Comments on Draft final proposal

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator Corporation’s (CAISO’s) Energy Storage Enhancements Draft Final Proposal.

CalCCA continues to support the CAISO’s co-located enhancements that would provide co-located storage resources with optional functionality in the day-ahead and real-time markets to ensure storage charging schedules do not exceed onsite renewable generation. This proposal will enable co-located storage resources to more effectively manage storage charging in a way that aligns with investment tax credit regulations. To improve this proposal, the CAISO should allow co-located resources to flag the ability to schedule charging up to its day-ahead forecast of renewable output, as opposed to the current proposal that would not schedule day-ahead charging or schedule charging only if there is a storage self-schedule. Otherwise, if the operator does not bid the renewable component in day-ahead (as is permitted under the Resource Adequacy (RA) must offer obligation rules), the renewable component would not receive a charging schedule until real-time. Scheduling storage charging subject to the renewable component’s day-ahead forecast will reflect the co-located resource’s expected ability to charge in the day-ahead timeframe and result in more efficient schedules in the day-ahead and real-time markets. Finally, CalCCA supports the ability for storage operators to toggle this functionality on or off and the removal of language around outage card submission and Resource Adequacy Availability Incentive Mechanism (RAAIM) application for the inability to charge from the grid.

CalCCA also supports the CAISO’s proposals to:

• Include opportunity costs in the day-ahead storage default energy bid;
• Improve accounting for state-of-charge of resources providing regulation; and
• Enhance the CAISO’s exceptional dispatch tools for storage resources by holding state-of-charge and compensating them for their opportunity costs of being exceptionally dispatched.

2. Please provide comments on the EIM Governing Body classification.

CalCCA has no additional comments at this time.

3. Please provide any additional input not included above related to the Draft Final Proposal.

CalCCA has no additional comments at this time.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

The California Energy Storage Alliance (CESA) appreciates the opportunity to provide feedback to the California Independent System Operator (CAISO or ISO) on the Energy Storage Enhancements (ESE) Draft Final Proposal (DFP). Through ESE, the CAISO has actively incorporated stakeholder feedback regarding the scope, focus, and overall policy direction of this initiative. CESA is particularly thankful of the ISO’s consideration of improvements to their state-of-charge exceptional dispatch (SOC ED) and electable co-located functionality proposals.

While CESA is generally supportive of the DFP, we are still materially concerned with the ISO’s position regarding requiring storage assets to submit accompanying energy bids while providing regulation. Thus, in these comments, CESA urges the ISO to provide additional clarity on the potential implications of applying both of their proposals regarding ancillary services (AS), to consider improvements to the approach by which the SOC formulae will be enhanced, and reevaluate the application, magnitude, and duration of their bid-requiring proposal based on the information shared to stakeholders. As such, CESA supports the DFP with caveats and looks forward to working with stakeholders and the ISO to enhance the AS proposals included herein.  

The ISO should provide additional information and numerical examples detailing the expected impacts of both AS proposals, as well as their potential interactions with other applicable mechanisms

In the DFP, the ISO notes that it has encountered situations in which storage assets that have AS awards, particularly regulation, are unable to meet said awards. The ISO underscores that this can be due to the storage resource having insufficient SOC, which would force a no-pay within the real-time market’s AS award and a rescission of the day-ahead AS payment, resulting in incremental ancillary services procurement in the 15-minute market. The ISO proposes two distinct measures to ensure the feasibility and provision of AS from storage assets. First, the ISO proposes an enhancement to the equation that governs SOC so that the impact of AS awards is reflected. Second, the ISO would require that storage resources have availability of economic bids for energy while providing regulation up or regulation down.

CESA understands the importance of ensuring an adequate and reliable supply of AS. Moreover, CESA supports the CAISO’s exploration of alternatives that would minimize the likelihood of communicating unfeasible dispatch instructions to energy storage assets. So far, CESA has been of the position that enhancing the formulae that govern SOC is a more lasting solution as it addresses a fundamental deficiency directly. Noting this, it has proven difficult for CESA, a stakeholder that is not a market participant, to assess the potential financial impacts of each of these proposals separately, as well as their joint effects. To this end, CESA requests the ISO produce a set of numerical examples showing how a single scenario would be affected by each of these proposals separately and both of them together. Importantly, these numerical examples should also cover interactions with other relevant market features and requirements, such as the end-of-hour (EOH) SOC parameter, the SOC requirements for AS awards within the day-ahead (DA) and real-time (RT) markets, the minimum SOC (MSOC) requirement, and the SOC ED.

Incorporating the impact of regulation on the SOC calculation is preferred over requiring accompanying energy bids?

CESA favors further development of the ISO’s proposal to enhance the formulae that currently govern SOC for storage resources. This approach is preferred as it gets to the source of the problem by addressing a fundamental deficiency regarding the ISO’s visualization of storage resources today. Enhancing the SOC formulation represents a more lasting approach that would not only mitigate the reliability risks identified by the ISO within the DFP, but more generally improve the modeling and optimization of these resources.

