BAs in the West on non-recallability protocols and to address this question at the appropriate regulatory level FERC/NERC. In addition to or in lieu of firm transmission requirements, PG&E encourages the CAISO to focus on establishing non-recallability protocols with other Balancing Authority Areas (BAAs) in the West and include pseudo ties and dynamic scheduling. These types of arrangements will harmonize the transmission protocols of the CAISO and external BAAs in ways that achieve the CAISO’s objectives of source specific imports that can be determined in sufficient advance notice to be considered reliable on a forward basis.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

PG&E appreciates that CAISO believes the minimum SOC requirement is needed to protect DA market awards on batteries with RA on peak need days.

Implementation question/issue:

Given that the implementation of the requirement has not been reviewed or tested by market participants, and that changes to market participant bidding systems are therefore highly reliant on the success of an unverified or incompletely verified system and process change, PG&E believes that implementation of the minimum SOC requirement by the end of 2021, let alone on an expedited schedule for summer 2021, is too aggressively scheduled. PG&E proposes as an alternative that CAISO require self-scheduling of day ahead awards (both charging and discharge) on critical days, with residual charge and/or discharge capacity bid into the market per RA MOO requirements only in hours already having day ahead awards, and only in the direction of awards.

The number of batteries subject to this requirement will be small enough during Summer 2021 that the requirement can be checked manually prior to the market close by CAISO and market participants, and bids modified if the requirement is not met. The requirement can then be more thoroughly vetted and implemented on the same schedule as other RA enhancements, that is to say, to be completed in 2022. 

PG&E is also concerned that all implications of the minimum SOC implementation for BCR be vetted in the stakeholder process prior to implementation, as the requirement undoubtedly incurs a market opportunity cost for batteries otherwise capable and willing to bid their entire operating ranges per RA requirements in all hours of the day.

PG&E is additionally concerned that the calculation of UCAP will include UCAP reductions due to limitations on charging that do not limit discharge during counting hours.

Finally, PG&E is concerned that a must-offer requirement that enforces both charge and discharge bidding in the same hours imposes a must-offer requirement on batteries that is not equivalent to the generation must-offer requirement on other generating resources because it allows not only a reversal of a resource’s day ahead position but a counter-award that is likely to be adverse to the battery operator’s daily planning processes (and in the case of co-located resources, may significantly impair ITC values).

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

In the draft final proposal, the CAISO proposes to “seek new CPM authority to procure resources when the CAISO identifies a need to procure local RA after an area or sub-area fails to meet the energy sufficiency test.”

PG&E requests additional details on how the energy sufficiency test will be performed to identify the need to procure for local RA.

To PG&E’s knowledge the CAISO intends to implement in phase 2B the portfolio assessment of the System RA Showings and Sufficiency Testing to assess the reliability of a given RA fleet and motivate a backstop decision. Since the implementation of this tool is delayed to phase 2B implementation, PG&E seeks for clarification on the “energy sufficiency test” for this phase 1.

PG&E’s primary concern is misalignment with the CPUC and asks the CAISO to consider the interaction between its proposals and the discussions ongoing in the RA proceedings. PG&E believes a comprehensive examination of the assumptions is critical to ensure that CAISO is procuring additional capacity only when required to maintain reliability and that the requirements can be coordinated with the CPUC processes.

The CAISO proposes the implementation of the new CPM authority in Phase 1, the current proposal lacks many details that must be clarified for us to provide comments.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

PG&E believes many implementation details are missing in the proposal for phase 1 and urges CAISO address the following issues:

• For the planned outage process enhancements: in answer to question 4, PG&E raises urgent implementation challenges to be clarified. PG&E also requests the CAISO provide a clear implementation plan for BPM, tariff and CIRA changes.
• For RA import requirements: in answer to question 5, PG&E requests a revision of the implementation steps and requests to postpone step 2 after an assessment of the step 1 is performed, moving the step 2 for RA year 2024 not earlier.
• For operationalizing storage resources: in answer to question 6, PG&E believes that the implementation of the minimum SOC requirement by the end of 2021 is too aggressively scheduled and asks clarification questions of the implications of the minimum SOC implementation on the UCAP counting and to address the bid cost recovery (BCR) calculation for storage.
• For new CPM authority in Phase 1, to procure local RA after an area or sub-area fails to meet the energy sufficiency test. PG&E believes the current proposal lacks many details that must be clarified prior to implementation (e.g., energy sufficiency test).

PG&E also requests the CAISO clarify in the section 8 that the phase 1 will include a shadow test for UCAP as specified on page 100 of the proposal “Timing and coordination of new counting methodology”: “The CAISO proposes that the 2022 RA year binding RA requirements would still be in terms of today’s NQC values, but we would “shadow” test both UCAP/NQC RA requirements and showings”.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No comments.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

No additional comments.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Please see Powerex's comments below:

CAISO RA Enhancements 6th Revised Straw Proposal

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

• Cal Advocates supports CAISO’s rejection of Planned Outage Process Enhancements Option 1, but has concerns about the two-phase replacement proposal.
• Cal Advocates supports components of the Resource Adequacy (RA) Imports attestation requirements, but opposes components that are unverifiable and inappropriately allocate risk (see Section 4).  Cal Advocates urges the CAISO to analyze firm transmission rights markets prior to adopting any requirements related to these markets.
• Cal Advocates supports with modifications the CAISO’s proposal for a minimum state-of-charge requirement for energy storage resources as a reasonable compromise for balancing flexibility with reliability concerns.  Cal Advocates offers two recommendations to improve the proposal.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

See section 1 above for this summary.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Cal Advocates supports the CAISO’s decision to reject Option 1 as described in the Fourth Revised Straw Proposal; however, Cal Advocates has concerns about the two phased approach proposed by the CAISO in the Resource Adequacy Enhancements Draft Final Proposal – Phase One and Sixth Revised Straw Proposal (“DFP1-6RSP”) in lieu of Option 2.[1]  Cal Advocates was among the parties that opposed Option 1, on the grounds that Option 2 would be significantly more cost efficient than Option 1.  Specifically, Cal Advocates emphasized that Option 2 would only require procurement of capacity on days when capacity is actually needed to maintain reliability.[2] 

The first phase of the CAISO’s Planned Outage Process Enhancements proposal would require LSEs to provide full capacity substitution for all planned outages in summer 2021.[3]  Cal Advocates is concerned that requiring full substitution for all planned outages on such a short timeline will increase ratepayer costs through last-minute procurement.  The second phase of the CAISO’s proposal would continue to be developed through subsequent revised straw proposals designed to create, “a longer-term proposal for a planned outage resource pool concept effective for RA year 2023 and beyond.”[4]  The CAISO’s proposal does not specify what requirements would govern planned outage substitutions for RA year 2022.  If the CAISO adopts the first phase solution, Cal Advocates prefers a pilot program for only summer 2021, with an opportunity for ex-post evaluation before CAISO considers any permanent changes. 

The second phase of the CAISO Planned Outage Substitution Process proposal is still underdeveloped but contemplates utilizing a summer planned outage pool of substitute capacity.  However, the CAISO notes that a “significant challenge for developing a summer planned outage pool will be finding sufficient non-RA capacity to participate in the pool.”[5]  It is unclear why a non-RA resource would participate in a planned outage pool without receiving capacity payments.  Likewise, the proposed planned outage pool appears to function identically to RA capacity.  Thus, the CAISO’s proposal appears to function similarly to a planned outage reserve margin, extending to cover the full year (rather than only non-summer months).  Cal Advocates looks forward to coordinating with the CAISO and other stakeholders to solve these and other issues raised in the second phase proposal.

[1] “Option 1 established a planned outage reserve margin for off-peak months. Option 2 established a replacement marketplace conducted by the CAISO.”  Draft Final Proposal - Phase 1 and Sixth Revised Straw Proposal, December 17, 2020 (DFP1-6RSP), December 17, 2021, p. 12.

[2] Comments of the Public Advocates Office on the Resource Adequacy Enhancements Fourth Revised Straw Proposal, April 14, 2020, p. 4.

[3] DFP1-6RSP, p.13.

[4] DFP1-6RSP, p. 13. 

[5] DFP1-6RSP, p. 18.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

The CAISO proposes to require scheduling coordinators (SC) to submit an attestation for each import contract certifying four attributes of any RA import product.  The four attributes are summarized in Table 1 along with Cal Advocates’ position on each proposed requirement.

Table 1

Attestation requirement #1 requires the scheduling coordinator (SC) to attest on behalf of a generator that the capacity shown is owned or contractually secured.  However, the commitment that the proposed attestation is intended to address should instead be demonstrated by the generator. The CAISO’s proposed attestation would require the SC to bear the risk in the transaction.  Under the CAISO proposal, the LSE functioning as an SC is responsible if a generator reneges on a commitment.  This does not solve the credibility problem the proposal attempts to address and is fundamentally unfair to the LSEs who are unable to prevent contract violations on the part of out-of-state generators.  Cal Advocates recommends that the CAISO shift the attestation burden from the SC to the resource owner.

