Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:
When providing additional comments in the text box below, please specify the section(s) or subsection(s) your comments refer to.
CDWR appreciates an opportunity to submit comments on the DAME Draft Tariff Language CAISO published on June 2, 2023.
CDWR proposes the following tariff change in order to align with what is proposed in the Revised Final Proposal (Page 30).
39.7.4 Default Availability Bid for Imbalance Reserves and Reliability Capacity
The CAISO applies separate IRU Default Availability Bids and RCU Default Availability Bids.
A resource’s IRU Default Availability Bid is the higher of: (a) $55/MWh; or (b) the IRU competitive locational marginal price
Negotiated Availability Bid.
A resource’s RCU Default Availability Bid is the higher of: (a) $55/MWh; or (b) the RCU competitive locational marginal price
Negotiated Availability Bid.
A Scheduling Coordinator may choose to pursue both an IRU Negotiated Availability Bid and an RCU Negotiated Availability Bid at a future date to be communicated in the CAISO’s Business Practice Manuals.
CDWR also has the following comments regarding the proposed Notional CRR Value definition. In Appendix A, it states:
- Notional CRR Value
For a given CRR in a Settlement Period, the sum of: (1) the product of: (a) the MCC of Energy at the CRR Sink minus the MCC of Energy at the CRR Source and (b) the MW quantity for that Settlement Period; (2) the product of (a) the MCC of Locational IRU Price at the CRR Sink minus the MCC of Locational IRU Price at the CRR Source and (b) the MW quantity for that Settlement Period; and (3) the product of (a) the MCC of Locational IRD Price at the CRR Sink minus the MCC of Locational IRD Price at the CRR Source and (b) the MW quantity for that Settlement Period. The Notional CRR Value for a CRR Obligation can be a non-positive value for a Settlement Period but cannot be less than zero (0) for a CRR Option.
CDWR is concerned of possible escalation of the CRR Auction Efficiency when the IRU and IRD MCC settlements are added to the DA CRR Settlements via the DAME proposal presented in the above paragraph. As mentioned in our CRR comments submitted to previous phases of the DAME Stakeholder process, CDWR recommended that, prior to implementing the DAME CRR design, CAISO initiate stakeholder process to identify the root cause of the shortages in the DA CRR Auction Efficiency. As part of this stakeholder process, CAISO needs to investigate why the Track 1B could not continue to provide the desired protection to the load demand as it did in the first three quarters following the implementation of the Track 1B proposal in January 2019
Until the DA CRR Auction Efficiency is fixed CDWR does not support the implementation of DAME CRR for the following reasons:
- Prior to the introduction of the DA CRR product to the market participants in April 2009, CAISO had performed seven years of DA LMP pricing studies (1, 1A, 2, 2A, 2B, 2C, 3 etc.), and the market participants could have an idea on how the DA CRR settlement mechanism works and the market participants could decide to participate or not in the CAISO’s DA CRR market. CDWR is not aware that CAISO had performed any of the IRU and IRD Locational Marginal Pricing studies that would tell market participants what range is expected from such settlements if IRU and IRD settlements will be added to the DA energy LMP settlement. CDWR strongly believes that market participants cannot accept the addition of the IRU and IRD MCC settlements to the DA CRR energy settlements as mentioned in the CAISO DAME CRR proposal without CAISO performing the IRU and IRD LMP pricing studies. If CAISO cannot provide any IRU and IRD locational pricing studies, it would be of great help if CAISO could provide a range the IRU and IRD LMP might have in the DAME CRR Settlements.
- CDWR, as any other participant to the CAISO’s CRR market is legally bound by the CAISO’s Officer Certification Form to comply with CAISO CRR design rules such as: a) CRR Credit Requirements and b) Market Participant’s (MP) proof that the MP has in place, a sound CRR Strategy that allows the MP to cope with negative CRR. CDWR CRR Strategy strongly relies in estimating the DA congestion rents, estimating the DA CRR revenues, and without an IRU and IRD LMP pricing in place CDWR cannot any longer estimate the value of its nominated CRR.
For the reasons specified at #2 above, CDWR strongly believes that CDWR and other market participants cannot accept the DAME CRR tariff language until CAISO performs, posts, and discusses with market participants via the stakeholder processes the IRU and IRD LMP studies.
CDWR proposes the following definition.
- Notional CRR Value
For a given CRR in a Settlement Period, the product of: (a) the MCC of Energy at the CRR Sink minus the MCC of Energy at the CRR Source and (b) the MW quantity for that Settlement Period.
The proposed Tariff Language above would maintain the status quo until the DA CRR Auction Efficiency is solved and CAISO runs IRU and IRD LMP studies.