CESA believes that properly enhancing the SOC formulation will obviate the need to require all AS awards for storage resources to be accompanied with bids for energy at a prescribed amount. While CESA recognizes the ISO’s relaxation of the proposal, requiring energy bids equal to 50% of the AS award is still overly restrictive. This limitation is not an evidence-based approach since the DFP does not offer an explanation behind the proposed 50%, nor does it explain how it relates to the observed hourly µ values. In this vein, we agree with the concerns shared by Pacific Gas & Electric (PG&E) during the July 7, 2022 stakeholder meeting: the adoption of both of these proposals would be overly burdensome and unduly restrictive. Thus, CESA recommends the ISO pursue improvements to the SOC formulation to better reflects the impacts of regulation by developing hourly µ values per month on a per resource basis.

As stated above, by properly enhancing the SOC formulae the ISO can improve storage optimization in a lasting way. To do so, CESA has urged the ISO to develop hourly µ values per month using data from the past year. We do not believe that using averages across all hours and months to inform the updated SOC formulae is desirable nor is it consistent with the analyses presented by CAISO so far as Appendices to the DFP. Instead, the ISO should develop hourly µ values per month to inform the first set of µ values to be applied to the SOC formula. CESA has recommended that, once applied, these values should be easily accessible and updated on a regular basis. CESA recommends publishing these values in OASIS for visibility and updating these values every 12 months. We welcome ISO input on the optimal regularity of these updates. 

In developing these values, CESA has urged the ISO to consider the benefits of developing them on a per-resource basis, not on a system-wide basis. This is desirable as the impacts of regulation on SOC are largely determined by the bidding strategy followed by each asset, as well as the unique marginal costs for each (e.g., cycle life, battery chemistry). In the DFP the ISO notes that developing resource-specific values may be challenging due to limited data. CESA believes that this can be overcome by establishing a data threshold. CESA continues to strongly recommend the ISO explore development of resource-specific hourly µ values per month for resources with at least one year of operational data. For resources with fewer datapoints the general hourly µ values per month shall be applied. Once resources achieve one full year of operational data, resource-specific hourly µ values per month shall be applied.

If despite stakeholder opposition the ISO pursues an energy bid requirement for storage assets with AS awards, the proposal should be applied in a limited fashion and revised in accordance with the ?? value study

If, despite the comments offered by CESA and other stakeholders the ISO adopts an energy bid requirement, CESA recommends that it only be applied in the RT market, in accordance with the observations made by PG&E during the August 25, 2022 stakeholder meeting. In addition, CESA urges the ISO to revise the 50% requirement downwards in a manner consistent with the findings of the ?? value study. Moreover, consistent with our position that properly enhancing the SOC formulation will obviate the need to require all AS awards for storage resources to be accompanied with bids for energy, the ISO should only implement the energy bid requirement in a temporary basis while enhancements to the SOC formulae are developed, applied, and improved upon. As such, CESA would recommend that, if despite stakeholder opposition the ISO pursues an energy bid requirement for storage assets with AS awards, the requirement should have a clear sunset period, even if the percentage of the requirement is revised downwards.  

CESA favors the use of market power mitigation prices in the enhancements proposed to the DA default energy bid (DEB)

During the stakeholder call held on August 25, 2022, some stakeholders inquired about the prices that would be utilized to operationalize the proposed enhancements to the DA DEB formulation. While some parties raised concerns with the use of prices derived from the market power mitigation (MPM) run, CESA holds that these values offer the most transparent source for DEB formulation. As such, CESA opposes the use of the prior day’s prices in the DA DEB formulation and favors the use of market power mitigation prices.

2. Please provide comments on the EIM Governing Body classification.

CESA does not offer comments at this time.  

3. Please provide any additional input not included above related to the Draft Final Proposal.

CESA does not offer additional comments at this time.  

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

2. Please provide comments on the EIM Governing Body classification.

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

3. Please provide any additional input not included above related to the Draft Final Proposal.

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

Calpine fully supports the CAISO decision to defer consideration of its proposal to “automatically secure state of charge for local needs” (section 4.1.4 of the Second Revised Straw Proposal).  This deferral reflects an CAISO commitment to additional discussion on this matter which requires significant data analytics and policy analysis.  Specifically, Calpine urges the CAISO to describe in greater detail how such procurement would be optimized and how it will ultimately affect price formation.

In contrast, there are several key areas in the proposal that Calpine believes require more discussion or vetting before taking the proposal to the Board in October.

First, section 4.3 Default Energy Bid (‘DEB”) acknowledges that the opportunity cost component or the lack thereof was thoroughly discussed in the ESDER initiative.  Therein, the CAISO concluded that in the Day Ahead market opportunity cost is inherently embedded in the optimization by virtue of the 24-hour time horizon.  Hence, there was no need to separately include this cost element into the Day Ahead DEB calculation.  Now it appears that the experience of a scheduling coordinator has changed the CAISO’s view.

Calpine does not know enough of the SC’s anecdotal experience to know whether such a case is sufficient basis for this rather significant change to DEB calculation.  Perhaps the CAISO can provide more color on the prevalence of the observation described in the proposal.  Nevertheless, the CAISO’s optimization should not be designed to accommodate any market participant’s bid behavior, rather the objective is to minimize the costs of reliable operation.  It must do so without preference or malice.  If a market participant’s bid strategy causes losses, it should change its behavior. Without further information, it would be difficult for Calpine to support this proposal.

Second, in section 4.1.1 Ancillary Services, the CAISO repeats its concern about the feasibility of day ahead regulation up/down awards. As Calpine had indicated previously, the justification for its proposal to require economic energy bids in the opposite direction of regulation awards remains unclear. 