Attestation requirement #2 requires that the capacity shown by the LSE has not been sold or otherwise committed to any party other than the LSE identified on the plan.  This attestation would essentially confirm that attestation requirement #1 is true.  However, empirically confirming the veracity of attestation requirement #2 is impossible because there is no universal register of capacity contracts to demonstrate the exclusive commitment of an individual generating resource.  At the January 6, 2021 workshop, the CAISO provided a helpful example of a generator that contractually commits the same capacity to both the CAISO and another ISO.[2]  In this example, the generator is contractually obligated to provide the same capacity to both LSEs; however, in reality, the capacity is only available to one LSE.  In the CAISO’s hypothetical, the generator is a bad faith actor who is violating its contracts.  However, contract law exists to solve this problem.  Requiring SCs to attest that capacity is not committed elsewhere requires a level of insight into the universe of RA contracts beyond the CAISO that is unavailable to LSEs or the CAISO.  Fundamentally, the CAISO’s proposal still depends on generators acting in good faith to meet contractual obligations.

Cal Advocates urges the CAISO to consider replacing attestation requirements #1 and #2 with a requirement that RA import contracts include a provision defining legal recourse to SCs if generators violate their contractual commitments.  Although such a contractual provision would not solve the ex-ante commitment problem, it nonetheless provides the CAISO with additional assurance vis-á-vis the enforceability of RA import contracts.  This provision would provide an incentive for generators to comply with their commitments, while also mitigating risk to the SC by shifting risk to the generator.

Attestation requirement #3 requires that capacity can only be interrupted for reliability reasons as determined under the host BAA’s tariff, a transmission curtailment, or a plant outage.  Cal Advocates supports attestation requirement #3 and urges the CAISO to implement this requirement immediately.  At the January 6, 2021 workshop, the CAISO stated that attestation requirement #3 would be enforced by analyzing bid behavior as well as delivery and non-delivery behaviors as indicators that capacity is committed elsewhere.[3]  In addition, the CAISO confirmed in an email response that “[a]s the market operator, the CAISO has access and authority to view and analyze market participant actions in its market and refer issues to DMM.”[4]  The CAISO’s statement confirms that the CAISO already has the necessary tools to investigate problematic bidding behavior.  Therefore, the CAISO should analyze these problematic behaviors to uncover evidence of shadow generator behaviors.  Cal Advocates supports adoption of attestation requirement #3.  Cal Advocates encourages the CAISO to use the tools that is has available to prevent capacity interruptions.

Attestation requirement #4 requires the LSE to attest that transmission service of proper firmness has been reserved for the delivery of the RA import resource(s) to the CAISO.  If implemented, this new transmission requirement would likely increase the price of RA imports, thereby increasing ratepayer costs, driving down supply, and threatening reliability.  Two mechanisms could contribute to increased ratepayer costs.  First, it is unclear that RA imports with bundled transmission rights are easy to obtain or currently exist.  Second, the need to procure transmission rights would lead to a higher cost of service, and the CAISO’s market analysis suggests that increased demand for transmission rights will lead to opportunities to exercise market power.[5]  Cal Advocates addresses these two concerns separately as follows:

Requiring firm transmission on the last leg is more complicated than the current proposal anticipates and requires substantially more analysis.

Assembling the proposed RA import with firm transmission product will require aligning lumpy generation capacity with inflexible delivery terms, creating seams issues.  The availability of transmission rights is in part related to the delivery term length of the transmission rights.  While an LSE may only require a month or two of RA imports to meet the LSE’s requirements, transmission rights terms are denominated in years, not months.  As Silicon Valley Power explains,

[an] LSE might need to make a multi-year commitment to obtain, for example, [Bonneville Power Administration (BPA)] transmission because the [Open Access Transmission Tariff] transmission is awarded on a priority basis to parties making longer term requests.  If BPA happens to have sufficient transmission available, the CAISO LSE might be able to obtain the transmission from BPA at cost-based rates.  But if such transmission is not available directly from BPA, the CAISO LSE would need to obtain the transmission from third parties who are not obligated to sell the transmission and are not required to offer it at cost-based rates.[6] 

In other words, LSEs would have to purchase several years’ worth of firm transmission rights to meet a few months’ worth of need, leading to overprocurement of transmission rights at the expense of ratepayers.  The incongruity between California’s monthly RA program and the annual terms of firm transmission rights poses a significant seams challenge to the CAISO’s proposed RA imports requirements. 

Another challenge to CAISO’s proposal is that long-term transmission rights are only available when a holder’s claim expires after a defined term.  As the California Community Choice Association (“CalCCA”) has noted, long-term transmission rights are not readily available because incumbent rights holders have the right of first renewal.  CalCCA analyzed BPA data and points out that, “Between 2012 and 2018, in five of the seven years none of the megawatts up for renewal were released.  In the two years that megawatts were released, only 20 MW and 148 MW, 4% and 31% were released. [emphasis added]”[7]  This data describes a primary market with scarce supply.  The CAISO’s proposal to require firm transmission rights on the last leg of transmission is overly optimistic about the liquidity of long-term transmission rights and ignores the potential for incumbent rights holders to squat on those rights to drive up prices.  A lack of firm transmission rights paired with higher prices could threaten reliability if LSEs are unable to procure adequate RA imports.  Additionally, there is no obvious secondary marketplace for obtaining these long-term transmission rights beyond contacting individual rights holders bilaterally; thus introducing another layer of coordination complexity to the CAISO’s proposed RA with firm transmission rights product.

Firm transmission rights markets present opportunities for exercising market power

The CAISO’s proposal to require firm transmission rights on the last leg of transmission may introduce opportunities for rights holders to exercise market power.  During workshops, the CAISO responded to concerns about market power on fully subscribed interties with an analysis of market share on the California-Oregon Border (COB) and Nevada-Oregon Border (NOB) interties.[8]  The CAISO used the Herfindahl-Hirschman Index (HHI) to analyze market concentration among intertie rights holders.[9]  Cal Advocates has identified several problems with this analysis which yield divergent conclusions.

First, the NOB intertie is a highly concentrated market.[10]  Cal Advocates’ HHI replication yields a summer HHI of 2,677 and winter HHI of 2,794.[11]  These HHI values are well over the 2,500 cutoff for a highly concentrated market, largely driven by the 46 percent share owned by Marketer 8.  Marketer 8 is also the largest market rights share holder on the COB intertie and would benefit from the demand generated by this attestation requirement.  The CAISO should not require firm transmission rights for RA imports unless the CAISO simultaneously implements a mechanism preventing intertie rights holders from exercising market power.

Second, the CAISO’s aggregation of the COB and NOB interties for the purpose of market share analysis is not reasonable.  The COB intertie connects with the CAISO grid at California’s northern border with Oregon, while the NOB intertie connects to the Sylmar Power Converter station near Los Angeles in southern California. 

Third, Cal Advocates’ replication of the CAISO’s HHI analysis shows that the aggregated market is moderately concentrated (HHI = 1,583) in winter and approaching moderately concentrated in summer (HHI = 1,405).[12]  Again, the CAISO’s aggregation of the COB and NOB interties for analytical purposes is not reasonable.  The results of the HHI analysis do not allay concerns about market power.  Instead, the aggregate results of the HHI analysis indicate that market operators need to be alert to preventing market power. 

Finally, an HHI analysis is an inadequate tool by itself to analyze market competition because it only considers the single transmission component of what would be a novel market.  For example, if Marketer 8—holding about 46 percent of summer market share on the NOB intertie—is a large volume generator, it would be well-placed to exert market power under this proposal. 

Recommendations

Cal Advocates recommends that the CAISO explore the transmission rights markets in greater depth before adopting a firm transmission requirement.  The CAISO’s desire to increase the reliability of RA imports is prima facie reasonable, but the CAISO’s current proposal does not solve the commitment issues created by double-committed generators.  On the RA Imports topic, Cal Advocates recommends:

• Replacing attestation requirements #1 and #2 with a single requirement that RA import contracts include a provision providing legal recourse to the SC if a generator double commits its capacity;
• Adopting attestation requirement #3 and enforcing it as soon as possible; and
• Substantial analysis of transmission rights markets and procedures before the CAISO adopts any firm transmission requirements.  Alternatively, the CAISO could consider a pilot program requiring RA imports to meet one of either the CAISO’s import requirements, or the Commission’s, with a built-in evaluation after a defined amount of time.

[1] DFP1-6RSP, p. 33.

[2] Day 2 RA Enhancements Draft Final Proposal and Sixth Revised Straw Proposal Workshop, January 6, 2021 (RA-E 6RSP Workshop, January 6, 2021).  http://www.caiso.com/InitiativeDocuments/Day2Presentation-ResourceAdequacyEnhancements-DraftFinalPropsoal-SixthRevisedStrawProposal.pdf

[3] RA-E 6RSP Workshop, January 6, 2021.  Note that the CAISO did not state how it would verify the first or second requirements, indicating that the CAISO understands that that requirement may be unenforceable.

[4] CAISO email response to Cal Advocates, January 19, 2020.

[5] RA-E 6RSP Workshop, January 6, 2021, slides 55-56.

[6] Comments of Silicon Valley Power on the Extended Day-Ahead Market - Bundle 1 Straw Proposal in the CAISO Extended day-ahead market initiative, August 10, 2020, #3.

[7] CalCCA Comments on RA Enhancements September 15 and 17 Working Group, October 1, 2020, #3.

[8] RA-E 6RSP Workshop, January 6, 2021.

[9] The HHI is a commonly used measure to determine market concentration.  The HHI is the sum of the squares of the market share in percentage terms of each entity.  An HHI less than 1,500 is not considered a concentrated market, while an HHI between 1,500 and 2,500 is considered a moderately concentrated market, and an HHI above 2,500 is considered a highly concentrated market.  For policy purposes, the higher the market concentration, the higher the likelihood that market power can be exercised by entities with large market share.

[10] During the RA-E 6RSP Workshop, January 6, 2021, the CAISO verbally noted only the (favorable) HHI results for the COB intertie, declining to report the HHI results for the NOB intertie.

[11] See attached analysis.

[12] See attached analysis.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

The CAISO’s proposal for Operationalizing Storage Resources is a generally reasonable compromise between providing storage resources flexibility in the real-time market and assuring the reliability of energy storage for resource adequacy counting.  Cal Advocates notes that the CAISO’s proposal for a minimum state-of-charge requirement may overlap with the minimum charge requirement in the CAISO’s Energy Storage and Distributed Energy Resources Phase 4 Final Proposal (“ESDER4”), which is not directly referenced in this proposal. [1]  ESDER4 includes a minimum charge requirement for resources providing ancillary services so that resources must maintain a sufficient state-of-charge to provide a 30-minute full ancillary services award.[2]  Cal Advocates recommends that the CAISO clarify how the DFP1+6RSP will interact with the ancillary services minimum state-of-charge requirement, if at all.  Likewise, the CAISO proposes a test after the day-ahead market is completed to compare load and non-storage resource availability and impose no minimum state-of-charge constraint if non-storage resources are able to meet 110 percent of the load.[3]  The origin of the extra 10 percent above full load is unclear, and Cal Advocates recommends that the CAISO develop metrics to assess the performance of this requirement over time so that it can be adjusted as needed.

[1] CAISO Energy Storage and Distributed Energy Resources Phase 4 Final Proposal, August 21, 2020.

[2] ESDER4, p. 6.

[3] DFP1-6RSP, p. 67.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

Cal Advocates has no comment on this topic at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

Cal Advocates continues to oppose the implementation of UCAP and related modifications.  That position aside, Cal Advocates has no comment on the proposed implementation plan.[1]

[1] DFP1-6RSP, pp. 118-119.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

Cal Advocates has no comment on this topic at this time.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Cal Advocates has no additional comments at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

The Public Generating Pool (PGP) appreciates the opportunity to comment on CAISO’s Resource Adequacy (RA) Enhancements Draft Final Proposal dated December 17th, 2020. PGP commends the CAISO in its efforts to enhance and close gaps in its existing RA program with changes that seek to ensure short-term and long-term adequacy amidst the evolving needs of the grid. PGP’s comments are focused on the import RA provisions and concerns around speculative supply and are largely supportive of the CAISO’s proposal. We concur with CAISO that the collective impact of these tariff modifications should greatly reduce or eliminate the potential for speculative supply. We further agree with CAISO that recent CPUC decision D.20-06-028 that directs non-resource specific resources to self-schedule or bid at our below $0/MWh does not provide assurance that non-specified resources are backed by physical resources and would not eliminate concerns with speculative supply. We believe these requirements would discourage import RA sales and detract from the overall goal of enhancing the RA program and the reliability of the CAISO grid. PGP believes CAISO’s proposed import RA modifications are the preferred solution to address speculative supply and we commend the CAISO for its efforts to continue to pursue its recommended solution with the CPUC.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

No comments.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

No comments.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

PGP supports the majority of CAISO’s proposed changes to import RA provisions. PGP agrees with CAISO that the current RA import policy framework can undermine the integrity of the RA program and threaten system reliability. 

As CAISO explains, the existing tariff does not require RA import resources be resource-specific or specify they represent supply from a specific balancing authority area (BAA), it does not specify the level of transmission firmness on which these RA import resources must be delivered, and it does not ensure the RA import capacity has not been committed to other parties. RA import resources are only required to be shown on RA supply plans with associated maximum import capability allocations and make offers as shown at a specific intertie point into the CAISO’s system. Import RA is not obligated to bid into the real-time market if it is does not receive an award in the day-ahead (DA) integrated forward market or residual unit commitment process. 

The existing requirements for RA resources have led to the sale of speculative RA supply, where there is no real physical capacity behind the contract that is available to meet the needs of the CAISO grid. Speculative RA supply undermines reliability as it leaves CAISO blind to what real physical capacity is available until the real-time increasing the likelihood and need for operator interventions that may not be available or effective, resulting in reliability concerns. Not procuring adequate physical supply on a forward basis for the CAISO BAA is particularly troubling given the tightening supply conditions of the Western grid and the recent summer 2020 load shed event.

PGP supports import RA requirements that would allow for the maximum participation of imports in the RA program backed by real physical resources while ensuring CAISO’s reliability needs are not compromised. PGP believes CAISO’s proposed import RA provisions would accomplish this as discussed below.

Source Specification and Resource Specific RA Types
PGP supports CAISO’s proposal to require source-specification of resources supporting an import RA contract. CAISO’s proposed resource-specific RA types include resource specific system resources (dynamically scheduled) pseudo ties and non-dynamic resource specific RA imports which are defined as either a single resource, a specified portfolio or aggregation of resources within a single BAA or a BAA’s pool/system of resources. PGP supports CAISO’s inclusive definition of resource-specific and we believe this is important to ensure real physical resources are not blocked from offering import RA into CAISO’s markets. With respect to allowing an aggregation of generating units to be designated as a specified source, we believe this is essential to ensure entities that operate their system in aggregate with real resources backing import RA contracts, such as the Bonneville Power Administration, are not inadvertently excluded from participating in the program.

Attestation Requirements
CAISO proposes that capacity underlying the RA import must be dedicated solely to the CAISO and an attestation would be required that specifies the RA capacity is not sold or otherwise committed to any other entity and is not being used in connection with any other capacity or resource adequacy construct in the applicable RA compliance month or showing timeframe. PGP wholeheartedly supports this proposal. We believe the most efficient and effective way to ensure RA imports are backed by real physical resources is to put in place measures that allow for verification of the supply behind the RA contracts and an attestation is a key component to achieving this.

Transmission/Deliverability 
CAISO proposes that RA imports be delivered on firm transmission (7-F priority) on the last leg of interest (intertie) and no lower than monthly non-firm PTP transmission (5-NM priority) on all other upstream transmission legs. PGP understands the interest in ensuring imports are deliverable, however we do not take a position on this aspect of CAISO’s proposal at this time. We believe the transmission related requirements for imports and exports is an issue that should be considered WECC wide with an interest in aligning requirements. PGP encourages CAISO to consider avenues to encourage collaboration west-wide on these requirements.
 

RA Import Most Offer Obligation
Under current rules, RA imports have a day-ahead must offer obligation up to the full shown RA amount and they are obligated to bid their full RA capacity into the real-time market. If they do not receive a day-ahead award for a given hour, then they are released from any further bidding obligation. CAISO proposes that RA imports would continue to have a day-ahead must offer obligation up the full shown RA amount and also proposes that an interim real-time MOO obligation (up to the full shown RA amount) until the end of the transition period proposed in the DAME initiative which will redefine all real-time must offer obligations. PGP supports this proposal and agrees that ultimately import RA provisions should align with the proposal in DAME once implemented as DAME is intended to ensure that CAISO has the ability to most efficiently and cost-effectively commit the day-ahead products it needs to meet real-time needs and uncertainties. 

Phased Implementation of Import RA Provisions
PGP supports CAISO’s phased implementation for import RA requirements which would encourage compliance with the proposed import RA requirements in the first year, 2022, and full compliance would be required in year two, 2023. PGP believes this phased timeline will be important to allow suppliers/importers the necessary time to modify existing contracts or enter into new ones as appropriate and adjust or develop strategies regarding transmission procurement to support delivery of RA imports

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

No comments.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No comments.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

No comments.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No comments.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

No comments.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

SMUD appreciates the opportunity to provide comments and input on the CAISO’s Resource Adequacy Enhancements Draft Final Proposal – Phase 1, dated December 17, 2020, including the stakeholder meetings in early January. SMUD is an active market participant in the CAISO’s Day-Ahead and Real-time Markets, including the Western Energy Imbalance Market. We are situated in the Balancing of Authority of Northern California (BANC) Balancing Authority (BA) and have robust interties with the CAISO grid, which we use frequently to import and export power. This provides SMUD the potential to provide import Resource Adequacy (RA) to the CAISO market. SMUD also has resources inside the CAISO BA footprint which could provide RA as well. In addition, SMUD purchases RA for a community choice aggregator. Accordingly, we have a direct interest in this initiative.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

No comments at this time.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

No comments at this time.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

SMUD agrees with the CAISO that imports of capacity from resources located outside of the CAISO BAA are increasingly important from both a market and grid reliability perspective. Dependable and reliable RA imports will help the CAISO meet internal CAISO demand requirements during peak periods. While SMUD has supported the CAISO’s proposals to tighten requirements around resource specificity, attestations, and must-offer obligations, we continue to question the CAISO’s proposal to require firm transmission on the last leg to deliver RA. This is a significant shift in market design, and one that is a belt and suspenders approach to solve a problem of speculative supply and double-counting of RA. While speculative supply and double-counting are legitimate concerns, they are largely resource, not transmission, issues. The CAISO’s proposed requirements for resource specificity, attestations, and must-offer obligations directly and sufficiently address these concerns. Without further evidence, data, or justification around transmission curtailments and non-deliverability, as discussed further below, SMUD sees the firm transmission requirement as one step too far. This will likely negatively impact the amount of RA imports available and diminish the number of RA suppliers. To be clear, SMUD does not oppose a transmission requirement for RA imports, but a “high quality” transmission product like monthly non-firm (e.g. 5-NM) on the last transmission leg suffices to ensure delivery. SMUD itself has imported RA from the Northwest for delivery at the California-Oregon Border (COB) using WSPP Schedule C.  These arrangements are for firm delivery at COB, without specificity as to transmission, and in approximately 20 years of this practice, we have not experienced any curtailments of these firm products, whether on the Southern Intertie or on transmission segments further upstream. Of course, this does not mean that physical derates or other limitations outside of the control of the seller can’t arise, but these events can impact any priority of transmission service. We therefore reiterate our recommendations from prior comments in this initiative (below).