The BPM for Market Operations, section 4.2.5 Ancillary Service Award Allocation on Energy Bids, paragraph 6, states “Energy Bids are required to dispatch Operating Reserve, but they are not needed for Regulation…”.  Same section next paragraph, in part says “…Regulation is not Dispatched based on its Energy Bid Curve price. Rather, Regulation is Dispatched by AGC based wholly on the resource’s effectiveness to re-establish the system frequency target...Also note that, AGC dispatches resources based on prices internally created by EMS system to coordinate control across all resources on AGC control.” 

To this, Calpine asks, how does requiring economic Energy Bids interact with the EMS AGC logic to maintain system frequency?  Will the EMS logic change?  If so, this was not clear in the proposal. 

There appears to be an unstated desire in this proposal to address the lack of sufficient SOC, and therefore regulation infeasibility.  In fact, in the last paragraph of the proposal under section Energy Bids (page 10), it says “The proposed rule is applicable to bids, and does not specify if a bid will clear or not…”  Is the CAISO going to implement a proposal that uneconomically dispatches energy to “correct” the state of charge? 

Rather, Calpine might prefer a reliability constraint embedded in real time co-optimization to ensure there is sufficient state of charge prior to and during the hour/s that the resource is awarded regulation.  In addition, performance requirements – including maintaining a sufficient state of charge -- should be created. 

In any regard, this proposal will require more vetting and should not go directly to the Board for approval this coming October.

Finally, while Calpine does not generally oppose the proposals specific to storage resources under section 4.1.2 and 4.1.3 Exceptional Dispatch.  The question remains as to how this “new tool” will effectively interact with existing protocols associated to Exceptional Dispatches (aka “traditional exceptional dispatches).  It remains unclear how the pecking order will pan out as it relates to exceptional dispatches (“traditional” vs. “new tool”).  What impacts will such Exceptional Dispatch have on price formation?  Calpine seeks more clarification and discussion on this matter.

More importantly, incorporating an opportunity cost mechanism different from a “traditional” exceptional dispatch bid or better paradigm insinuates that conventional resources do not have opportunity costs simply because they are dispatched ED MAX to hold a lower volume than they could otherwise produce.  Once again, this design element leaves CAISO exposed to discriminatory claims for prioritizing storage revenue against all other resources exposed to opportunity cost, including but not limited to RECs. 

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

Calpine fully supports the CAISO decision to defer consideration of its proposal to “automatically secure state of charge for local needs” (section 4.1.4 of the Second Revised Straw Proposal).  This deferral reflects  CAISO commitment to additional discussion on this matter which requires significant data analytics and policy analysis.  Specifically, Calpine urges the CAISO to describe in greater detail how such procurement would be optimized and how it will ultimately affect price formation.

In contrast, there are several key areas in the proposal that Calpine believes require more discussion or vetting before taking the proposal to the Board in October.

First, section 4.3 Default Energy Bid (‘DEB”) acknowledges that the opportunity cost component or the lack thereof was thoroughly discussed in the ESDER initiative.  Therein, the CAISO concluded that in the Day Ahead market opportunity cost is inherently embedded in the optimization by virtue of the 24-hour time horizon.  Hence, there was no need to separately include this cost element into the Day Ahead DEB calculation.  Now it appears that the experience of a scheduling coordinator has changed the CAISO’s view.

Calpine does not know enough of the SC’s anecdotal experience to know whether such a case is sufficient basis for this rather significant change to DEB calculation.  Perhaps the CAISO can provide more color on the prevalence of the observation described in the proposal.  Nevertheless, the CAISO’s optimization should not be designed to accommodate any market participant’s bid behavior, rather the objective is to minimize the costs of reliable operation.  It must do so without preference or malice.  If a market participant’s bid strategy causes losses, it should change its behavior. Without further information, it would be difficult for Calpine to support this proposal.

Second, in section 4.1.1 Ancillary Services, the CAISO repeats its concern about the feasibility of day ahead regulation up/down awards. As Calpine had indicated previously, the justification for its proposal to require economic energy bids in the opposite direction of regulation awards remains unclear. 

The BPM for Market Operations, section 4.2.5 Ancillary Service Award Allocation on Energy Bids, paragraph 6, states “Energy Bids are required to dispatch Operating Reserve, but they are not needed for Regulation…”.  Same section next paragraph, in part says “…Regulation is not Dispatched based on its Energy Bid Curve price. Rather, Regulation is Dispatched by AGC based wholly on the resource’s effectiveness to re-establish the system frequency target...Also note that, AGC dispatches resources based on prices internally created by EMS system to coordinate control across all resources on AGC control.” 

To this, Calpine asks, how does requiring economic Energy Bids interact with the EMS AGC logic to maintain system frequency?  Will the EMS logic change?  If so, this was not clear in the proposal. 

There appears to be an unstated desire in this proposal to address the lack of sufficient SOC, and therefore regulation infeasibility.  In fact, in the last paragraph of the proposal under section Energy Bids (page 10), it says “The proposed rule is applicable to bids, and does not specify if a bid will clear or not…”  Is the CAISO going to implement a proposal that uneconomically dispatches energy to “correct” the state of charge? 

Rather, Calpine might prefer a reliability constraint embedded in real time co-optimization to ensure there is sufficient state of charge prior to and during the hour/s that the resource is awarded regulation.  In addition, performance requirements – including maintaining a sufficient state of charge -- should be created. 

In any regard, this proposal will require more vetting and should not go directly to the Board for approval this coming October.