As we have noted before, there are a handful of firm transmission rights holders on the Southern Intertie, which creates a limited pool of RA price-maker suppliers that load-serving entities (LSEs) must rely on for RA imports, decreasing competition and increasing prices for ratepayers. SMUD thanks the CAISO for providing the graphs on slides 35 and 36 of the January 7 presentation, which show the entities that hold firm transmission rights to the COB and NOB interties. We appreciate the fact that there are 21 entities on the COB intertie and 9 on the NOB interties, however only three marketers hold the majority of rights to COB, and only two marketers hold the majority of rights to NOB. In addition, although the graphs show the IOUs, Munis, and PUDs have rights, it is unknown how much of this is already committed to long-term delivery requirements or other utility arrangements that are not related to RA import obligations. The CAISO commented at the January 7 meeting that there are plenty of entities from which to purchase long-term firm rights; however, these rights are subject to roll-over if the entity wishes to renew (they have a first right of refusal). Accordingly, this raises additional uncertainty about the CAISO’s proposal and the unintended consequences that may flow from a firm transmission requirement.

We would like to highlight the discussion that occurred at the January 13 Resource Sufficiency workshop that is part of the Summer 2021 Readiness initiative. Other BAs in the west clarified that they do not curtail exports that are under contract to other BAs. This supports the contention that any delivery failures appear to be due to resource issues, such as double counting and speculative supply, not transmission issues, such as curtailments from the neighboring BAAs. Indeed, it is standard utility practice in the west to avoid the curtailment of exports for several reasons, including  the  potential domino effect of cascading reliability problems, the fear of reciprocal curtailments, and out of deference to the reliability obligations of neighboring utilities. The CAISO should not assume that firm transmission is needed if this is not standard practice in the west. And in fact, the CAISO appears to be out alone in its championing of firm transmission; many stakeholders have questioned the CAISO’s firm transmission proposal and have noted that the Summer 2020 heat wave and looming capacity shortfalls are based on a resource shortage, not a transmission shortage.  In other words, the focus of the RA import rules should be on supply certainty, which is resolved by resource specificity, attestations, and must-offer obligations, not firm transmission.

Recommendations

Based on information (and the lack thereof in certain areas) provided by the CAISO, it is apparent that uncertainty remains around the CAISO’s proposal and the effectiveness of a firm transmission restriction for any portion (last leg, or source to sink) of delivery. Accordingly, SMUD urges the CAISO to:

1. Review data on all tags associated with CAISO imports and analyze the frequency and impact of curtailments to confirm that the use of non-firm transmission has caused actual import deliveries to be lower than what is contracted thru import RA by California LSEs. The implementation of this requirement deserves a data-driven approach given the significant implications on reliability and costs.
2. Address delivery concerns with penalties directed at delivery itself such as revisions to RAAIM, etc.
3. Allow the market to decide the most efficient resource and pathway of energy once RA commitments have been made.
4. Consider the cost impacts to customers. While RA is focused on meeting the most extreme scenarios, the restrictions put in place could create market distortions and extra costs in many other times of the year by not allowing resources to participate in the RA market. This restriction will affect the market/costs in all months, while the original concerns are more relevant during only a few months of the year.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

No comments at this time.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No comments at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

No comments at this time.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No comments at this time.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

No comments at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Please see responses below.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

Please see responses below.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

SDG&E does not support the CAISO’s proposal to require ALL planned outages to be substituted because the CAISO is not proposing to implement UCAP targets in summer 2021 and therefore the solution does not “reflect system UCAP targets rather than reflect the traditional NQC targets.”[1]  The CAISO’s solution only increases the problems faced in the bilateral market, because of the inefficiencies of the bilateral market in procuring capacity in a constrained market which could result in additional planned outages not being able to provide substitute capacity.  The proposal will have significant impacts on approved planned outages already submitted to the CAISO for various summer months in 2021.  The current outage substitution rules may allow for such outages to not require replacement if there’s sufficient surplus of shown RA capacity.  However, if the CAISO adopts this proposal, such outages may be rejected because of insufficient available capacity in the market.  Furthermore, the requirement to substitute all planned outages effectively raises the reliability requirement to the shown RA amount, rather than the forecasted load plus a planning reserve margin.  For these reasons, SDG&E recommends the CAISO not proceed with the outage process enhancement proposal for 2021 and develop a workable solution. 

SDG&E has no position on phase 2 enhancement at this time, as the CAISO is expecting to develop it in the future.

[1] Draft Final Proposal, p 3

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

As indicated in SDG&E’s earlier comments at both the CAISO and CPUC, SDG&E has not supported changes to the RA import rules.  The CPUC’s decision to require RA imports to either self-schedule or offer below $0/MWh is inconsistent with efficient market operation and will result in fewer suppliers willing to sell to CPUC-jurisdictional Load Serving Entities.  The CAISO and Department of Market Monitoring have produced no evidence that offering RA imports at high prices means that power will not be delivered if market clearing prices rise to those levels.  The CAISO should further analyze why certain import capacity were not delivered even at high clearing prices rather than assume all import RA resources will not deliver when called upon.[1]

  SDG&E remains concerned that non-resource specific system resources will no longer qualify as RA import capacity.  Suppliers’ ability to assemble, on short notice, a portfolio of generating capacity, potentially across multiple balancing authority areas, is an important and useful source of capacity for the CAISO Balancing Authority.  Requiring that these portfolios be identified and assembled far in advance of when they will be required to produce power, decreases flexibility and will increase costs.  While SDG&E appreciates the CAISO’s revision to require firm transmission only on the last leg of the import, this rule adds additional complexity and cost.  Because power flows according to physics and not according to pre-determined contract paths, these mechanisms introduce inefficiencies:  the availability of generating capacity and the transfer capability necessary to deliver this power to the CAISO Balancing Authority may not be known months in advance.  SDG&E is concerned that the combined effect of the CAISO’s RA import proposal will be to reduce the amount of generating capacity in the Western Interconnection that is made available to meet the CAISO’s RA requirements.  This is not a desirable outcome.  

Notwithstanding the above concerns, if the CAISO moves forward with its RA import proposal, SDG&E recommends the attestation language be included as either in the Tariff appendices or be written as part of the business practice manual so that the language may be updated as needed in the future.  The CAISO may wish to consider the Tariff appendices as a scheduling coordinator agreement with the CAISO such that the scheduling coordinator must abide by the language rather than having to make periodic attestations.  This would simplify the RA supply plan submission process since all scheduling coordinators that submit supply plans with import RA capacity must meet these requirements. 

[1] The CAISO’s analysis shows that the amount import RA offered at very high prices has been declining over the last few years.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

SDG&E appreciates the CAISO’s revisions to when it will impose the minimum state of charge requirement on energy storage resources.  SDG&E understands that the technological challenges the CAISO has at this time when developing the proposal.  Given the large quantities of energy storage resources that will be built over the next few years, SDG&E strongly urges the CAISO to develop solutions which would not impose such a limit in the future. 

SDG&E also requests the CAISO to confirm the minimum charge requirement will only be imposed after the residual unit commitment process runs and not during real-time.  If the constraint is triggered real-time, it may be challenging for the resource to meet its day-ahead state of charge requirement if the resource was not required to meet it and was optimized in the real-time market.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

While SDG&E supports the CAISO having backstop authority to ensure grid reliability, the energy sufficiency test and the cure period for entities to clear any deficiencies is ambiguous.  Unlike NQC counting where Load Serving Entities (LSEs) are generally able to understand which resources can help meet the deficiency, it is unclear if the CAISO or even the LSEs are able to identify which resource would be able to cure the deficiency.  SDG&E recommends that the CAISO provide information that allows LSEs know that the CAISO procured resource is able to cure the deficiency and whereas another resource with equivalent or lower offer price does not.  This would provide transparency to the CAISO’s backstop procurement process.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Shell Energy appreciates the opportunity to comment on this this ongoing process. CAISO should seek to align the changes to the RA program in this stakeholder process to the ongoing CPUC proceeding on RA (R.19-11-009) where possible to minimize confusion and duplicative efforts.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Shell Energy opposes the draft final proposal with caveats

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

There appears to be differing interpretations on what the phase 1 requirements will be with some stakeholders understanding the 100% replacement requirement applies only to the summer months. 

Shell Energy is concerned that the CAISO did not make explicitly clear that the proposal will require, under phase 1, a 100% substitution requirement for RA during all months, not just the summer months.  This nuance has large impacts for certain resources which typically take planned outages during the off-peak seasons. 

Shell Energy is concerned that a100% replacement requirement for all RA in 2021, regardless of seasons, will result in market disruptions as resources delay taking planned outages due to not being able to secure replacement capacity.  This may result in longer and increased forced outages as preemptive repairs may be delayed as replacement capacity will be tight or unavailable during certain months.

Additionally, RA supplies likely will be even tighter for 2021 if CAISO’s proposed increase to a 17.5% PRM for June through October is adopted by the CPUC.  This additional procurement pressure will make it more difficult to secure replacement capacity for existing planned outages. 

This new requirement also does not comport with the monthly nature of the RA program in California.  Implementing this change during the middle of RA year 2021 is highly disruptive and should begin, at soonest, in late 2022 for RA year 2023.  

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Shell Energy opposes the proposed requirement to require 100% substitution during all months.  The CAISO has not demonstrated evidence that outages during off-peak seasons are problematic for RA deliverability. 

The CAISO also fails to address how existing pending outages will be treated if phase 1 of Resource Adequacy Enhancements is adopted.  Shell Energy requests the CAISO clarify how existing pending planned outages will be addressed.  Shell Energy would suggest queued planned outages before this initiative is adopted be grandfathered and not subject to these new requirements as resources made outage planning decisions regarding timing without these requirements in place.

Shell Energy also suggests the CAISO develop a planned outage substitution pool to assist resources with procuring substitution capacity for planned outages. 

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

Shell Energy acknowledges the complexity associated with RA imports or any imports given multiple jurisdictional nuances and the diverse views of RA import providers and end use customers.

Shell Energy supports the following aspects of the RA import requirements as proposed in the draft final proposal:

• DA tagging requirement for RA import resources
• Source attestation, subject to audit and oversight will explicitly require:
  • The capacity shown is owned or contractually secured;
  • The capacity shown has not been sold or otherwise committed to any other party;
  • The capacity can only be interrupted for reliability reasons as determined under the host BAA’s tariff, a transmission curtailment or plant outage; and
• Firm transmission requirement for last transmission leg to the CAISO border

Shell Energy opposes these aspects of the proposal:

• 5-NM transmission requirement for all but last transmission leg
• Multiple BAA source(s) prohibited

Requiring all transmission have a NERC priority of at least 5-NM is problematic because it will severely limit qualifying supply and result in supply constraints and potentially higher RA prices for consumers.  Shell Energy maintains, given the long history of non-firm transmission reliably delivering imports to CAISO, this approach is unnecessary.  Should the data show a deliverability issue using non-firm transmission ahead of firm transmission on the last leg, the CAISO could revisit the issue. 

Many market participants have RA-qualifying generation sources located in multiple host BAAs.  Barring Resource Specific import RA from utilizing resources located in more than one BAA is discriminatory to certain customer classes and geographically dispersed generation sources.  There is no appreciable reliability benefit to be gained by limiting to one BAA or a system of resources located behind one BAA.  Shell Energy strongly encourages CAISO reconsideration of this requirement. 

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

Shell Energy supports a MSOC only for storage resources providing ancillary services as these awards are physical and binding whether cleared in the IFM or FMM.  A/S awards cannot be “bid-out” of; thus, a MSOC to ensure deliverability of these products is sensible.

Outside of A/S awards, Shell Energy does not support a MSOC for storage resources.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No comment.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

Shell Energy does not support the proposed timeline for phase 1.  Only a matter of months will separate the adoption of the RA Enhancements proposal and 2022 RA plans being finalized in Fall 2021.  In order to avoid potential market disruptions and unintended consequences, the CAISO should implement all changes in one tranche in 2022 for RA year 2023.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No comment.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

No comment.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

As explained more fully below, the Six Cities support, with several caveats, the CAISO’s Draft Final Proposal on the topics of Resource Adequacy (“RA”) imports, operationalizing storage resources, and backstop capacity procurement and the proposed revisions to the Capacity Procurement Mechanism (“CPM”). 

The Six Cities do not support – and have significant concerns regarding the feasibility of – the CAISO’s Draft Final Proposal with respect to the Planned Outage Enhancements topic and, in particular, the requirement to provide substitute RA capacity for all planned outages of RA resources.  

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

See the discussions below of the specific sub-topics under Section 5.1.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

At this time, the Six Cities are unable to support the CAISO’s proposal to require substitute RA capacity for all planned outages of RA resources even on an interim basis.  The Six Cities appreciate that the objective of the CAISO’s proposal is to enhance reliability for the 2021 summer period, and the Cities further agree that one virtue of a comprehensive requirement for substitute capacity is simplicity and predictability.  However, the Six Cities are concerned that it simply may not be feasible for many resource owners and/or Scheduling Coordinators to provide substitute capacity to cover necessary planned maintenance for RA resources.  If that turns out to be the case, an absolute requirement to provide substitute capacity for planned outages may backfire and result in decreased reliability.

It appears obvious that an absolute requirement to provide substitute capacity for planned outages will result in resource owners, Scheduling Coordinators, and load-serving entities (“LSEs”) holding back on designation of capacity in excess of RA requirements or making excess capacity available for purchase by others, choosing instead to retain undesignated capacity so as to have substitute capacity available to support planned outages of their own designated RA resources.  Combined with increased RA requirements (as contemplated under an unforced capacity (“UCAP”) approach or an increased planning reserve margin) and more realistic, but also more restrictive, counting rules, the Six Cities question whether the resource fleet expected to be available in the near term will be capable of supporting both RA requirements and a requirement to provide substitute capacity for all planned outages.  If it turns out that the resource fleet is not capable of supporting substitute capacity for all planned outages as a practical matter, then the substitution requirement will act as a barrier to the performance of planned maintenance and potentially reduce reliability as a result. 

The Six Cities urge the CAISO to conduct a quantitative assessment of the feasibility of satisfying the proposed requirement to provide substitute capacity for all planned outages, taking into account historical schedules for planned outages, the CAISO’s proposals for increased RA requirements and modified counting rules, and resources expected to be available during the next two RA years.  In the absence of analysis demonstrating the feasibility of satisfying the proposed substitution requirement, the Six Cities are concerned that it may do more harm than good from a reliability perspective.

As to the CAISO’s proposed Phase 2 review of the planned outage process, the Six Cities support further evaluation of a potential “planned outage capacity pool,” and expect to provide further comments regarding this topic when the CAISO issues a proposal.

With regard to the CAISO’s discussion of Scenario 2 on page 17 of the Draft Final Proposal, the consequence for Scenario 2 under Option 1 is unreasonable.  It makes no sense to classify an outage extension as a Forced outage while also requiring the provision of substitute capacity for the outage extension.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

The Six Cities continue to support elements of the CAISO’s proposals that seek to ensure that RA imports are backed by physical capacity that is committed and deliverable to the CAISO.  To that end, the Six Cities support the CAISO’s proposal to allow pseudo-tied and dynamically scheduled resources and resources that meet the CAISO’s criteria for “Non-Dynamic Resource-Specific Resource Adequacy Imports,” including individual resources that can be specifically identified at the individual resource level (among other criteria).  The Six Cities do not oppose the proposal to require the Scheduling Coordinator representing the RA import in the market to provide source-specific information relating to the resource or for enforcement through auditing of RA supply plans and tags, and they do not oppose the CAISO’s proposals regarding the associated transmission service requirements (i.e., the proposal to require Firm transmission of 7F priority to the CAISO intertie and to require a priority no lower than Monthly Non-Firm Point-to-Point of 5-NM priority on all upstream segments).  Finally, the Six Cities also continue to support the proposed attestation requirement associated with import RA. 

The Six Cities’ support for and/or non-opposition to elements of the CAISO’s RA import-related proposals are expressly contingent upon their understanding that legacy import RA resources that provide high-quality RA to the CAISO and are from identifiable resources, such as the Six Cities’ Hoover Power Plant rights, will fully satisfy these revised import RA requirements and may continue to be relied upon by the Six Cities in meeting their individual RA obligations.  Relatedly, the Six Cities observe that the Draft Final Proposal’s attestation requirements and the discussion surrounding offer obligations for imported RA resources do not expressly acknowledge the operational limitations on certain existing RA imports, such as the Hoover Power Plant, that are available for bidding in a sub-set of hours, nor does the Proposal provide an exemption for Hoover and similar hydroelectric resources.  The Six Cities request that the CAISO’s Final Proposal expressly acknowledge that such resources will continue to meet the CAISO’s RA import rules. 