Finally, while Calpine does not generally oppose the proposals specific to storage resources under section 4.1.2 and 4.1.3 Exceptional Dispatch.  The question remains as to how this “new tool” will effectively interact with existing protocols associated to Exceptional Dispatches (aka “traditional exceptional dispatches).  It remains unclear how the pecking order will pan out as it relates to exceptional dispatches (“traditional” vs. “new tool”).  What impacts will such Exceptional Dispatch have on price formation?  Calpine seeks more clarification and discussion on this matter.

More importantly, incorporating an opportunity cost mechanism different from a “traditional” exceptional dispatch bid or better paradigm insinuates that conventional resources do not have opportunity costs simply because they are dispatched ED MAX to hold a lower volume than they could otherwise produce.  Once again, this design element leaves CAISO exposed to discriminatory claims for prioritizing storage revenue against all other resources exposed to opportunity cost, including but not limited to RECs. 

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

Cat Creek Energy acknowledges that the CAISO and stakeholders have worked diligently for months to craft a Draft Final Proposal that enhances Energy Storage as a resource for California in its transformation to a 100% carbon free electrical system. This task will be easier with the deployment of Long Duration Energy Storage resources, which have a broader range of application, thus can maintain a more robust relationship to exceptional discharge criteria. In the meantime, the resulting approach to promote reliability of BESS in the Draft Final Proposal is overly complicated, and we believe the proposal should be streamlined to advance the installation of energy storage necessary for a rapid transition.

More appropriate would be a condition precedent for all BESS, whether co-located or independent, to maintain a State of Charge (SOC) of a certain percentage which is dedicated to exceptional dispatch and operating orders promoting reliability for the grid operator.  A kW-mo. payment for this SOC for exceptional dispatch frees up the balance of the BESS to perform at ideal market conditions or under contract without additional stipulations or the need of payments for lost opportunity even in day-ahead applications.  Grid or co-located charging becomes much less an issue if a percentage SOC must be maintained for exceptional dispatch conditions.

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

LSA’s comments are summarized below and explained further under item 3.

Reliability enhancements for storage resources 

LSA understands the general rationale for the CAISO’s proposal but believes that:

• The CAISO should more fully share the results of its Regulation non-compliance investigation.
• More attention is needed to implementation details.
• The CAISO should consider use of the proposed approach more widely, e.g., for Operating Reserve and Energy market awards.

Co-located Resource (CLR) enhancements – grid charging option 

This option is still needed despite the possible removal of grid-charging limitations in the recent Inflation Reduction Act (IRA).

LSA appreciates the CAISO’s inclusion of our previously requested clarifications that the option applies both to forward scheduling and real-time operations.  However, the Day Ahead Market element should be modified to allow charging schedules for storage even if generation is not scheduled in that market timeframe, instead of the self-scheduling method in the Proposal.  LSA provides two options for CAISO consideration.

CLR enhancements - Dynamic Transfer (DT) resources 

As noted before, LSA strongly supports the CAISO's extension of the Aggregate Capability Constraint (ACC) option to Pseudo Tie resources, and we appreciate the CAISO's adoption of our clarification request that such resources would also qualify for the new grid-charging management option.

However, the CAISO did not respond to LSA’s earlier comment, repeated here, that both the ACC and grid-charging management option should be available to Dynamically Scheduled resources as well, i.e., to all DT resources.  We repeat that recommendation here.

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

Reliability enhancements for storage resources

LSA has two comments concerning the Proposal:

• The CAISO should more fully share the results of its Regulation non-compliance investigation.  The Second Revised Straw Proposal noted, anecdotally, some instances of Regulation non-compliance by storage resources and proposed a “multiplier” to reduce such awards.  The Proposal apparently concludes that such non-compliance is due to lack of recognition in CAISO market algorithms of changes in State of Charge (SOC) when storage resources are dispatched in real-time to provide Regulation.

LSA agrees that the lack of recognition of SOC changes from Regulation provision is a design shortcoming that should be fixed, but was that the only problem?  The CAISO should share more details of its more detailed research and disclose if there were any other contributing factors and, if so, if it intends further action to address those.

• More attention is needed to implementation details, e.g., the calculation methodology.  For example, if changes are made seasonally, will the CAISO just use the “raw” data from the same season the year before to set the multiplier the next such season (e.g., Spring 2023 data to set the Spring 2024 multipliers), or will the data be adjusted in some way to normalize weather and/or reflect load growth?  The proposal represents a potentially significant reduction in Regulation awards to energy storage resources, and a hasty and inaccurate methodology could harm both the resources involved and system reliability generally.  

• The CAISO should consider using this more generally in the market optimization.  For example, SOC changes could impact resource availability for Operating Reserve and Energy market awards, and not just Regulation.

Co-located Resource (CLR) enhancements – grid-charging management option 

LSA appreciates the CAISO’s inclusion of our previously requested clarifications that the option applies both to forward scheduling and real-time operations.  LSA also appreciates CAISO adoption of our suggestion that the election of this option be implemented in a flexible manner (e.g., by activating an hourly flag or “toggle”) instead of inflexible and cumbersome elections through Master File changes. 

LSA has the following additional recommendations:

• The CAISO should proceed with development and implementation of this innovative option, despite recent tax legislation.  This option is still needed, even though Inflation Reduction Act changes may reduce that need. Specifically, the IRA includes provisions that could allow storage resources to recover Investment Tax Credits (ITC) without charging limited to on-site renewables.  However:

• Projects already operating, or going into operation, under the current (pre-IRA) ITC framework could still have to continue under that framework.