In conjunction with consideration of import RA requirements, the Six Cities reiterate their prior statements that issues relating to the calculation, allocation, and retention of Maximum Import Capability (“MIC”) remain critical to ensuring the viability of import RA supply to the CAISO.  The CAISO has announced that it will initiate a separate stakeholder initiative this year to assess issues pertaining to MIC, and the Six Cities urge the CAISO to examine ways to ensure that MIC is not an obstacle to the ability of CAISO LSEs to access imported RA resources. 

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

The Six Cities support limited elements of the CAISO’s proposals regarding operationalizing storage resources.  In general, the Six Cities are concerned that the CAISO is not fully acknowledging the operational reality that many mixed fuel resources, including hybrid and co-located resources, will include storage components that are subject to Investment Tax Credit (“ITC”)-related restrictions on obtaining charging energy from the transmission system, rather than from the adjacent variable resource.  If the CAISO is to have access to the capacity from these resources, the CAISO needs to ensure that they can be integrated into the CAISO’s energy markets and the RA program consistent with ITC requirements.  In particular, the CAISO’s proposed Must Offer Obligation (“MOO”) for storage resources, to the extent applicable to resources subject to ITC grid charging restrictions, is unworkable and should be revised to remove any charging-side MOO.  Furthermore, it is unclear when the CAISO intends to apply the MOO element of its Draft Final Proposal – whether for RA year 2022 or RA year 2023, or at some other time period.  The Six Cities will provide additional comments regarding the proposed storage resource MOO and bid insertion proposals in their comments to the CAISO on January 29^th.   

With respect to other proposal elements in Section 5.1.3, which represent the CAISO’s Draft Final Proposal on these topics, the Six Cities concur in the modifications to the minimum state of charge (“SOC”) requirements, including the proposal to apply the minimum SOC requirement only on selected days when the need for storage resources is likely to be more critical (i.e., days when the CAISO forecasts that its non-storage resource fleet is unable to meet 100% of net load plus 10% following the Day Ahead Market run).  However, stakeholders would benefit from additional information concerning application of this proposal.  Specifically, how will hybrid and co-located resources fit into the CAISO’s analysis of whether the minimum SOC is applicable?  Second, has the CAISO evaluated the expected number of days during, for example, the summer of 2020 in which the minimum SOC would have applied?  Third, the CAISO should provide further information regarding how application of the minimum SOC will be communicated to market participants (i.e., how resources will be notified that the minimum SOC constraint will be applicable the following day).  Finally, with respect to the CAISO’s proposal to impose a minimum SOC on resources needed to maintain reliability in a local area as discussed at page 68 of the Draft Final Proposal, how will the CAISO implement this proposal? 

Issues pertaining to storage resources and mixed fuel resource components are integrated with other aspects of the Draft Final Proposal.  The Six Cities will fully address the derivation of UCAP for these resources and application of the MOO and bid insertion in their comments to the CAISO due on January 29^th.  With respect to these elements of the CAISO’s Draft Final Proposal, the Six Cities will continue to work with the CAISO on addressing storage integration issues. 

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

The Six Cities do not oppose the CAISO’s proposal to adopt, as described in Section 5.3, authority for CPM procurement in the event of identified energy needs within an area or sub-area, subject to the commitment to provide LSEs with an opportunity to cure any deficiencies.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

The Six Cities generally agree with the proposed phasing for implementation of the RA Enhancements and the assignments of topics to Phases One and Two.  The proposed implementation of the Phase One elements in 2021 (for RA Year 2022) appears reasonable.  With the exception of the Flexible Resource Adequacy topic, it seems reasonable (though potentially aspirational) to target implementation of the Phase Two elements in 2022 (for RA Year 2023).  Because the development of revisions to the Flexible RA framework has not really begun and is explicitly tied to the outcome of the Day-Ahead Market Enhancements initiative, it is premature to target implementation of Flexible RA Enhancements in 2022.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

The Six Cities agree that the CAISO Board of Governors should have exclusive review authority over the RA Enhancements proposals.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

The Six Cities have no additional comments at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

SCE appreciates the opportunity to provide the following comments on the CAISO Resource Adequacy (RA) Enhancements Draft Final Proposal and Sixth Revised Straw Proposal dated December 17, 2020^[1]. At a high level, SCE provides the following comments on elements in Phase 1 and Phase 2:

• SCE does not support the CAISO import RA proposal because it has not been demonstrated that the proposal is necessary. The proposal would introduce significant challenges in import RA procurement. There are significant issues with the proposal as described in the specific section below (see Question 5).
• The CAISO proposed a minimum state-of-charge (MSOC) requirement that is not a sustainable solution. Given that the amount of energy storage resources participating in the market is increasing rapidly, the CAISO should focus on development of a long-term solution that is optimal for energy storage resource market participation.
• The CAISO should closely collaborate with the CPUC on its unforced capacity (UCAP) proposal to avoid program misalignment. Changes to the current planning reserve margin (PRM) should be based on rigorous loss-of-load-expectation (LOLE) studies.
• SCE supports the CAISO proposal to maintain net qualifying capacity (NQC) as the compliance instrument and the proposal to create the term DQC (Deliverable QC) to replace NQC.
• SCE supports the changes to the CAISO hydro UCAP proposal that will allow month-ahead updates to the resource UCAP value and increase the maximum capability of the resource following infrastructure upgrades to the resource.
• Must offer obligation (MOO) is a crucial component of the RA construct; a proposal of no real-time MOO for RA resources unless receiving a day-ahead award can create unacceptable market and reliability issues.
• The CAISO should clarify, and amend if necessary, the existing rules that require regulatory must run (RMR) resources’ bidding obligation and provide CAISO the authority to insert bids (when applicable) for and exceptional dispatch RMR resources.

[1] Resource Adequacy Enhancement Draft Final Proposal and Sixth Revised Straw Proposal, 

http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-SixthRevisedStrawProposal-ResourceAdequacyEnhancements.pdf.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Please see the section above for a summary of SCE’s comments.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

Please see SCE’s comments under Questions 4 – 6 below.  

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

SCE understands the rationale and motivation of the CAISO proposal of requiring capacity substitution for all planned outages for RA resources for summer reliability as a near-term solution, while a long-term solution is being developed under Phase 2B of this initiative. SCE notes that today the CAISO performs reliability assessment to study potential impacts of a requested outage and has discretion in approving a planned outage.

Given that the proposal will likely increase costs for resources seeking planned outages, the CAISO should clarify the details including, but not limited to the following:

• For a planned outage covering a portion of the capacity of a unit, is it required to substitute the outage portion (e.g., a planned outage of 20MW for a 100MW unit, only 20MW substitution capacity is required)?
• Will substitution follow the current rules? That is, substitution for planned outages can be resources for system needs while for forced outages substitution capacity must be in the same local area as the RA resource that is on outage or extended outage.[1]
• Will the CAISO release the substitution capacity that was submitted for a planned outage when the planned outage is denied by the CAISO?
• Details on how opportunity outages would work under the proposal, including the timing of submitting a request and receiving a notification of being approved

In addition, while the CAISO has listed planned outage process enhancements – the potential for a planned outage pool – as an item under Phase 2B, design details are not available. The CAISO should provide details on the longer-term proposal as soon as practical to engage parties in order to achieve the targeted implementation timeline for this item.

[1] CAISO BPM for Reliability Requirements, Sections 9.2 & 9.3.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

The proposed import RA requirements appear unnecessary given the existing import RA rules recently adopted by the CPUC. It’s also unclear why these changes are needed.  The concern around speculative supply for import RA is likely addressed by the requirement that non-resource specific import RA resources must self-schedule or bid at a negative price. The concern of perceived double counting is likely addressed by the requirement that an import RA resource cannot source from within the CAISO Balancing Area^[1].  The existing rules are effective starting 2021 RA compliance year and as a result, it will require some time to build data and real-world experience about the effectiveness of the existing rules. However, the existing rules have been developed with significant stakeholder input at the CPUC and there is no sign that the rules would be ineffective in addressing those concerns. Therefore, there is no clear evidence that significant changes to the existing rules are necessary.

Similarly, the proposed import RA requirements appear unnecessary given the findings from the Final Root Cause Analysis for Mid-August 2020 Heat Storm prepared jointly by the CAISO, the CPUC, and the CEC. The Analysis provided that the import bids were at a “robust level” during the August heat wave events.^[2] The Analysis did not find any significant issue particular to import RA availability, as compared to other RA resource categories, during the most stressed grid conditions. Indeed, imports appear to be consistent and one of the better performing resources.

SCE notes that the import RA requirements proposed by the CAISO represent significant changes to the existing rules and would be directly conflicting with existing CPUC rules on RA imports. A non-resource specific import RA resource that is located outside the CAISO BA, contracted by an LSE, and meets the bidding requirements, qualifies as an RA resource meeting the LSE’s RA requirement per CPUC rules. Conversely, CAISO’s proposal requires imported power to only be tied to a specified source[3].  Thus, under the CAISO’s proposal and the CPUC’s rules, an LSE could be facing two separate compliance obligations that are incompatible.  LSEs would either have to comply with both at great expense or face the unenviable dilemma of choosing which program to comply with. 