• Many PPAs explicitly prohibiting grid charging for the first 5 years were already executed, and those resources are already under development.

• Grid-charging limitations are still a feature of property-tax exemptions that provide significant financial benefit.

• The IRA provisions contain many conditions that are not yet entirely clear.  Many projects could still find the current ITC framework more advantageous and may choose to continue proceeding under that framework, assuming that it is still available.

• The CAISO should modify its Day-Ahead (DA) Market proposal for scheduling charging energy.  The Proposal reflects the need for a mechanism to allow CLR charging schedules even where solar/wind Must-Offer Obligations (MOOs) do not require bids or schedules until the Real-Time (RT) Market. 

The Proposal suggests that CLR storage resources submit DA Market self-schedules for charging equal to forecasted solar/wind production each hour.  This solution is problematic, because:

• Most energy storage resources provide Flexible Capacity, which requires submittal of economic bids for the full operating range, including energy charging.  Thus, this proposal would violate the storage MOO.

• Submission of a self-schedule would effectively remove that entire storage operating range from the CAISO market optimization, potentially distorting the market results.  For example, a charging award in a particular hour might not even have been awarded in the absence of the self-schedule.

• The solar/wind CLR schedules themselves may be submitted in the RT Market as economic bids and may not clear that market.

• CAISO policies have been encouraging less self-scheduling, not more.

LSA’s last comments contained a better solution (with no response from the CAISO), and LSA recommends it again here, along with an alternative option: 

• Option proposed in last comments:  Allow the resource to submit a wind/solar output forecast into the DA Market that would limit the charging schedule awarded, if the solar/wind CLR is not scheduling in that timeframe.  The storage CLR charging schedule would be adjusted in the RT Market once the solar/wind CLR schedules are submitted.

• Alternative option:  Allow the resource to elect the new option only for the real-time market, i.e., comply with the storage MOO in the DA market and then have the CAISO adjust any storage charging schedule in the RT markets to reflect the awarded solar/wind schedules.  storage CLRs could also manage charging restrictions by limiting the charging range for each hour to the solar/wind forecast.  This approach would ensure that virtual demand and virtual supply do not impact the CLR charging restrictions.

CLR enhancements – Dynamic Transfer (DT) resources 

As noted above, LSA strongly supports the CAISO’s extension of the Aggregate Capability Constraint (ACC) option to Pseudo Tie resources, and we appreciate the CAISO’s adoption of our clarification request that such resources would qualify also for the new grid-charging management option. 

However, the CAISO did not respond to LSA’s earlier recommendation that eligibility for both the ACC and the grid-charging management option be extended to Dynamically Scheduled (DS) resources as well, i.e., to all DT resources.  DS resources that are Mixed-Fuel Resources have the same need for these features as internal CAISO and PT resources, and as long as both resource types are included in the DS/DT arrangement.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

MRP supports the Draft Final Proposal with a few caveats.  Those caveats are:

MRP supports the CAISO including opportunity cost in the Day-Ahead Default Energy Bid (DEB) for storage resources if the DEBs for other resources also includes opportunity cost.  Said differently, the formulation of the DEB should be the same for all resources and not different for energy storage resources. 

MRP supports the CAISO’s proposal to account in a resource’s state of charge for energy associated with regulation awards  Given that the CAISO is proposing hour-specific and product-specific multipliers, MRP urges the CAISO, once it has gained some experience with these multipliers, to make available information that indicates how these multipliers performed after implementation and adjust the multipliers as needed. 

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

The Draft Final Proposal includes six changes to ensure reliable storage operation and modeling. PG&E provides the following comments for each item below:

Enhancements for reliability:

1. Improved accounting for state of charge while providing regulation

2. Enhanced bidding requirements for resources providing ancillary services

• PG&E supports the CAISO taking action to ensure reliability of the system and recognizes the need for both (a) empirical regulation energy take parameters and (b) energy bids to support AS awards. However, implementing these proposals in both the day-ahead and real-time markets come with challenges and may actually reduce the ability for storage resources to provide regulation.
• PG&E supports using the revised SOC formula (with multipliers based on historical averages) in the day-ahead context, since these will lead towards “balanced” procurement of regulation (and possibly energy) in such a way that an “optimal” state of charge trajectory is obtained over the day. In the real-time context, however, PG&E recommends that regulation energy take parameters be constructed differently since parameters based on historical averages may conflict directly with SOC telemetry and yield incorrect dispatches. PG&E recommends using a different SOC formula for the real-time market, or a subset of the real-time market (i.e. binding intervals), which incorporates the risk of a “worst-case scenario”: 100% regulation energy take in the adverse direction. This real-time SOC formula would use multipliers different from historical averages in order to protect regulation awards.
• As mentioned in PG&E’s comments on the Second Revised Straw Proposal (California ISO - All comments (caiso.com), energy bids to support AS awards are better suited to the real-time market and not the day-ahead market. One issue is that energy bids may be taken independent of need to manage regulation, and even counter to capability in later periods. Even when energy bids are dispatched to preserve regulation capability, worst case energy takes may make such dispatch ineffective (e.g. discharge nets to zero with 100% reg down energy takes). PG&E therefore recommends that day-ahead energy bids which encumber regulation awards should not be taken, and energy bid insertion in real-time should be used instead to support regulation awards.

3. Exceptional dispatch tools for storage resources to hold state of charge and opportunity cost compensation.

• PG&E supports the proposal, with the expectation that any exceptional dispatch which holds SOC should be compensated for regulation no pays, not on a counterfactual but a pure lost capacity revenue basis.

Enhancements to co-located model:

4. Electable mechanism to prevent ‘grid charging’

5. Extension of the co-located model to pseudo-tie resources

• PG&E supports the two proposals.

Improvements to the storage default energy bid:

6. Add an opportunity cost component into the day-ahead default energy bid

• PG&E supports the proposal.

2. Please provide comments on the EIM Governing Body classification.

CAISO provided clarifications in the Draft Final Proposal specifying the reliability and the co-located enhancements changes will impact both day-ahead and real-time markets. PG&E supports the EIM governing body classification.

For future initiatives, PG&E believes that CAISO should better describe the EIM governing body classification for each change in the proposal.

3. Please provide any additional input not included above related to the Draft Final Proposal.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

REV Renewables supports the Draft Final Proposal, with the caveat in comments on how the CAISO will calculate the opportunity cost for the day-ahead Default Energy Bid (DEB).

REV strongly supports including an opportunity cost component in the day-ahead DEB.

• While CAISO notes its example is for only one day, REV has experienced this phenomenon for many days in 2022. During these days, market power mitigation triggered in earlier hours and caused the resource to dispatch during early- to mid-afternoon hours at lower prices as a result of the DEB. REV agrees with CAISO that including an opportunity cost in the day-ahead DEB should better align dispatch to higher priced hours when storage is needed most.
• However, REV does not agree with the proposal noted in the stakeholder meeting to use prices from the day-ahead market results from the previous day. The previous day could vary dramatically from the current day in factors such as weather, day of the week (e.g. Sunday vs. Monday), system conditions, outages, and more. REV suggests CAISO maintain its proposal to use the same series of prices from the market power mitigation run to generate the opportunity cost term.
• REV requests that CAISO provide examples of counterfactual runs of resources that were mitigated using the current DEB vs. the proposed DEB to ensure that the appropriate opportunity cost formulation is used and that it results in the desired dispatch outcome.

REV supports the proposed bid cost recovery enhancements for exceptional dispatch. The proposed changes better reflect the opportunity costs of being withheld from the market and should compensate the resource appropriately.

REV supports the proposed ancillary service enhancements. However, suggests that CAISO be transparent in the formulas used, historical data that drives regulation deployment, and in implementation of the proposed enhancements. CAISO should closely monitor impacts on the market to ensure there are not unintended consequences in the market.

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

REV has no additional comments at this time.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

SEIA appreciates the revisions made in the draft final proposal and largely supports the proposal. SEIA is supportive of the added flexibility under the co-located enhancements to allow for the use of the grid-charging limitation in the DA and RT market and toggled on or off on an hourly basis. SEIA believes that this functionality will provide scheduling coordinators with greater control and flexibility and will reduce instances of grid-charging without limiting market participation. This functionality should also provide CAISO with greater visibility into co-located resource positions, which should limit any potential reliability risks that could result from not having control of the full dispatch range of the co-located resource.

SEIA believes the proposed enhancements to energy storage resource availability to provide ancillary services improve upon the initial CAISO proposal. More specifically, SEIA supports the update to the state of charge equation to reflect regulation awards and believes this equation can and should be expanded to include the full slate of ancillary services. On the proposal to require economic energy bids in the DA to support ancillary service awards, SEIA supports the proposal put forward by PG&E during the August 25^th ESE meeting to eliminate the DA must-offer requirement and instead utilize a must-offer obligation for energy storage resources that have an ancillary service awarded in the DA. SEIA believes this proposal provides a simple solution to the observed reliability issue without creating economic concerns for energy storage resources or feasibility concerns for CAISO.

2. Please provide comments on the EIM Governing Body classification.

Support.

3. Please provide any additional input not included above related to the Draft Final Proposal.

No additional comments.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

See attached

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

Vistra is the owner, operator, and Scheduling Coordinator of 400 MW / 1,600 MWh of battery energy storage systems online at its Moss Landing site operating that achieved commercial operations in 2021. We will have 350 MW / 1,400 MWh additional MW in 2023, bringing our combined storage capability at Moss Landing to 750 MW / 3,000 MWh. Vistra is also developing up to 1,460 MW / 5,840 MWh of additional battery storage being developed for mid to long-term depending on the needs of the grid. The rules and procedures around storage operations significantly impacts Vistra and we request the CAISO mindfully consider our input in this light.  

Vistra opposes the CAISO moving forward with a Final Proposal. Below we provide specific feedback on elements of the CAISO’s proposal that lack detail, are not supported, or have not sufficiently considered stakeholder feedback:

• CAISO failed to respond to Vistra’s questions and requests for information on the Second Revised Straw Proposal. Without these clarifications it is impossible for us to evaluate the merits of the proposal.
• CAISO has not yet evaluated the interplay between its state of charge (SOC) calculation and the constraints used in the CAISO markets that manage the SOC value. We believe a revision to the SOC calculation to include a multiplier without simultaneously updating the Ancillary Services state of charge constraint will likely lead to adverse market outcomes as discussed on the August 25^th stakeholder call. Vistra cannot support this change without the accompanying revisions in the AS SOC constraint due to its expected adverse impacts.
• CAISO has not explained the problem it is trying to address though the proposal to require energy bids for 50% of the regulation award(s). Additionally, there appears to be confusion on what the CAISO is proposing: (A) limit regulation awards to 50% of energy range or (B) require minimum of 50% of regulation range offered in energy range. The CAISO has not provided sufficient details on actual operator experience that it describes in its paper, and it should clarify the mechanics of its proposal. The CAISO should support the operational concerns with data from actual experience. Further, the CAISO should test whether the SOC calculation and AS state of charge enhancements would address the concern driving this element of the proposal. Without providing this analysis, Vistra is not able to support this proposal due to insufficient information.
• CAISO has yet to consider stakeholders requests to further discuss Default Energy Bid formulations to better represent rational storage offers. While we appreciate the CAISO addressing one major issue with the existing DEB in the day-ahead, Vistra believes there are more issues that result in inefficient dispatches when mitigated. Vistra does not believe its efficient or robust market design where mitigation of storage resources in real-time is at significantly lower price levels during strained conditions. This results in the storage fleet not being able to effectively manage its own state of charge to ensure it can be available during periods of greatest need. For a real life example, CAISO should review its market operations on September 6, 2022. The inefficiency of the dispatch is even starker when considering that storage assets were struggling to operate under a minimum state of charge constraint to efficiently meet those hours which the real-time market could not see. In the absence of extending the market horizon, storage operators must be able to submit bids and offers that reflect these risks in real-time. Vistra urges the CAISO acknowledge the real-time opportunity cost component of the DEB is insufficient to allow for appropriate asset management by using the fourth highest hour, instead the CAISO should use the highest hour to represent the final hour that the storage asset should be available. The same change should be adopted in the day-ahead formulation to use the highest hour to set the opportunity component. Additionally, Vistra thinks it is counterintuitive that when mitigated storage can have their entire range mitigated to the same price, which effectively communicates that storage assets are revenue neutral during the period mitigated paying and selling the same price for its charge and discharge. We do not believe this is how the market should function. Further discussions on mitigation and how it can adversely impact operations will help identify what solutions are needed. We urge the CAISO to allow for this discussion.

In addition to believing the elements of the proposal are not sufficiently developed, we feel more strongly that important issues are not being addressed and should be to support reliability. Our previous concerns about outage management including challenges with managing foldback impacts to storage operations through outage management proved out to be burdensome for both us and market operators. Outage management was not only burdensome but inefficient without overlapping outage cards due to the time delays for cancelling and resubmitting outage cards. We have identified new challenges during the past weeks and ask for the time and space to perform our own lessons learned review. This would also afford the CAISO additional time to provide analysis and data to support its proposals as requested above. Vistra cannot support this initiative moving forward to a Final Proposal. We request the CAISO delay the timeline of this initiative to allow for analysis and stakeholder discussions on the events and storage performance that have been learned over the last few weeks.

The need to slow down, clarify the problem statements, and explore better solutions to those problems has a silver lining. We find ourselves in a new position than we were when the Draft Final Proposal was published. The region-wide heat wave that stressed the Western grid allowed for both storage operators, market operators, and grid operators to stress test the storage fleet in what are normally “edge cases”. The edge cases that arose over the last two weeks afford us an opportunity to take a step back and to review performance during this window. Out of this review, we are certain more issues will be identified that merit expedient solutions. This initiative should be the vehicle to pursue solutions to these operational needs to increase the ability of storage fleet to support reliability.

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

Vistra has endeavoured to engage meaningfully in this effort. For additional context see Vistra's prior comments:

• Comments on the Issue Paper[1]
• July 26, 2021 workshop presentation sharing storage operator challenges[2]
• Comments on the July 2021 workshop[3]
• Comments on the straw proposal[4]
• Comments on the revised straw proposal[5]
• April 13, 2021 workshop presentation on identified issues not being addressed by proposal[6]
• Comments on the second revised straw proposal[7]

Vistra requests the CAISO respond to stakeholder requests and questions in the next iteration. It is not clear to us our requests are being understood and considered at this time.

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/b0fa2c31-76b6-459f-af5e-761fbf6e1fdd#org-e92a62cc-f434-4def-84d2-dafab0e0ad6b

[2] http://www.caiso.com/InitiativeDocuments/VistraPresentation-EnergyStorageEnhancementsWorkingGroup-Jul26-2021.pdf

[3] https://stakeholdercenter.caiso.com/Comments/AllComments/a355489d-9b17-45aa-adb8-d515bea239ab#org-7c7ce76b-80ca-40ff-9ee5-7b0fd0a7d2e6

[4] https://stakeholdercenter.caiso.com/Comments/AllComments/8fac1e22-3deb-4986-a27b-7cdfe3a44d87#org-f678313f-880a-4c18-a7f2-3b09f2b313f7

[5] https://stakeholdercenter.caiso.com/Comments/AllComments/bb10ac11-7090-4e45-bca4-06191a4a8adb#org-307fa6fa-0466-4ab4-9e53-a8d30de6d191

[6] http://www.caiso.com/InitiativeDocuments/Vistra-Corp-Presentation-Energy-Storage-Enhancements-Apr13-2022.pdf

[7] https://stakeholdercenter.caiso.com/Comments/AllComments/6211a605-5db0-45c7-a959-3b1df57bb7ba#org-5bebc51b-7df5-4710-85c5-9b8bfbd270ad

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

WPTF appreciates the opportunity to provide comments on the CAISO’s Energy Storage Enhancements Draft Final Proposal. We are encouraged to see the CAISO continuing to make efforts to improve modeling and participation of storage resources in the CAISO wholesale energy market. Generally speaking, we are supportive of the CAISO’s proposal but believe it requires a few additional modifications prior to finalizing. Most notably below is WPTFs’ concerns with imposing an energy bid requirement in the day-ahead market for resources providing regulation. This element of the proposal provides no benefit to the market and results in unnecessarily discounting the amount of regulation energy storage resources can provide. WPTF cannot support this element of the proposal.

Additionally, we respectfully request that the CAISO include in the Energy Modeling Enhancements initiative continued discussion around the drivers of unexpected charging/discharging schedules for energy storage resources due to, for example, flat mitigated energy bids from charging to discharging operating ranges.

2. Please provide comments on the EIM Governing Body classification.

3. Please provide any additional input not included above related to the Draft Final Proposal.

WPTF is supportive of the CAISO making changes to improve feasible ancillary service awards to energy storage resources coming out of the day-ahead market. We continue to support the CAISO making changes to how it calculates the state-of-charge in the day-ahead market to estimate the impact using that regulation in real-time may have on the actual state-of-charge. However, we would like the CAISO to provide some numerical examples of how the proposed SOC formulation and the other constraint in the day-ahead market that limits ancillary service awards by the SOC will (1) interact and (2) impact the regulation awards for storage resources. We are concerned that there may be a circular nature between the two constraints given how the SOC formulation is currently being proposed, and believe examples will help provide clarification and a better understanding such that we can ensure the actual and intended outcomes are aligned.

WPTF cannot support the CAISO’s proposal element that requires storage resources to submit day-ahead energy bids in the opposite direction for 50% of its regulation awards. We believe the CAISO’s proposal to modify the SOC formulation in the day-ahead market will address the concern articulated by the CAISO that this element of the proposal is trying to address. Furthermore, based on our understanding of this element of the proposal, it provides no additional benefit to the market but rather unnecessarily harms storage resource’s ability to provide flexibility to the market via energy and regulation.

Of utmost importance is that the CAISO clearly articulates in the next iteration exactly what they are proposing for the day-ahead market energy bid requirement and what concern it is trying to address that the SOC formulation (in conjunction with the other constraints in the day-ahead and real-time markets) does not address. The proposal paper describes this element of the proposal as resources being required to submit energy bids in the opposite direction of the regulation award and for 50% of the awarded regulation. However, in the day-ahead market you don’t know what your regulation awards are when submitting energy bids – all bids are submitted simultaneously, and all awards are made simultaneously. In other words, there is no way to know what your regulation awards will be, and thus what the energy bid requirement is when the energy bids are due. Based on the useful discussion during the stakeholder call, it was made clear that what the CAISO is actually proposing is to just hold back a portion of the resource’s operating capability (i.e., not award it regulation or energy) in the day-ahead market for use in the real-time market to manage SOC while providing regulation. This is not clear in the proposal itself and we would like the CAISO to clearly articulate the impact this will have on storage resources energy and ancillary service awards coming out of the day-ahead market (ideally including examples).

One example articulated during the call was a 100 MW storage resource being awarded 100 MW reg up and 100 MW reg down and how, while that is possible today, under the new proposal, that will no longer occur because it should be considered an infeasible award. However, if that resource is a 4-hr battery and has 50% SOC going into that hour (200 MWhs stored energy) it has sufficient charging and discharging capability to fully provide the 100 MW reg up and 100 MW reg down for the entire hour if needed. We do not believe that is necessarily an infeasible award and thus should not drive the CAISO to construct a constraint or market rule to prevent this from occurring. We do agree that over time if this award occurs hour after hour it will become infeasible at some point; this is because we know that in real-time the resource will be used for the regulation and in reality that resource will not maintain 200 MWhs stored energy hour after hour. Thus, adjusting the SOC formulation to account for that impact should address this concern as well. WPTF does not believe there is a need to impose an additional market rule or constraint to further limit storage’s ability to provide flexibility to the grid.

To be clear, we are less concerned with the energy bid requirement in real-time than the day-ahead. However, we do wonder if having the bidding requirement alongside the SOC requirement will exacerbate conditions the CAISO is facing on the grid. For example, if a resource is providing reg up in a given hour and the market starts to lean on that reg up (i.e., dispatch it above its energy schedule) its most likely because there was a disturbance on the grid (e.g., supply didn’t show up or demand came in higher). Does this requirement now force the storage resource to charge in that instance, creating more demand?  

Lastly, regarding the updated DEB formulation, WPTF appreciates the CAISO quickly reacting to issues as they arise. We are supportive of including an opportunity cost component in the day-ahead DEB formulation but continue to question the use of prices coming out of the Market Power Mitigation run to set the opportunity cost component. The MPM run uses unmitigated bids to then identify what bids are subject to mitigation. Thus, the prices coming out of the MPM run may be inflated due to the exertion of market power. The purpose of the DEB is to protect the market from participants exerting market power. It seems somewhat of an oxymoron to use prices reflecting market power to set bids that are intended to protect the market against market power. WPTF would be supportive of the CAISO using another set of prices to determine the day-ahead opportunity cost component, such as the prior day’s day-ahead market prices.