Under the CAISO proposal, in order for a resource to qualify as import RA, the resource (or the scheduling coordinator) must meet the source specification requirement, the attestation requirement and the firm transmission requirement proposed by the CAISO. These new requirements proposed by the CAISO represent significant changes to the existing import RA rules, which themselves have been implemented for less than a month and have already caused significant reduction in available market liquidity for import energy to the CAISO[4]. The newly proposed requirements impose additional burden on LSEs and other market participants that can provide liquidity for import energy. For example, the source specification requirement and the firm transmission requirement likely would bring significant distortion to the current import RA market and could increase costs significantly. SCE wouldn’t know the transmission pathing information until after the deal is done. Having knowledge of whether the final transmission leg is firm or non-firm is not known at the time of deal execution. There is no visibility upstream of the path. There is also a concern regarding potential concentration in the transmission market and it may be challenging for market participants to find and then purchase excess firm transmission. The attestation requirement, that the RA import must be dedicated solely to the CAISO, imposed on the scheduling coordinator (SC) instead of the resource itself, bring impractical requirements. Simply put, the SC is not situated to provide and attest to information that should come from the resource owner or the provider.

Finally, the CAISO should clarify the requirement of the last leg of transmission on 7-F: whether the requirement refers to the very last leg of the tag or the last leg prior to the intertie. For example, for PV West, is it “PALOVERDE500 to PVWEST” or the leg prior to “PALOVERDE500 to PVWEST” that has to be on 7F? SCE understands the interest is the last leg prior to the CAISO being the Transmission Provider.

In summary, the CAISO RA Import proposal imposes stringent requirements to load serving entities, while there is no clear evidence on why the proposed changes are necessary. As a result, the proposal will drive up costs for RA compliance unnecessarily. The proposal creates conflict with the CPUC’s RA program that is not addressed under the proposal. For these reasons, SCE does not support the proposal.

[1] CPUC D. 20-06-028.

[2] Final Root Cause Analysis for Mid-August 2020 Heat Storm, at 48.

[3] The proposal also states, “a RA import which is a BAA pool or system of resources is only required to identify the source BAA”, Presentation at 11. However, it is unclear how the attestation requirement (that the capacity shown has not been sold or otherwise committed to any other party) would work. (The CAISO presentation is available at http://www.caiso.com/InitiativeDocuments/Day3Presentation-ResourceAdequacyEnhancements-DraftFinalPropsoal-SixthRevisedStrawProposal.pdf ).

[4] Recent experiences have shown that the requirement of not having the ability to source energy from within the CAISO (while necessary to avoid double counting for RA) as recently adopted by the CPUC, has brought substantial challenges for LSEs to secure import RA capacity and greatly reduced the ability for some parties to provide energy at major WECC/CAISO interties.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

The CAISO has proposed changes to its minimum state-of-charge (MSOC) requirement proposal, including imposing the MSOC requirement only on critical days, defined as days when non-storage cannot meet 110% of net load after the day-ahead market (DAM) is complete, and imposing the MSOC during the lowest priced hours of the DAM. The CAISO should clarify if the measure of 110% of net load refers to the residual unit commitment (RUC) process given that RUC may commit additional units.  

While these changes are incremental improvements to the prior MSOC proposal, SCE believes the MSOC proposal overall is not a sustainable solution. The amount of energy storage resources participating in the market is increasing rapidly. The proposed MSOC mechanism would be triggered likely during days when the net load is ramping fast and/or volatile market prices are present.  At the same time, the proposed MSOC mechanism can significantly restrict energy storage resources in meeting grid ramping needs and take away their ability to arbitrage market prices, resulting in a suboptimal outcome for both those resources and the market. The impact can be significant when the fleet of energy storage resources increases, as expected to be the case in the near term.

In addition, the proposed MSOC mechanism does not address other issues that energy storage resources are facing today. One issue is that it is unclear how the proposal would honor ancillary service (A/S) schedules for an energy storage resource, and how the proposal would interfere with the co-optimization between energy and A/S for the resource. The proposal does not seem to address multiple outages that an energy storage resource can have, similar to conventional and intermittent resources where multiple outages can occur on a resource at the same time.  

SCE understands that the CAISO needs a short-term tool to manage energy storage resources that are online today. As such, the MSOC proposal should only serve as a short-term measure. The CAISO should focus on developing a long-term solution and immediately initiate an effort to evaluate multiple solutions that have the potential to address the issues described above more comprehensively. As a starting point, there are a range of potential solutions that should be further evaluated[1]. Although the CAISO has brought up those potential solutions for a while, it does not appear sufficient progress has been made.The CAISO should proactively pursue those solutions as the grid is transferring to a resource fleet that includes a rapidly increasing amounts of energy storage resources.

[1] E.g., see October 9, 2020, Market Surveillance Committee Meeting presentation, at 29, available at http://www.caiso.com/Documents/ResourceAdequacyEnhancements-Presentation-Oct9_2020.pdf.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

The CAISO proposes to seek new CPM authority to procure resources when the CAISO identifies a need to procure local RA after an area or sub-area fails to meet the energy sufficiency test. If CAISO identifies any capacity and/or energy shortfall, it will provide a cure period for entities to clear any deficiencies before exercising its backstop procurement authority.

Since the proposal appears to build upon a hourly net load profile in deriving the energy requirement for local areas[1], there is some similarity between this proposal and the SCE-CalCCA Joint Proposal in that both proposals would build upon net load curves.  In this regard, the methodology used by the CAISO in its local capacity technical (LCT) Studies in deriving energy needs in local areas may serve as a complementary tool when the net load framework under the SCE-CalCCA Joint Proposal is extended to local areas.

SCE seeks clarity from the CAISO on whether the need for ensuring sufficiency energy for local areas, as studied in its LCT studies, is pertinent to all local areas, or just a smaller subset of local areas.  If the latter, it may be more efficient to address the issue on an area-by-area basis, without the need for applying the proposed requirement to all local areas.  The CAISO should provide more clarity on this aspect. 

[1] E.g., see October 3, 2019, Local Resource Adequacy with Availability-Limited Resources and Slow Demand Response Draft Final Proposal, at 6 – 9, available at http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-LocalResourceAdequacy-AvailabilityLimitedResources-SlowDemandResponse.pdf.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

The CAISO should collaborate with the CPUC and relevant agencies to ensure full alignment of the RA program. Significant work is undertaken under the CPUC RA proceeding. SCE urges the CAISO to coordinate with the CPUC on its RA Enhancements proposals, including, but not limited to, the import RA proposal, the UCAP proposal and the PRM proposal. The coordination is essential for LSEs’ compliance and program success.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

SCE agrees with the CAISO that this initiative falls outside the scope of the EIM Governing Body’s advisory role and should seek approval from the CAISO Board only.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

Vistra appreciates the opportunity to share our perspective with the CAISO on its Resource Adequacy (“RA”) Enhancements Phase 1 stakeholder effort. The Phase 1 elements include the:

1. 100% planned outage substitution requirement,
2. Capacity Procurement Mechanism (“CPM”) for local energy sufficiency,
3. Minimum State of Charge Requirement (“MSOCR”), and
4. RA import rules.

We view the first three elements listed above in #1-#3 as distinct from item #4 on RA imports. The proposals in #1-#3, if approved, would make changes to the overall RA program that will affect generating resources, included energy storage and load resources. Conversely, the RA import element is narrowly focused on the participation rules for imports to ensure imports are dependable reliability resources and do not make overall RA program design changes like the prior elements. Vistra requests the CAISO treat the RA import element as severable from the other three elements. This clarification would be helpful in the policy phase but is necessary in the Tariff development phase.

We do not support the RA Enhancements Phase 1 proposal as a single package. While Vistra believes the CAISO RA import proposal would be improved by requiring firm transmission on earlier legs of the e-tag, we can see the proposal is a positive incremental improvement to status quo. We do not believe that the other three Phase 1 elements (#1-#3 above) provide any incremental improvement over status quo. These three elements will be ineffective at best, and at worst, harmful for both reliability and overall market efficiency. For instance, the 100% planned outage substitution requirement would in some instances reduce capacity available and willing to participate in RA for a given month because of lack of liquidity making substitute capacity unavailable. The incremental improvement created by the RA import rules proposal would not outweigh the potentially harmful impacts of the other elements in order to garner Vistra’s support for the Phase 1 elements as a total package.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Vistra opposes elements #1-#3 (100% planned outage substitution requirements, Capacity Procurement Mechanism (“CPM”) for local energy sufficiency, and Minimum State of Charge Requirement). If the RA import proposal is filed separately, Vistra can support the RA import proposal, otherwise we would oppose with caveats.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

None at this time.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

None at this time.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

None at this time.

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

None at this time.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

None at this time.

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

None at this time.

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

None at this time.

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

None at this time.

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1) The CAISO should clarify the timing of mid or short-range outages

2) The CAISO should re-examine its approach to operationalizing storage.  

2. Provide your organization’s overall position on the draft final proposal – phase 1:

Wellhead is generally supportive of phase 1. However, as further discussed below, the CAISO should seriously reconsider its out of market approach to operationalizing storage resources.

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

No new comments

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Wellhead supports the CAISO’s proposal for planned outages but given that many legacy toll contracts allow for planned outages with 7-day notice, Wellhead requests that the CAISO confirm that the timing to submit the mid and/or short-range outages (after RA showings) will not change

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

No new comments

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

Wellhead appreciates that the CAISO has responded to participants’ concerns about overly limiting storage participation in the real-time market. By reducing the limitations on storage participation in the real-time markets to only those periods when non-storage resources are able to meet no more than 110% of the load, the risk of over limitation is reduced. Wellhead understands that the 110% is an arbitrary number that should comfortably cover the risk. However, if supplies are tight enough to trigger the proposed minimum state of charge (MSOC), there are already significant economic incentives for storage resources to be charged according to their day ahead schedules.

The number of annual hours that any MSOC tool will be needed will grow dramatically as the resource mix changes and the need for energy shifting becomes a daily necessity. Continuing to limit RT market participation without consideration of the lost opportunity costs will leave storage resources with ever diminishing returns which will make storage even harder to finance than it is today.

Wellhead appreciates the CASIO’s willingness to continue to work toward a sustainable solution. But no form of the current MSOC tool is sustainable since the proposed MSOC is not market-based. Wellhead requests the following:

• Short-term
  • Adjust the Multi Interval Optimization (MIO) – Wellhead strongly supports LS Power’s recommendation to adjust the MIO for storage resources. At a minimum, the use of bid prices, not price spreads, in the RT market would provide resources with a higher level of certainty that energy can be procured for charging when need and it would simply the RT bid cost recovery.
  • Provide for some level of recovery of the lost opportunity cost. Again, Wellhead agrees with LS Power (and others) that storage resources should be compensated for reliability services. At a minimum through a modified bid cost recovery.
  • Allow for self-schedules for DA awards without penalty when the MSOC is binding - Under the current proposal, the MSOC (when enforced) limits a resource from participating in the RT except to enforce a MOO that may or may not result in discharge of the stored energy. Wellhead request that the CAISO also allow for self-scheduling of the discharge scheduled by DA awards without penalty of being considered unavailable as flexible EA.
  • Relax MSOC hurdle – Without some supporting analysis, 10% seems a bit too high given the current size of the storage fleet.
• Mid-Term
  • Wellhead urges the CASIO commit to developing a market- based solution such as an energy shifting product. A shifting product, based upon a daily shifting-demand curve, would reserve stored energy needed for peak, and the resource would be compensated for reserving this energy at their specific opportunity cost in the form of a reservation fee. Since the both the quantity and the price to reserve the energy would be co-optimized with all other products and services, this is really the only market-based solution.  

Wellhead has some additional concerns regarding the use of the minimum state of charge tool at a local level and requests that the CAISO hold an additional workshop to ensure that participants fully understand the frequency that this tool will need to be used ensure local reliability, both now and in the future. The concern is that as the resource mix evolves the frequency could severely hamper the economics of storage in local reliability areas.

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

No new comments 

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

No new comments

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

No new comments

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

No new comments

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

WPTF opposes the planned outage and operationalizing storage proposals. We ask that the CAISO provide a sandbox sandbox environment for SCs to practice bidding and using the end-of-hour state of charge tool prior to summer 2021. We further ask that the CAISO begin sending advisory prices along with advisory schedules so that SCs can bid in their storage in a manner that accounts for systemic differences in advisory and binding prices.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

WPTF does not support a 100% planned outage substitution requirement for Summer 2021. It fails to address the following situations:

• A resource must take a planned outage for environmental reasons or to resolve an immediate mechanical need and cannot find replacement due to tight capacity conditions.
• A resource’s planned outage gets unexpectedly extended into the following month and cannot find replacement.
• System conditions are such that weather does not materialize and there is more than sufficient capacity available for a resource to take an outage without providing replacement.

WPTF asserts that the majority of resources are not going to take planned outages, if at all possible, in the summer months. There is no economic incentive for them to do so because even absent the CAISO’s 100% substitution proposal, the existing planned outage process typically requires substitution in summer months AND importantly, they miss out on higher market revenue opportunities. Requiring 100% substitution upfront and adding a potential penalty if a resources planned outage gets extended are unnecessary additional incentives and are unreasonably punitive for events that asset owners have little control over.

The CAISO has proposed a 17.5% Planning Reserve Margin (PRM) for summer months and has demonstrated that in all likelihood LSEs will barely be able to meet this requirement or they may be short, given the amount of internal and import RA capacity available. In the rare situation where a resource must take a planned outage, the 100% substitution meaningful is not helpful if the resource cannot find the capacity in the bilateral market. The 2020 August blackouts occurred in part because of lack of clear internal CAISO policy around what to do if a planned outage gets extended to a following month. The CAISO could have issued a CPM and chose not to do so. This is the bigger issue that should be addressed prior to summer 2021. Thus, rather than require a 100% substitution requirement and additional unnecessary penalties, WPTF recommends the CAISO maintain the status quo planned outage process and enhance their own internal monthly planning practices and provide notice to the market and/or issue a CPM in advance of reliability issues occurring.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

It is WPTF’s understanding that the minimum charge requirement has been moved from RA Enhancements to the Market Enhancements for Summer 2021 initiative and tariff filing. WPTF asks the CAISO to provide a market notice and clarification on the minimum charge requirement proposal and timeline.

WPTF does not support the minimum charge requirement. The day-ahead market is a financial market intended to ensure sufficient commitment of long-start resources prior to real-time. The day-ahead market does not reflect real-time grid conditions as well as the real-time market for obvious reasons. A constraint that prevents storage from meeting real-time operational needs if they happen to occur in advance of their day-ahead schedule is unreasonable and counter to prudent reliability practices. It is also discriminatory toward co-located resources because hybrids will not be held to similar standards.

The CAISO should allow storage resources to respond to real-time prices like they do every other resource in the market and rely on the existing exceptional dispatch authority if this is insufficient. Ultimately WPTF believes real-time prices reflect the need for energy and therefore the most efficient and reliable strategy for storage resources is to allow them to respond to real-time prices. The CAISO spent over a year developing the end-of-hour state of charge requirement that will allow storage resources to meet their day-ahead schedule if it is economic to do so. This tool combined with natural market economic incentives should allow storage resources the capability of meeting their day-ahead schedules or meeting real time needs if appropriate. 

If the CAISO is concerned that scheduling coordinators (SCs) will have difficulty optimally bidding their resource in real-time, the CAISO should give SC’s additional tools. WPTF strongly recommends the CAISO provide a sandbox environment for SCs to practice bidding and using the end-of-hour state of charge tool. We further strongly recommend sending advisory prices along with advisory schedules so that SCs can bid in a manner that accounts for systemic differences in advisory and binding prices. 

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

1. Provide a summary of your organization's comments on the Resource Adequacy Enhancements draft final proposal – phase 1:

YWA generally supports, or is agnostic, to the resource adequacy enhancements proposals currently put forth by the CAISO, except for the specific sections and comments below.

2. Provide your organization’s overall position on the draft final proposal – phase 1:

3. Provide your organization’s feedback on the System Resource Adequacy topic as described in section 5.1:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in section 5.1.1:

Yuba Water Agency (YWA) understands and appreciates the challenge the CAISO faces to provide needed capacity during tight supply cushion hours and to ensure reliable capacity supplies for the coming summer season.  However, YWA does question the practicality of requiring planned outage substitute RA for summer 2021 through 2022, and are concerned that the potential for unintended consequences or redirected impacts will make the system less reliable rather than more reliable.

• Firstly, it is not clear that substitute RA will be available. YWA’s unit outages are planned for the fall months (September – November), due to regulatory, flow and FERC constraints.  YWA has not been successful finding substitute RA in the  most recent years when needed to avoid RAAIM. Obviously, substitute capacity will become even more difficult to find over the next two years. As a consequence, if substitute RA must be procured but not available, and therefore planned outages are not allowed, necessary maintenance maybe deferred with the potential for triggering forced outages.
• Alternately, generating resources may choose to not sell RA for planned outage periods.  This would also exacerbate the capacity problem the CAISO is trying to address. Since most hours of most periods would not require substitute RA in order to maintain reserve margins (as evidenced by the infrequency of RAAIM penalties), a more wholesale withholding of RA sales (For the entire potential period of an outage, rather than just the minimal required for the outage) may exacerbate capacity shortages.  For example, YWA would likely not sell RA for the entire month when a generator would be on planned outage, even though YWA typical outages are less than a full months (e.g. 2-3 weeks).  This is due to both the relatively slight potential for a delay in return to service, and a capacity market that tends to transact in discrete blocks of one month.

To help partially mitigate these concerns, YWA would recommend the CAISO consider retaining the current POSO process for the November through April non-peak -months, and consider utilizing the POSO process during the May and October months.  We believe CAISO’s data shows that the POSO process can provide sufficient reliability for the system during October – May.

5. Provide your organization’s feedback on the Resource Adequacy Import Requirements topic as described in section 5.1.2:

6. Provide your organization’s feedback on the Operationalizing Storage Resources topic as described in section 5.1.3:

7. Provide your organization’s feedback on the Backstop Capacity Procurement topic as described in section 5.3:

8. Please provide your organization’s feedback on the implementation plan, including the proposed phases, the order these policies must roll out, and the feasibility of the proposed implementation schedule, as described in section 8:

9. Please provide your organization’s feedback on the proposed decisional classification for this initiative as described in section 9:

10. Additional comments on the Resource Adequacy Enhancements draft final proposal – phase 1: