Comments on Draft final proposal and stakeholder discussion for July 09, 2026

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Advanced Energy United (United) appreciates the California ISO’s continued progress on DDEMI Track 1 and thanks staff for the additional specificity provided in the Draft Final Proposal, including the discussion of resource-level exports (market-wide versus ISO BAA deliverability), non-responsive load, the hierarchical baseline adjustment methodology, and Net Energy Metering (NEM)/Net Billing Tariff (NBT) participation. We appreciated the July 9 stakeholder meeting was a useful forum for clarifying the ISO’s deliverability rationale and the mechanics of the proposed settlement changes.

United continues to support the core objective of Track 1: allowing individual customer exports within a demand response (DR) aggregation to be reflected in performance measurement, rather than zeroed out, so that behind-the-meter (BTM) storage and other distributed energy resources (DERs) are not artificially capped below their real capability. This directly addresses and (partially) remedies the problem statement that motivated Track 1 of the DDEMI initiative.

At the same time, United notes that this proposal remains narrowly scoped to resource-level (i.e., individual end-use customer) exports, and defers the more consequential question of aggregation-level or sub-LAP exports to a future track. United urges the ISO to commit to a concrete scope and schedule for that follow-on work.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

United’s overall assessment is that the Draft Final Proposal is a positive, if incremental, step forward. It corrects an identified measurement flaw (artificially capped PDR/RDRR performance) without redefining demand response, and it does so using existing PDR/RDRR constructs and PEMs, consistent with the Simplicity/Feasibility principle that guided this initiative.

However, because the resource (aggregation) as a whole still may not be a net exporter, a significant share of DER export capability will remain unrecognized wherever an aggregation’s co-located curtailable load is small relative to its export potential (e.g., storage-heavy or light-load aggregations). United therefore views Track 1 as a necessary but not sufficient step, and asks that the ISO pair adoption of Track 1 with a clear commitment to schedule necessary follow-on work on aggregation-level exports.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

United supports the Draft Final Proposal with caveats. United supports adoption because it remedies an identified measurement flaw, preserves the load-curtailment definition of DR, and can be implemented on existing systems in time for 2027, consistent with broad stakeholder support reflected in the record.

United’s support is caveated with the recommendations that the ISO: (1) commit to a defined scope and schedule for Track 2 work on aggregation-level/sub-LAP exports and associated deliverability treatment; (2) monitor and report on how often the hierarchical baseline adjustment factor falls to Step 2 or Step 3 so any representativeness concerns can be addressed with data; (3) codify continued NEM/NBT eligibility in tariff language rather than proposal discussion alone; and (4) ensure the new DRRS registration attributes do not introduce new UDC review delays for exporting customers.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

United recommends the following revisions before the proposal is finalized:

1. Identify appropriate venue(s), scope and schedule (whether a DDEMI Track or successor or parallel initiative) for addressing aggregation-level/sub-LAP exports, Full Network Model (FNM) representation of geographically distributed injections, and associated ISO BAA deliverability/TPD allocation options, rather than leaving this as an open-ended future consideration.

2. Direct staff to track and periodically report the frequency with which Step 2 (excluding export intervals) and Step 3 (default 1.0 factor) of the hierarchical baseline methodology are triggered, and their settlement impact, so the methodology can be refined based on operating experience.

3. Add tariff or Business Practice Manual language expressly confirming that NEM and NBT customers remain eligible to participate in wholesale DR aggregations under the revised measurement rules, to avoid future ambiguity or re-litigation of this issue.

4. Provide a detailed DRRS implementation timeline and draft Business Practice Manual language for the new export-related registration attributes, with a stakeholder review opportunity, to support a workable 2027 implementation date.

5. Keep RDRR in scope on the same timeline as PDR, consistent with the ISO’s proposal and contrary to the CPUC Energy Division staff’s recommendation to phase RDRR in later, given the operational similarity between the two models.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

United appreciates the ISO’s clearer articulation of the distinction between (a) the market-wide Full Network Model (FNM) modeling considerations associated with geographically distributed exports and (b) the ISO BAA-specific transmission deliverability and TPD allocation framework, as well as the clarification of the scope of the 2005 FCDS grandfathering policy. United agrees that resolving the FNM representation question is a nontrivial undertaking that should not be rushed into Track 1.

That said, United reiterates the concern, shared by United, CALSSA, Sunrun, the Joint DR Parties, Tesla, VGIC, and Voltus in the stakeholder process, that a resource-level export limit continues to understate the real flexibility that DER-heavy aggregations can offer the grid, particularly for storage-heavy portfolios with limited co-located curtailable load. Preserving this limit as a permanent feature of the market design, rather than as an interim step, would leave substantial DER capability stranded. United asks the ISO to formally scope and schedule the follow-on evaluation of alternative resource modeling, FNM representation, and deliverability/TPD allocation approaches referenced in Section 3, so that this “future phase” work has a defined path forward rather than remaining open-ended.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

United supports the ISO’s proposed hierarchical approach to pre-event baseline adjustment factors and agrees with the ISO’s decision not to adopt CPUC Energy Division staff’s recommendation to systematically cap adjustment factors at 1.0, since that approach would eliminate legitimate downward adjustments while retaining upward ones, reducing measurement accuracy. The three-step framework appropriately preserves the existing baseline construct as the default while addressing the narrow mathematical problem introduced by export behavior.

United’s further recommends continued monitoring to ensure that excluding export intervals does not reduce the sample size used to calculate the adjustment factor and introduce its own representativeness concerns. United recommends that the ISO publish data after an initial implementation period on how often Steps 2 and 3 are triggered and their effect on settlement outcomes, and make Business Practice Manual examples (including interaction with the existing 0.80–1.20 cap) available for stakeholder review before or shortly after go-live.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

United strongly supports the ISO’s determination that NEM and NBT customers should remain eligible to participate in wholesale demand response aggregations under the revised measurement rules, consistent with the position United and other stakeholders during the stakeholder process. United agrees with the ISO’s reasoning that retail export compensation and wholesale DR compensation are distinct products under separate regulatory frameworks. Retail compensation is an ex ante, administratively set credit for exported energy that does not require dispatchability, while wholesale compensation is earned only for verified incremental performance in response to ISO dispatch, measured against a baseline that already reflects the customer’s routine export behavior.

Excluding NEM/NBT customers, as recommended by CPUC Energy Division staff, would unnecessarily strand flexible capacity that can provide real reliability value, as CalCCA also cautioned. Further, to the extent that any double-compensation concern is an artifact of the CPUC’s retail tariff, the CPUC has the opportunity to adjust its tariff more accurately and surgically than a blanket exclusion at the ISO.

United urges the ISO to translate this determination into clear tariff language (not just proposal discussion) so that the eligibility of NEM/NBT customers is not revisited or disputed on an ad hoc basis after implementation, and to continue coordinating with the CPUC on this issue.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

United agrees with the ISO’s conclusion that no new aggregation-composition or customer-level responsiveness standards are needed as part of this targeted settlement reform, and that Resource Adequacy accreditation is properly governed by CPUC and other Local Regulatory Authorities through a separate process from wholesale market settlement. Existing bidding, settlement, and performance obligations for PDR/RDRR, together with ISO and DMM compliance monitoring, already provide meaningful safeguards against non-performance.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

United appreciates the opportunity to comment and offers the following additional points. First, United supports a firm 2027 implementation target and encourages the ISO to publish an implementation timeline for the DRRS registration enhancements as soon as practicable so DRPs and SCs can plan system changes. Second, United looks forward to timely scoping of an appropriate venue (DDEMI Track or successor or parallel initiative) to address aggregation-level and sub-LAP exports, alternative FNM representation, and associated deliverability/TPD treatment, and requests that the ISO provide an indicative schedule for that work as part of the final proposal or accompanying decision.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

The California Community Choice Association (CalCCA) appreciates the opportunity to provide comments on the Demand and Distributed Energy Market Integration (DDEMI) Track 1 Draft Final Proposal. CalCCA also appreciates the California Independent System Operator’s (CAISO) detailed explanations regarding the eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) participation in the end-user export model, settlements, and non-responsive load, and reaffirms its support for the proposal. The proposal to recognize end-use customer exports while maintaining a resource-level export limit makes an important near-term incremental change to better leverage existing demand flexibility on the CAISO system. The CAISO should advance the proposal for implementation in 2027.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

See responses in Sections 1, 5, and 7.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

For the reasons described in Section 1, above, CalCCA supports the proposal.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

CalCCA has no proposed revisions at this time.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

The proposal to recognize end-use customer exports while maintaining a resource-level export limit makes an important near-term incremental change. The proposal will:

• Better leverage existing demand flexibility on the CAISO system;
• Minimize barriers to demand flexibility participation; and
• Expand the pool of dependable and price-responsive capacity on the CAISO system. 

To further advance demand flexibility opportunities, the CAISO should facilitate discussions in future initiative tracks to remove barriers to exports beyond the resource level. While DR exports are supported through the Distributed Energy Resource Aggregation (DERA) model, there is currently no resource adequacy (RA) pathway for DERA resources, limiting their use. Future discussions in coordination with the California Public Utilities Commission (CPUC) should seek to remove barriers to exporting at the resource aggregation level, whether through future enhancements to the modified Proxy Demand Resource model or through the existing DERA model.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

CalCCA generally supports the CAISO’s proposed hierarchical baseline adjustment factor methodology. This proposal was first introduced in the Draft Final Proposal. Upon initial review, CalCCA has identified some potential methodological changes that could improve the accuracy of the adjustment factor. To ensure all parties have a common understanding of the current methodology, the CAISO should clarify that the adjustment factor is currently calculated by taking the ratio of the sum of net load over all settlement intervals on the event day and the sum of net load over all settlement intervals in the historical baseline period. Building upon this clarification, CalCCA recommends two refinements to the proposed hierarchical baseline adjustment factor methodology.

First, the CAISO should ensure the proposed hierarchical methodology is applied consistently. Specifically, the CAISO should consider the mathematical validity of the adjustment factor produced using the existing methodology (Step 1) before moving to excluding export intervals (Step 2). Examples C and D in the proposal illustrate this inconsistency in applying the CAISO’s proposed methodology.

• In Example C (p. 32), applying the existing methodology produces a mathematically valid adjustment factor. However, it appears the CAISO unnecessarily excludes the export interval, resulting in a lower adjustment factor than if the existing methodology were applied.

CAISO’s Example C calculation:
Adjustment Factor = (50 + 66) ÷ (40 + 60) = 116 ÷ 100 = 1.16

Calculation using existing methodology:
Adjustment Factor = (-15 + 50 + 66) ÷ (-20 + 40 + 60) = 101 ÷ 80 = 1.26 (capped at 1.20)

Excluding the export interval results in an artificially lower adjustment factor, resulting in an inaccurate adjustment to the customer’s historical event baseline.

• In Example D (p. 33), applying the existing methodology also produces a mathematically valid adjustment factor. However, it appears the CAISO unnecessarily excludes all export intervals, resulting in no remaining valid data. CAISO then jumps to Step 3 and applies an adjustment factor of 1.0.

CAISO’s Example D calculation:
Exclude all export intervals and apply an adjustment factor of 1.0

Calculation using existing methodology:
Adjustment Factor = (-15 + (-25) + (-10)) ÷ (-10 + (-20) + (-5)) = (-50) ÷ (-35) = 1.43 (capped at 1.20)

This is a mathematically valid result, as applying a 1.20 adjustment factor would indicate increased exports on the event day, which is representative of actual customer behavior on the event day. Applying an assumed factor of 1.0 produces in a higher historical event baseline (lower exports), resulting in overcompensation of the customer’s event day response.

Second, the CAISO should consider changes to the proposed hierarchical baseline adjustment factor methodology to allow for more export intervals to be included, to ensure accurate compensation of customer response. Specifically, the CAISO could add the following step to the hierarchical approach, sequenced after the existing proposed Step 1:

• If applying the existing methodology (Step 1) results in a negative or 0 adjustment factor, indicating that customer load is swinging from negative (exporting) to positive (importing), or vice versa, between the historical baseline and the event day net load, then default to the minimum adjustment factor (0.80) instead of excluding settlement intervals with exports from the calculation. This would be more aligned with the existing methodology – i.e., if there is a drastic change in load between the historical baseline and event day behavior, then the adjustment factor is capped at 20 percent up or down.

In these examples, applying the existing methodology (Step 1) would result in a negative adjustment factor, which is mathematically invalid. However, if the sign of the load flips, we know that the customer’s event day net load is at least 100 percent lower or higher than their historical baseline net load. Thus, we can apply the capped downward adjustment factor of 0.80, which would move the customer’s historical event baseline closer to 0, accurately reflecting their event day behavior.

• In Example 1, if the customer’s historical event baseline is -200 kWh, then the adjusted baseline would be:
-200 kWh x 0.80 = -160 kWh

This result accurately reflects lower exports (or higher imports) on the event day.

• In Example 2, if the customer’s historical event baseline is 300 kWh, then the adjusted baseline would be:
300 kWh x 0.80 = 240 kWh

This result accurately reflects lower imports (or higher exports) on the event day.

• In Example 3, if the customer’s historical event baseline is -200 kWh, then the adjusted baseline would be:
-200 kWh x 0.80 = -160 kWh

This result accurately reflects lower exports (or higher imports) on the event day.

With this additional step in the methodology, excluding export intervals and defaulting to a factor of 1.0 would only be necessary if the existing methodology results in an undefined adjustment factor due to dividing by 0.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

CalCCA agrees with the CAISO that retail export compensation and wholesale DR compensation are distinct services and supports maintaining the eligibility of NEM and NBT customers.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

CalCCA agrees with the CAISO’s determination that the proposed construct only compensates for demonstrated performance, and that by definition, non-responsive load does not perform and is therefore not compensated. Changes to the proposal related to non-responsive load are therefore unnecessary.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

CalCCA has no additional comments at this time.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Comments on Demand and Distributed Energy Market Integration

Track 1 Draft Final Proposal

Department of Market Monitoring

July 23, 2026

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Demand and Distributed Energy Market Integration: Track 1 Draft Final Proposal: End-Use Customer Exports in Performance Measurement dated July 8, 2026.[1]

DMM continues to conditionally support removing the lower limit for individual customers in demand response (DR) aggregations so that individual customers can better reflect their physical capability.[2] Individual customers with export capability – including those already participating in Net Energy Metering or Net Billing Tariff (NEM/NBT) programs – can provide additional load flexibility to the wholesale market if baseline methodologies accurately estimate counterfactual behavior.

While DMM supports more accurate modeling of DR resource aggregations, we reiterate previously stated concerns regarding DR performance, baseline accuracy, and the recommendation for improvements to baseline methodologies and more widespread adoption of control group baselines. We note that participation in NEM/NBT programs may reduce incentives to inflate baselines.  However, baseline manipulation is not the primary concern with accurate assessment of DR performance.  DMM recommends that the ISO prioritize baseline improvements and design changes that yield improved DR performance before changes that would increase the amount of registered DR capacity.

A key concern with allowing resources to participate in both wholesale DR programs and NEM/NBT programs is whether there is potential for double compensation. On this issue, DMM highlights an important distinction between compensating twice for the same product, and deriving compensation for additional production from multiple revenue streams. Additional flexibility from DR aggregations will be provided if the marginal revenue from all sources covers the marginal cost of providing the additional flexibility.  This marginal revenue could derive from multiple sources such as a combination of NEM/NBT and wholesale market payments. When resource performance is calculated from an accurate baseline, this total marginal revenue represents compensation for additional production beyond what the resource was already doing, rather than paying twice for the same production.

DMM supports the ISO’s proposal to collect additional resource meta data on the exporting customer accounts. DMM expects the ISO would monitor and report on the performance of DR aggregations that include exporting customer accounts.  This additional data would facilitate such monitoring, while also supporting DMM’s DR monitoring capabilities.

Comments

DMM conditionally supports allowing individual customer accounts in demand response aggregations to export to the distribution system to better reflect their capabilities

DMM supports the ISO’s proposal to improve modeling of DR resources by recognizing that some customers are currently approved to export onto the distribution system from their utility distribution company (UDC).[3] However, this support is conditional on the ISO prioritizing baseline improvements and design changes that yield improved DR performance before undertaking changes that would increase the amount of registered DR capacity, such as allowing exports of individual customer accounts to be considered in DR performance.

DMM also supports the clarification in the Draft Final Proposal of the definition of DR to ensure the rules and agreements for exporting resources do not allow customers to circumvent the interconnection queue process for generating technologies.

Allowing resources to participate in wholesale demand response programs while already participating in Net Energy Metering or Net Billing Tariff requires accurate baselines

The key concern with allowing resources to participate in both wholesale DR programs and NEM/NBT programs is whether there is potential for distortionary impacts on efficient market participation or double compensation. Key to determining the distortionary impacts of enrollment in both programs is whether participation in either program will incentivize the resource to behave uneconomically in the other program. Double compensation may occur if a resource is already modifying its behavior in response to one market’s incentives, while also receiving compensation in another market for no additional value added to that market beyond what the resource was already doing.

NEM/NBT provides an incentive to shift loads throughout the day through a time-varying customer rate structure. The incentive is largely static across days and independent of grid conditions, such that the underlying load flexibility incentive does not change from day to day. In contrast, wholesale DR participation requires a price-quantity bid that reflects the marginal quantity and value of customer load flexibility. Wholesale DR participation is responsive to varying day-ahead and real-time grid conditions, with DR availability and performance being measured against a counterfactual baseline.

This baseline is intended to reflect the customer’s expected load absent a wholesale market dispatch and is calculated using historical load behavior that already incorporates the customer’s response to the underlying NEM/NBT rate structure. As a result, the capacity made available to the wholesale market should represent the additional load flexibility beyond that already induced by the NEM/NBT incentives. To the extent the baseline accurately estimates the counterfactual, wholesale compensation is intended to reflect incremental performance rather than behavior that would have occurred absent a wholesale market award.

Since estimating the additional load flexibility from wholesale market participation requires robust baselines, DMM continues recommend the ISO to improve baselines to capture the true counterfactual response from DR customers.[4] Current DR participation rules allow the scheduling coordinators to select their own baselines from more than 50 options, and all data to verify DR performance is self-reported. The current baseline selection and calculation processes leave room for inaccuracies, errors, and potential for manipulation.

DMM’s leading recommendation for counterfactual estimation is the use of control group methodologies.  DMM requests the ISO to improve baseline calculation methodologies in this stakeholder process, prioritizing these improvements over measures that would lead to additional registered DR capacity.

NEM/NBT revenues and wholesale market revenues combine to achieve the total marginal revenue needed to support the export of additional energy above a customer’s baseline

Conditional on well-functioning baselines, DR resources could provide energy bids to the wholesale market beyond the regular customer behavior induced by the NEM/NBT rate structure.  This additional export resulting from wholesale market participation would result in both NEM/NBT and wholesale payments. However, this additional load flexibility bid into the wholesale market is additional energy that would not have otherwise been available because the marginal cost to the customer exceeds the marginal benefit of the NEM/NBT incentive alone. Wholesale market participation and payments  provide the additional incentives for load flexibility beyond that already incentivized by the NEM/NBT rate structure. The combined revenue streams of the NEM/NBT and wholesale market create the total marginal revenue needed to incentivize the additional load flexibility.

Suppose a customer typically exports one kWh at a NEM/NBT credit of $100/MWh ($.10/kWh) but is willing to export a second kWh if compensated at a total $190/MWh. The first kWh is the customer’s regular behavior and is incentivized and compensated through NEM/NBT at $100/MWh. The second kWh represents additional load flexibility that may be available to the wholesale market if the customer were compensated above the NEM/NBT incentive. If that second kWh were scheduled in the wholesale market, the customer continues to receive the underlying NEM/NBT compensation of $100/MWh but requires an additional $90/MWh to justify providing the incremental kWh. This incremental cost of $90/MWh for one kWh is the efficient price-quantity bid that should be submitted to the wholesale market.[5]

The above example demonstrates how the NEM/NBT revenues and wholesale market revenues combine to achieve the total marginal revenue needed to support the export of energy above a customer’s baseline. Therefore, to the extent that baseline methodologies accurately estimate the counterfactual, wholesale market bids reflect the resource’s marginal cost beyond expected additional NEM/NBT compensation. Allowing participation in the wholesale market may provide efficient access to additional load flexibility beyond that already induced by the NEM/NBT rate structure, but requires accurate baseline calculation to ensure the performance of the DR aggregation is measured accurately.

NEM/NBT incentives may mitigate some baseline manipulation incentives; however, baseline manipulation is not the primary source of DR performance and performance measurement concerns

DMM has previously recommended the ISO consider enhancements to the counterfactual of existing baselines, and recommends the ISO continue to monitor resource behavior if the straw proposal in Track 1 is implemented. DMM will also continue to monitor performance and behavior of DR resources.

With current baselines, during tight grid conditions in 2024, DR resources met their schedules (performed) on average 81 percent and 54 percent of the time for utility and third-party DR, respectively.[6] The ability for customers to export to the distribution system may result in additional DR capacity, however improved performance is unclear when resources will have the capability to indicate greater availability through export. Resources currently have exporting technologies, and resource performance is relatively low. As a result, DMM continues to recommend the ISO improve the baseline calculation methodologies.

DMM has also raised concerns with potential baseline manipulation, such as a resource inflating its baseline to improve measured dispatch performance. This incentive may be partially mitigated for resources that include NEM/NBT customers. Increasing the baseline would require the resource to forego regular revenues available through the NEM/NBT rate structure in order to increase future wholesale DR availability.

While the longstanding concerns regarding baseline accuracy and potential manipulation remain, DMM notes that resource adequacy capacity sales historically provide the majority of revenue for many DR resources. As a result, it is incumbent upon the local regulatory authorities to ensure the qualifying capacity (QC) valuation of DR resources reflects the capability of those resources to provide load flexibility that is additional to the flexibility already induced by the underlying NEM/NBT rate structure. If QC valuations appropriately reflect incremental capability and baseline methodologies accurately estimate the counterfactual, the risk of compensating resources for non-incremental flexibility will be reduced and wholesale market incentives will remain aligned with efficient market participation.

DMM supports the ISO proposal to collect additional data on exporting customers to improve the monitoring capabilities of demand response aggregations and the supporting portfolio

In the Draft Final Proposal, the ISO proposes to enhance the Demand Response Registration System (DRRS). The DRRS would be enhanced to include attributes identifying customer service accounts who possess behind-the-meter export capabilities, and include the level of export authorized to the customer under their interconnection agreement. DMM continues to support the ISO’s proposal to collect the exporting customers’ interconnection information on their ability and magnitude of export capabilities.[7] This additional data will enhance the ISO and DMM’s monitoring capabilities for demand response resource aggregations. 

[1] Demand and Distributed Energy Market Integration: Track 1 Draft Final Proposal: End-Use Customer Exports in Demand Response Performance Measurement, California ISO, July 8, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Draft-Final-Proposal-Demand-and-Distributed-Energy-Market-Integration-DDEMI-Track1-Jul-08-2026.pdf

[2] Comments on Demand and Distributed Energy Market Integration Track 1 Revise Straw Proposal, Department of Market Monitoring, July 1, 2026: https://www.caiso.com/documents/dmm-comments-on-demand-and-distributed-energy-market-integration-track-1-revised-straw-proposal-jul-01-2026.pdf

[3] Ibid.  

[4] Comments on Demand and Distributed Energy Market Integration Working Group, Department of Market Monitoring, November 6, 2025: https://www.caiso.com/documents/dmm-comments-on-demand-and-distributed-energy-market-integration-working-group-nov-06-2025.pdf

[5] This incentive structure and bidding outcome is similar to production tax credits or Renewable Energy Credits under a Renewable Portfolio Standard for variable energy resources. The external payment from the credits is internalized into the wholesale market bids by the resource to reveal the marginal cost of the energy bid.

[6] Demand response issues and performance 2024, Department of Market Monitoring, March 14, 2025: https://www.caiso.com/documents/demand-response-issues-and-performance-2024-mar-14-2025.pdf

[7] Comments on Demand and Distributed Energy Market Integration Track 1 Revise Straw Proposal, Department of Market Monitoring, July 1, 2026: https://www.caiso.com/documents/dmm-comments-on-demand-and-distributed-energy-market-integration-track-1-revised-straw-proposal-jul-01-2026.pdf

2. Please provide your organization's overall assessment of the Draft Final Proposal.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Energy Division staff (ED staff) of the California Public Utilities Commission (CPUC) develop and administer energy policy and programs to serve the public interest, advise CPUC decision makers, and ensure compliance with CPUC decisions and statutory mandates. ED staff provide objective and expert analyses that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California.? 

ED staff appreciates the productive discussions both on June 18^th and July 9^th and the CAISO’s continued efforts to improve Demand Response participation in the CAISO markets. ED Staff does not recommend moving forward with the proposal at this time, while NEM/NBT double compensation issues remain unresolved.  

2. Please provide your organization's overall assessment of the Draft Final Proposal.

ED staff continues to support the intent of this initiative and has engaged with CAISO Staff to try to improve the feasibility of the proposal. However, the Draft Final Proposal minimizes the real and consequential risks to ratepayers raised by ED staff and other stakeholders regarding double compensation for NEM/NBT customers, among other issues, and fails to put forward a solution that addresses double compensation. Due to these outstanding concerns, ED staff does not recommend moving forward with the proposal at this time. ED staff offers more extensive discussion in response to subsequent questions. 

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

ED Staff opposes moving forward with the Draft Final Proposal until NEM/NBT double compensation concerns, raised by ED Staff, Cal Advocates, and the three IOUs, are resolved. 

4. What revisions, if any, would your organization recommend before the proposal is finalized?

The following are critical items that must be addressed before implementation:

• Limit the initial roll-out of the proposal to non-NEM/NBT end-users only (exclude NEM/NBT end-users until the double compensation concerns are resolved); and
• Cap day of adjustments for all PEMs at 100% maximum value (or maximum adjustment factor of 1.0)

The following are not critical, but recommended:

• Implement the initial roll-out of the proposal (to non-NEM/NBT end-users only) in 2028 (the CAISO board adoption may be earlier); 

• Defer the inclusion of RDRR resources to a later stage[1]; 

• Clarify that all end-user exports must conform to the CPUC’s prohibited resource policy.

[1] The initial CAISO draft proposal for enabling exports did not envision the inclusion of emergency/reliability resources. As a result, the implications of this policy on RDRR (which does not include 3^rd party participation at the moment) is not sufficiently studied and should be deferred to a later phase.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

ED staff supports this proposal.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

ED staff appreciates CAISO exploring the issues with adjustment factor methodology in such depth in its proposal. However, the proposed methodology fails to address the concern raised by ED staff, namely the incentive created for gaming day of adjustment factors uniquely available to BTM energy storage resources, in a way which risks grid reliability, market competitiveness, and end-user retail bills.  

CAISO’s proposal only addresses mathematically illogical baseline adjustment factors, which, while important to address operationally, fails to mitigate the perverse incentives created by upward adjustment factors. CAISO’s proposal and scenarios also specifically focus on end-users who routinely export energy. The final proposal should include appropriate solutions to adjustment factors gaming incentives for these types of end-users, which, in theory, is already a risk today.  

The key population of interest in this regard is end-users who have the capability to export, whether they routinely do so or not. For instance, an end-user who routinely uses excess onsite solar to charge their BTM battery and discharges that battery throughout the afternoon to keep their net load at or near zero, may not be a routine exporter. However, their aggregator may still choose to withhold typical battery discharge in the hours leading up to the event in order to maximize event-related revenue. This practice artificially inflates baselines when paired with day of adjustment factors, increasing the overall apparent value of that export. See example load shape below. While CAISO cannot prevent aggregators from directing aggregated resources to perform this way, it certainly should mitigate any incentive built into its market model which encourages such manipulation.  

Day of adjustment factors are intended to account for exogenous impacts to baselines, to achieve a more accurate counterfactual. The behavior discussed in the paragraph above is endogenous variation that, if rewarded through upward baseline adjustment factor methodology, reduces rather than increases the accuracy of counterfactual estimates.  

ED staff notes that its proposal, to cap adjustment factors at 1.0 (as in, adjustment factors may not be higher than 1.0, but may go lower than 1.0), does not, as CAISO’s proposal suggests, systematically eliminate downward adjustments while retaining upward adjustments – it does the opposite. The downward adjustment below 1.0 would still be allowed, but any value above 1.0, which would represent an upward adjustment, would be disallowed. ED staff still believes this to be a reasonable constraint for any individual site with the capability to export power within an aggregation. ED staff also notes that the California Energy Commission’s Demand Side Grid Support program for BTM energy storage resources already disallows day of adjustments.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

ED Staff disagrees with CAISO staff’s determination that its proposal does not represent double compensation for NEM/NBT customers. ED staff reiterates its position that NEM/NBT customers should be excluded from the CAISO proposal until the double compensation issues can be fully resolved. CAISO staff has proposed no guardrails to address the issue, and without sufficient guardrails it is not ready for adoption.

ED staff agrees that, with appropriate changes to baseline adjustment factors, CAISO’s proposal would generally limit wholesale compensation to exported energy that is incremental to normal end-user behavior.

Nonetheless, as a tariff, NEM/NBT makes no distinction between expected exported energy and incremental exported energy. Rather, NEM/NBT compensates all energy actually exported by the end-use customer. This results in the same kWh being paid for twice by ratepayers: once through the relevant NEM/NBT tariff and a second time to compensate for energy in the wholesale market. For every kWh that is thusly dispatched, ratepayers are worse off for having double-paid. In addition, competing market resources in CAISO’s supply curve are also harmed, as those resources are unfairly under-cut by DR resources whose market bidding price is subsidized by that retail compensation for the same energy. 

Without modifications to mitigate the affordability impact to ratepayers of double compensation, ED Staff cannot support the proposal. 

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

ED staff reiterates the concerns it (and other stakeholders) raised prior about the incentive created for resources to recruit non-responsive load only to incorporate its measured energy performance on event days into the resource to be eligible to be reimbursed in the wholesale market. The examples below, adapted from CAISO’s presentation, show how this may play out among many resources. 

Example Resource before allowing end-user exports 

? 

Example Resource after allowing end-user exports, resource recruiting a non-responsive load 

In this example, non-responsive load is added to the existing resource merely so that the export from the existing customer is eligible for compensation. Per the discussion on deliverability, however, this (and other) non-responsive load is already being relied upon for other generation sources’ deliverability. These PDR or RDRR resources recruiting non-responsive load reduces the pool of available load for broader deliverability. With greater scale expected for exporting end-users (as promoted by other stakeholders), the deliverability for DR and other existing resources may be at risk. 

ED staff requests CAISO schedule implementation of the proposal beginning in 2028 so that CPUC and stakeholders can analyze the implications of this policy in more detail and mitigate any potential risk to the distribution grid. Additional time prior to implementation will also allow CPUC jurisdictional LSE’s more opportunity to adopt and implement such adjustments. 

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

ED Staff appreciates CAISO’s efforts to appropriately value and compensate exports from BTM resources. However, ED Staff also cautions against expediting implementation of a proposal that may appear straightforward to incorporate into the CAISO tariff but could present insufficiently evaluated risks to grid reliability, deliverability, distribution system operations, and ratepayer costs. A thorough assessment of these potential risks, along with appropriate mitigation measures, is warranted before moving forward with implementation.

ED Staff also notes that there is an opportunity to address the lack of incremental export dispatch at the retail level rather than through the wholesale market. The CPUC is currently considering mechanisms for dynamic retail rate design coordinated with CAISO market outcomes. Dynamic retail rates can offer a highly cost-effective mechanism for capturing the operational benefits of these resources while minimizing costs to ratepayers. 

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

CALSSA appreciates the CAISO’s July 9, 2026 workshop and the explanations it provided on its draft final proposal, particularly around dual compensation and allowing net energy metering (NEM) and net billing tariff (NBT) customers to receive credit for exports. CALSSA agrees with and strongly supports the CAISO’s stance on dual participation and NEM/NBT participation. CALSSA agrees with the explanation provided in the CAISO’s draft final proposal.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

CALSSA appreciates the CAISO’s latest proposal and conditionally supports it with the understanding that future phases of the DDEMI initiative will cover other important issues, such as exports at the resource level, device-level telemetry, and customer enrollment. As CALSSA has stated in past comments and workshops, there are several issues that need to be addressed to fully open CAISO market participation for behind-the-meter resources, and CALSSA views the CAISO’s latest draft proposal as an important step in the right direction but on its own not complete. CALSSA therefore supports the draft final proposal on the condition that it leads to additional improvements to be made in future phases of the DDEMI initiative.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

CALSSA supports the proposal with the caveat that future phases of the initiative will address remaining barriers to CAISO market integration of distributed and behind-the-meter resources, such as exports at the resource level, device-level telemetry, and customer enrollment. CALSSA further asks that the CAISO not delay future phases, as they will be important in facilitating greater DER participation in CAISO markets. Without these additional changes, it is likely that the changes in the draft proposal alone will not lead to dramatic uptick in DER participation.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

CALSSA supports the current proposal with the caveat that additional issues be taken up in future phases of the initiative.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

CALSSA supports the current proposal as a stepping stone to additional discussions on recognizing exports at the resource level. CALSSA understands the considerations that the CAISO has raised, such as impacts on deliverability, and supports addressing these in future phases of the DDEMI. In the meantime, CALSSA supports recognizing site-level exports.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

No comment at this time.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

CALSSA strongly agrees with and supports the CAISO’s reasoning for maintaining eligibility for NEM and NBT customers. CALSSA agrees that retail export credits and CAISO energy payments are compensation for separate services and that NEM and NBT customers should continue to be eligible for CAISO market participation and be eligible for site-level exports.

Regarding the CPUC’s concerns raised in comments and during the workshop, CALSSA believes that these concerns can be addressed in CPUC proceedings. CALSSA does not agree that customer prohibitions are the correct way to address concerns of dual compensation. More dynamic approaches, such as subtracting out the generation capacity and/or energy from the Avoided Cost Calculator export credit for NBT customers participating in CAISO markets, would be a more accurate and equitable means of addressing the CPUC’s concern. But that should be a policy discussion for the CPUC to address in its proceeding, and not in the DDEMI initiative.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

CALSSA agrees that the baseline methodologies used should resolve concerns of non-responsive load; resources are compensated only for the incremental load drop they provide, and any non-responsive load is therefore not compensated.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

CALSSA really appreciates the CAISO staff’s efforts so far in the the DDEMI initiative and looks forward to collaborating further in the next phases of the initiative!

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Leap does not have any comments on the stakeholder meeting, but overall has been appreciative of the CAISO team’s management of this initiative. CAISO has created an environment that actively solicited stakeholder engagement, acknowledged and worked through stakeholder comments and concerns, and incorporated them into the Draft Final Proposal.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

As discussed in both prior written comments and during the Spotlight presentations at the recent CAISO Board and WEM Governing Body meeting, the Draft Final Proposal provides a meaningful step forward in the utilization of an under-utilized resource on the CAISO system, namely behind-the-meter batteries.

The Draft Final Proposal allows for the ability to export from individual customer-sited batteries, while ensuring that the associated CAISO Resource ID remains a net consumer of electricity. As CAISO noted, that is consistent with the way that Demand Response (DR) is currently defined while also opening up the opportunity to participate from a multi-GW asset class.

Leap and our partners, who represent many of the storage players active in the California market, would like to see even broader participation, including exporting beyond the Resource ID level. We also recognize CAISO’s desire to take a phased approach and plan to continue to advocate for broader participation ability in future DDEMI Tracks.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

Leap supports the Track 1 proposal, as well as recommends:
1) additional clarity on data provisioning, as outlined in Response 4 below
2) continued flexibility on the baseline adjustment factor as stakeholders work to implement it, as outlined in Response 6 below

4. What revisions, if any, would your organization recommend before the proposal is finalized?

CAISO has recommended the addition of a data field when a new Location is registered in CAISO’s Demand Response Registration System (DRRS). While Leap understands that the intent of registering data on the export limitation for a given customer is to monitor whether exports exceed interconnection limits, Leap and our partners have concerns about the feasibility of receiving and providing this data. The distribution service providers, which in most cases will be the Investor-Owned Utility (IOU), have access to this customer data and are ultimately responsible for interconnection agreements, so Leap contends that they should be the entities responsible for validating exports at the customer level.

Nonetheless, in the event that CAISO continues to require this modification to DRRS, then the IOU is best placed to provide it. In the event that that is not feasible, then that customer-specific data must be provided in a scalable way to the Demand Response Provider that is registering the customer Location. The most scalable way to do so would be via the existing data-sharing pathway (generally called Share My Data) that customers authorize in order to share their data with DR Providers. This process shares customer meta data with the registered DRP such as name, address, and service account number in addition to the meter interval data and would be the most seamless pathway for utilities to share interconnection limits with DRPs. Any additional customer authorization requirement or action that does not flow through Share My Data will be a significant barrier to customer enrollment, since customers do not have ready access to their interconnection limit and will not be able to locate it or provide it easily.

The data should be provided by the holder of the data, generally the IOU, either directly to CAISO or to the DR Provider via existing, scalable data-sharing infrastructure. If the IOUs are concerned about the feasibility of adding that information to Share My Data, then a simpler framework than requiring this data for each individual customer could be a generally allowable export amount for all customers (for example, 5 kW for each residential customer) with export beyond that amount only allowable if a higher interconnection limit can be demonstrated via customer interconnection data.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

Leap supports the Track 1 Proposal, while also encouraging the CAISO to take up the ability to allow for exports more broadly in Track 2.

Leap agrees that there are no immediate deliverability concerns or operational/market implications from the Proposal. However, Leap concurs with other stakeholders in the meeting that suggested CAISO revisit its deliverability processes at some point in the future. If future DR resources need to complete a full deliverability study just to reduce load at the Resource level, it will likely wipe out any additional DR participation in CAISO’s market. A simpler, streamlined approach to deliverability studies should be designed for these resources in recognition of their smaller size and unique characteristics.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

Leap understands the ISO’s need to mathematically take into account exports in the calculation of the baseline adjustment factor. Leap calculates performance across a number of markets and baseline methodologies and recognizes the inherent complexity herein. The three-step process outlined by CAISO will necessitate additional work and logic to program in, and as Leap has not yet begun the analytical and engineering work to accommodate the new baseline it does not yet know how much it will increase complexity.

Leap recommends that the CAISO remain open to ongoing changes with the baseline adjustment factor as Leap, and other parties, study the process to implement with actual customer data.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

This is a critical element of the overall Proposal and important to maintain in order for this Proposal to result in growth in storage customer participation in the CAISO market.

CAISO has worked to incorporate multiple stakeholder perspectives, and it is worth noting that the existing baseline methodologies ensure that customers only receive credit for exports that are 1) distinct from their typical operating behavior and 2) in response to an ISO award or dispatch. The Proposal is only providing credit for verifiable, incremental customer response that would not have occurred based on operating in response to retail rates. Additionally, retail rates are a shaping tool for customer load overall but are not nimble enough to anticipate the real-time needs and contingencies in the wholesale market. As storage and Distributed Energy Resources (DERs) overall continue to grow and make up an ever-larger proportion of the resources on the system, it will become increasingly critical for the CAISO to have visibility into those resources, as well as the ability to dispatch them economically or for reliability purposes. Doing so will lead to more efficient outcomes for the market overall.

To exclude NEM and NBT customers would serve to limit flexible capacity participation in the wholesale market, leading to less efficient utilization of these resources and an overall more expensive energy system. There are precedents in other markets for different programs at the wholesale and distribution levels related to provision of different services, for example the NYISO-level Special Case Resources (SCR) program and the utility distribution-level Distribution Load Relief Program (DLRP) and Commercial System Relief Program (CSRP).

CAISO has been thoughtful in its implementation and is within precedent of other markets, and Leap and its partners are strongly in support of inclusion of NEM and NBT customers.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

Leap works with aggregations of residential and commercial customers, and as such anticipates that its Resources will be able to accommodate individual customer-level exports while remaining a net consumer of energy at the Resource ID level. Leap agrees with the CAISO’s assertion that the Draft Final Proposal does not change the requirements and performance obligations of PDR and RDRR products to represent ‘genuine, dispatchable load flexibility for the individual customers that comprise the aggregation.’ Through Leap’s diverse portfolio of partners and end customers it will be able to pair traditional load curtailment sites with exporting sites to create an aggregation that is a net consumer of energy.  

While Leap would like to see additional progress on broader export capability in Track 2, the Track 1 proposal is a meaningful step forward and advocates that the CAISO move forward to make it available for 2027.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

Grids across the United States are facing unprecedented increases in demand from data center growth, electrification, and extreme weather events. Continuing to think and work strategically will be critical to ensure that our energy system remains ahead of these challenges. California has built up a multi-GW energy storage resource that is the envy of many other markets in the country. This Track 1 Proposal is a meaningful step to utilize that resource more fully and meet the needs of this moment. Various parties, including Leap, have been advocating for greater use of behind the meter storage for many years, and Leap applauds this pragmatic first step in greater utilization at the wholesale market level. We encourage the CAISO to move forward with this Proposal expeditiously.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

MCE appreciates the opportunity to submit these comments on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper. MCE supports the Track 1: Draft Final Proposal.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

MCE supports the Track 1: Draft Final Proposal. MCE appreciates the additional clarity provided in this version regarding deliverability, interconnection, settlement, and implementation responsibilities.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

MCE supports the Track 1: Draft Final Proposal. The proposal addresses a critical limitation of the current demand response participation models by allowing demand response providers and the CAISO to capture the additional export capacity that already exists, while maintaining wholesale demand response as a load curtailment product at the resource level.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

MCE has no comments at this time.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

MCE supports the incremental reforms of the Track 1: Draft Final Proposal, and appreciates the CAISO's inclusion of market-wide and ISO balancing authority area considerations in this version. MCE supports advancing the Track 1: Draft Final Proposal now, and addressing net exports beyond the resource-level in a future phase of DDEMI.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

MCE supports the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

MCE has no comments at this time.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

MCE has no comments at this time.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

MCE has no additional comments at this time.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

PG&E appreciates the opportunity to comment on the July 9, 2026 stakeholder meeting. PG&E appreciates CAISO’s thoughtful and careful presentation of the Draft Final Proposal, including the acknowledgment of various stakeholder positions. PG&E also appreciates the thoughtful discussion facilitated during the stakeholder meeting.

PG&E’s comments on the DDEMI Track 1: Draft Final Proposal are presented in Question 2.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

PG&E’s overall assessment of the Draft Final Proposal can be summarized as follows:

• PG&E supports the CAISO proposal because it can make NEM/NBT and other export-capable resources more useful from a wholesale grid perspective.
• That support should be contingent on coordinated CPUC implementation that enables RA credit and addresses double-compensation concerns for NEM/NBT customers and potentially third-party DRPs.
• CAISO should revise the proposal to avoid suggesting that wholesale and retail compensation represent entirely different products. The more accurate explanation is that CAISO market prices provide a day-ahead or real-time operational signal, while TOU/ACC-based customer compensation is set in advance and may not match actual system conditions in a specific hour.
• Retail compensation is not irrelevant; it is outside CAISO’s direct jurisdiction and should be addressed through CPUC-led mechanisms, program design, tariff design, RA rules, or other appropriate CPUC proceedings.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

PG&E position on the Draft Final Proposal is support with caveats.

PG&E supports the Draft Final Proposal contingent on implementation being coordinated with necessary changes at the CPUC to enable RA credit and address double compensation concerns with NEM/NBT customers.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

The proposal should be revised to acknowledge double compensation risk of NEM and NBT customers as outlined in question 7 below. In addition, PG&E recommends that CAISO defer adoption of the proposed hierarchical baseline adjustment factor methodology until stakeholders have more time to evaluate its implementation complexity, baseline accuracy, interaction with export zeroing, and performance across different resource configurations.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

PG&E supports the concept of recognizing end-use customer exports while maintaining a resource-level export limit, with guardrails in place to ensure energy services for the same kWh are not compensated twice.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

PG&E does not support the proposed hierarchical baseline adjustment factor methodology at this time. The proposal would introduce a significant change to the existing baseline and settlement framework, including a shift toward customer-level analysis for this use case, and stakeholders have not had sufficient time to evaluate, test, and refine the methodology.

PG&E is concerned that the proposed approach could create implementation complexity for resources with large numbers of end-use customers and may produce adjusted baselines that do not accurately reflect event-day load absent dispatch. Additional analysis is needed to assess how the methodology would perform across different resource configurations and operating conditions, including intervals with exports.

PG&E also requests further clarification on how the proposed methodology would interact with the Scheduling Coordinator’s responsibility to zero out service account meter data to prevent exports at the resource level, including whether that process would occur before or after application of the baseline adjustment factor.

Given these unresolved questions and the limited time available to evaluate such a material change, PG&E recommends that CAISO defer adoption of the hierarchical baseline adjustment factor methodology and continue stakeholder discussion before considering any future implementation.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

Double Compensation for NEM/NBT Customers Remains Unresolved

PG&E supports CAISO’s objective of improving the ability of demand response resources to reflect the capabilities of behind-the-meter DERs, including export-capable resources, in CAISO market operations. PG&E agrees that the Track 1 proposal could create a meaningful pathway for greater DER market participation, support future VPP growth, and enable emerging use cases such as vehicle-to-grid. PG&E’s concern is not with the objective of targeted DER dispatch, but with the absence of safeguards to prevent double compensation.

Different Signaling Mechanisms Does Not Result in Different Energy Services

CAISO’s Draft Final Proposal appears to conclude that NEM/NBT export compensation and PDR/RDRR market compensation do not overlap because they arise from different compensation frameworks. PG&E disagrees. The relevant question is not whether the compensation is administratively determined or market-based, nor whether the dispatch signal is ex ante or ex post. The relevant question is whether the same exported kWh is being compensated twice for the same underlying grid value. NEM/NBT export credits and PDR/RDRR settlements may be calculated through different mechanisms, but both can compensate the same physical service: exported energy or net-load reduction provided by the customer’s DER. The difference in signal does not mean the product is different.

Incrementality Does Not Solve Double Compensation

PG&E agrees that baseline-based incrementality is important for determining whether a resource has provided measurable demand response performance. However, incrementality does not resolve double compensation. A kWh can be incremental relative to a baseline and still receive retail export compensation under NEM or NBT.

This concern is particularly clear for NBT customers. NBT export compensation is based on avoided-cost values and reflects time-differentiated grid value. NBT includes time-differentiated energy, system and local capacity, GHG, T&D avoided cost, ancillary services, and losses. If CAISO’s position is that PDR/RDRR compensation reflects the dispatchability or grid usefulness of the resource, then PG&E believes that value is not absent from the existing NBT framework. Paying again through CAISO market participation without an offset or other guardrail risks compensating the same grid value twice. Because Demand Response also includes a “gross-up” to account for avoided T&D losses, the double compensation issue arises again, as avoided losses are already paid to the same kWh.

DERA Treatment Highlights the Need for Consistent Compensation Guardrails

PG&E also believes the Draft Final Proposal should be reconciled with CAISO’s treatment of NEM/NBT customers under the DERA model. CAISO’s tariff explicitly does not allow NEM and NBT participation in DERA. CAISO should explain why the same compensation concern is sufficient to restrict NEM/NBT participation in DERA but not in PDR/RDRR when the same customer exports and the same retail tariff compensation remain in place.

Accordingly, PG&E recommends that CAISO revise the proposal to preserve the broader Track 1 market participation framework while adding safeguards to prevent duplicate compensation of export value for NEM and NBT customers. At minimum, implementation should be coordinated with CPUC-jurisdictional tariff or program changes that ensure customers do not receive both retail export compensation and wholesale market compensation for the same exported energy value.

PG&E agrees that the CPUC is the appropriate body to determine whether, and under what conditions, NEM and NBT customers may receive incremental compensation for demand response participation without being compensated twice for the same exported energy value. The CPUC could address this issue through program design or amendments / clarifications to NEM, NBT, or successor tariff language.

However, CAISO’s conclusion that the Track 1 proposal does not create double compensation makes the CPUC’s role more difficult by effectively pre-judging a retail tariff issue. PG&E urges CAISO to revise the Draft Final Proposal to acknowledge that the double-compensation issue remains unresolved and should be addressed in coordination with the CPUC before implementation for NEM and NBT customer exports. PG&E supports Energy Division and other stakeholders that disagree with CAISO’s interpretation that NEM and NBT participation under the proposal does not raise double-compensation concerns.

CAISO should ensure that the demand response participation rules applicable to resources participating directly in CAISO markets remain consistent with the compensation principles applicable to CPUC-jurisdictional demand response programs. This is particularly important because, absent such coordination, similarly situated NEM/NBT customers could face different compensation outcomes depending on whether they participate through a CPUC-overseen program or through a third-party resource participating directly in CAISO markets.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

PG&E agrees with CAISO that non-responsive load, by itself, does not improve a resource’s performance. If Track 1 settlement requires exports to be zeroed out at the resource level, however, adding non-responsive load may reduce the amount of exports excluded from future market awards. In that circumstance, added customers may not be dispatched or provide load reduction, but their baseline-day load may still increase the counterfactual used to measure event-day performance.

PG&E does not believe this concern warrants additional restrictions at this time because matching one customer’s incremental exports with another customer’s load within the same sub-LAP can still provide aggregation value, even where the second customer did not respond to the dispatch. This could be particularly helpful for use cases involving electric vehicles or large loads.

PG&E appreciates that CAISO is not proposing additional limits on customer responsiveness and that DMM and CAISO will continue monitoring market behavior.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

PG&E has no additional comments.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the independent ratepayer advocate at the California Public Utilities Commission (CPUC).  Cal Advocates’ goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.

 In the comments below, Cal Advocates provides the following recommendations:

• The CAISO should adopt rules to exclude customers who receive export compensation through their retail tariff from participation in Demand Response products that allow exports to offset usage within an aggregation.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

The CAISO should revise its final proposal to exclude customers who receive export compensation through their retail tariff from Demand Response products that allow exports to offset other participants’ usage.  Moreover, it should remove statements asserting that allowing customers that receive retail export compensation would not result in double compensation through wholesale Demand Response products.[1] As the CPUC points out, the California Energy Commission’s (CEC) Integrated Energy Policy Report (IEPR) demand forecast is used to determine the resource adequacy obligations for Load Serving Entities (LSEs) and it already accounts for avoided energy and capacity due to Net Energy Metering (NEM)/ Net Billing Tariff (NBT) resources.[2]  In other words, NEM/NBT customers’ exports are already accounted for on the demand side of the market.  Providing additional demand response compensation on the supply side would not only be double compensation but would also threaten grid reliability by placing the same energy on both the supply and demand sides of the market.  Therefore, the CAISO should revise its final proposal to exclude customers who receive export compensation through a retail tariff from being included in Proxy Demand Resource (PDR), Reliability Demand Response Resource (RDRR), or any similar market models.

[1] Demand and Distributed Energy Market Integration: Track 1 Draft Final Proposal, at 34.

[2] CPUC July 1^st, 2026 Comments.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

Oppose with caveats.  Please see responses to Questions 2 and 9.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

Cal Advocates provides no additional comments at this time.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

Cal Advocates provides no additional comments at this time.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

Cal Advocates provides no additional comments at this time.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

Cal Advocates provides no additional comments at this time.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

Cal Advocates provides no additional comments at this time.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

 Cal Advocates requests the CAISO provide clarification on the following:

• What methods or procedures will CAISO implement to ensure that double compensation does not occur for NEM/NBT participants?
• How will CAISO verify what portion of solar and storage load is incremental to what is included in the CEC’s IEPR?
• Current NEM/NBT tariffs prohibit participants from joining market integrated demand response and specifically from receiving demand response compensation from excess energy provided to the grid.[1]  Similarly, (Distributed Energy Resources Aggregate) DERA also excludes (distributed energy resources) DERs that already participate in NEM.[2]  What steps will CAISO take to ensure that these customers are not included in demand response aggregations?
• If CAISO observes generators using non-responsive load in order to circumvent participating in the market as a generator what tools and methods will the CAISO employ to correct this unintended behavior?
• Demand response may perform relatively better if their exports are included in performance metrics.  What estimates has the CAISO made to determine if demand response would perform beyond their existing qualifying capacity?  To facilitate effective daily market planning, does the CAISO currently employ safeguards against resources performing beyond their market award volume, which is linked to the resource’s qualifying capacity?

[1] “NBT customers may choose to enroll in Peak Day Pricing or Critical Peak Pricing rates. Any other demand response programmatic elements that are affected by a customer’s load (e.g., program eligibility) shall also be excluded from consideration for any impacts of Generator Account generation. Any payments for demand response will be limited to the customer's load, and not include excess generation exported to the grid.” PG&E Electric Schedule NBT at sheet 4. 

[2] “Provision against double counting for any possible future scenarios, prevents a DER from participating in a DERA where the DER already participates in a retail net energy metering program that does not expressly permit wholesale market participation, requiring the distribution company to confer regarding any double-counting concerns.” CAISO Business Requirements Specification FERC Order 2222, March 25, 2022, at p. 5.  

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

SDG&E suggests revisiting the upper bound of the baseline adjustment factor. There is a potential upward bias in the calculation for adjustment factor for customers whose exporting behavior falls in the adjustment window preceding the event hours. Changes in customers’ discharge and export behavior on event versus non-event days biases the adjustment factor towards the maximum value. In the absence of a study determining the optimal value, SDG&E suggests a maximum value of 1.0.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

SDG&E acknowledges the thought put into the hierarchical baseline adjustment methodology. The proposal preserves the existing mechanism for resources composed of non-exporting customers, and avoids a mathematically undefined adjustment factor. However, SDG&E reiterates concerns about accurate estimation of counterfactual 'baseline' energy use on event days. Performance methodologies that allow a baseline adjustment factor do so to better reflect the degree to which event days may differ from non-event days. The introduction of exports to the calculation may bias the calculation upwards, resulting in inflated settlement values for all such methodologies. Because the bias is upwards, SDG&E supports revisiting the proposal to default the adjustment factor to 1.0, or reduce the upper bound on the baseline adjustment factor from 1.2 downwards. The most appropriate bound should be the topic of additional study.

For clarity, a mathematical example for a single customer is worked out below, and in the attached Microsoft Excel file. It demonstrates that shifting discharge patterns on event days may artificially inflate the calculated adjustment factor for customers whose energy resources enable intermittent or inconsistent export behavior. This results in overestimation of the program's actual demand response by between 18-30%. The discharge pattern below could arise if a customer’s exports in the pre-event window decrease due to pre-cooling of their house or conserving battery charge to ensure availability during event hours.

Consider a customer whose hourly demand is exactly 14 KW throughout the day. The customer installs a 25 KWH battery that can discharge up to 15 KW in one hour. When discharging, the battery generates 15 KWH in the first hour and 10 KWH in the second hour. During the first hour of the adjustment window, the customer's exports are 1 KWH. During the second hour of the adjustment window, the customer draws 4 KWH. During the third hour of the adjustment window, the customer draws 14 KWH. Under the new rules, the customer's non-event day average hourly load during the adjustment window is (4 + 14)/2 = 9 KWH. The exporting hour is excluded from the calculation.

Suppose that the customer's participation in a DR Program shifts their discharge out of the adjustment window and into the event hours on all event days where the DR Program is dispatched. The average hourly demand during the adjustment window for the event day would be 14 KWH. The adjustment factor would be calculated as the ratio: 14 KWH / 9 KWH = 1.56, which is capped at 1.2. By shifting their discharge behavior in response to an event dispatch, the customer's adjustment factor is set to the maximum. The adjusted baseline load for this customer on event days would be 14 KWH * 1.2 = 16.8 KWH. Without discharging their battery, the customer would be guaranteed at least 2.8 KWH per hour (8.4 KWH across a three hour event) due to the reduction in exports during the morning. Delaying the battery discharge on event days increases the calculated load reduction for performance evaluation methodologies with adjustment factors by 20% of the unadjusted baseline.

Now consider the settlement results for a three-hour event. The customer's load in the first event hour was 14 KWH - 15 KWH from Battery discharge, for an export of 1 KWH. The customer's load in the second event hour was 14 KWH - 10 KWH from the remaining charge on the battery, for a load of 4 KW. The customer's load in the third event hour was 14 KWH because the battery was exhausted. Comparing against the adjusted baseline load, the customer will earn load reductions of 17.8 KWH for the first hour, 12.8 KWH for the second hour, and 2.8 KWH for the third hour. The customer's average hourly load reduction is 1113 KWH across three hours, or 33.4 KWH total. Notably, in this three hour event more than a quarter (8.4/33.4 = 25.15%) of the calculated load reduction was due to the adjusted baseline despite no conservation effort on the part of the customer. 

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

SDG&E maintains strong concerns regarding the potential for overlapping retail and wholesale compensation for customers taking service under Net Energy Metering (NEM) or Net Billing Tariff (NBT) frameworks. SDG&E acknowledges the ISO's position that retail export compensation and wholesale demand response compensation compensate different products and services, but notes that the distinction may not always be clear in practice. Although the Avoided Cost Calculator used to establish NBT export values is based on forward-looking avoided costs, retail export compensation is not fully decoupled from wholesale energy market value. Additionally, ACC export values apply only to NBT customers, not NEM customers who have a 20-year legacy period under NEM. At a minimum, CAISO should exclude customers who are on NEM until double compensation concerns are more adequately addressed.  SDG&E’s annual NEM cost shift is in excess of $1 billion and growing.  Regardless of whether an incremental service is being provided, the current retail-side compensation mechanism is providing significant over-compensation that is being funded by non-NEM/NBT customers. SDG&E does not support additional compensation for these customers until this is no longer the case. Retail rates and avoided-cost-based compensation ultimately reflect the energy procurement and capacity costs incurred by Load Serving Entities, including wholesale market costs and cannot be fully decoupled.

If CAISO still elects to move forward with the Draft Final Proposal, SDG&E recommends a tracking mechanism for participation, dispatch performance, export volumes, and associated wholesale compensation for NEM and NBT customers participating under this new construct. Collecting empirical data would provide stakeholders with an objective basis to evaluate concerns in practice and would help inform future DDEMI enhancements and coordination with CPUC and CEC proceedings. More broadly, SDG&E believes performance and compensation tracking would be beneficial for all resources participating under the proposal, as it would support future evaluation of baseline accuracy, settlement outcomes, market incentives, and Resource Adequacy implications based on actual operational experience rather than assumptions.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

SCE appreciates CAISO’s continued stakeholder engagement and supports keeping Track 1 narrowly focused on settlement treatment for authorized end-use customer exports within existing PDR and RDRR models, rather than redefining DR or creating a new export-capable wholesale resource construct.

SCE supports CAISO’s clarification that DR resources remain load-curtailment products, customer exports may be reflected only where UDC-authorized, and the aggregation may not net export.

However, CAISO should further address SC settlement validation, DRRS export capability attributes, including interconnection authorizations and validations, NEM/NBT double compensation, WDAT exclusions, and non-responsive load monitoring before implementation.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

SCE’s overall assessment is that the Draft Final Proposal is directionally reasonable as a targeted settlement enhancement, but should not be implemented without additional guardrails. The proposal appropriately recognizes end-use customer exports while maintaining the resource-level no-net-export limitation.

The remaining concerns are limited but important: CAISO should address potential NEM/NBT double compensation, specify validation and audit requirements for SC calculations, and monitor whether aggregations rely on non-responsive load in ways that affect settlement accuracy, market integrity, or RA valuation.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

SCE supports the Draft Final Proposal with caveats.

SCE supports the limited objective of recognizing UDC-authorized end-use customer exports within an aggregation, provided the resource remains a net load-curtailment resource and exports beyond the Resource ID are deferred to a separate stakeholder process.

SCE’s support is contingent on CAISO addressing the following before implementation:

• validation, reporting, and audit requirements for SC calculations;
• coordination with the CPUC and LRAs on NEM/NBT double compensation;
• prohibition of WDAT resources;
• clear DRRS treatment of UDC-authorized export capability; and
• post-implementation monitoring of non-responsive load concerns.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

SCE recommends that CAISO make the following revisions before implementation.

1. DRRS export capability. DRRS should capture whether export is authorized, the applicable export limit, and material operating limitations.
2. Validation and audit. CAISO should require sufficient supporting data for CAISO and DMM to review SC application of the export limit and baseline hierarchy.
3. NEM/NBT coordination. CAISO should coordinate with the CPUC and LRAs on guardrails to prevent duplicative compensation for the same incremental exported energy.
4. WDAT prohibition. CAISO should not allow WDAT interconnected resources to participate in PDR/RDRR products.
5. Non-responsive load. CAISO should monitor whether export-capable aggregations rely on passive load in ways that affect settlement, market integrity, or RA valuation.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

SCE supports recognizing end-use customer exports while maintaining a resource-level export limit because this preserves PDR/RDRR as load-curtailment products and avoids treating DR aggregations as exporting generation resources.

SCE agrees that exports beyond the Resource ID would raise broader FNM, congestion management, pricing, dispatch, deliverability, interconnection, and RA concerns that should be addressed separately.

Any future expansion beyond the Resource ID should occur in a separate stakeholder process with full treatment of those issues.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

SCE generally supports the proposed hierarchical baseline adjustment-factor methodology as a reasonable starting point.

Before implementation, CAISO should define “otherwise non-representative” adjustment factors, specify data sufficiency requirements, clarify export-interval exclusions, and provide examples for likely PEMs.

As noted in response to Question 4, CAISO should also require sufficient data to validate SC application of the hierarchy and resource-level export limit.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

CAISO states in its Draft Final Proposal, “The ISO recognizes that an administrative retail tariff framework, by nature of its design, will credit this incremental energy as a result of CAISO wholesale market dispatch at the retail level at the predetermined ACC price (in the case of the Net Billing Tariff) or at retail rates (in the case of the Net Energy Metering tariff).”

Despite CAISO’s recognition of a double counting and compensation risk, under a framework where customers receive both retail and wholesale market compensation for exports of the same incremental energy, SCE remains concerned that CAISO’s Draft Final Proposal position to maintain eligibility for NEM and NBT customers introduces unnecessary costs to ratepayers. Simply viewing retail and wholesale export compensation as separate distinct frameworks does not provide a strong rationale to why CAISO believes ratepayers should pay for the same incremental energy twice. See tables below using CAISO’s settlement and performance measurement examples, with an added view of the retail and wholesale kW compensation for export to illustrate the double compensation problem.

Today’s rules prevent double compensation because, by retail design, NEM and NBT customers already receive export compensation based on their retail rate or ACC, respectively. For this example, the incremental -3.0 kW of export is compensated once on the retail side.

By not addressing the compensation impacts under the existing retail tariff design, CAISO’s proposal to remove the zeroing of BTM exports will result in the same incremental -3.0 kW of export to be compensated twice. In addition to the -3.0 kW of export compensation on the retail side, ratepayers will also pay for -3.0 kW of export on the wholesale side based on the market dispatch locational marginal price. Moreover, double counting of the kW from NEM and NBT customers requires coordination with the CEC to ensure California’s Integrated Energy Policy Report (IEPR) energy and peak demand forecasts only account for the incremental -3.0 kW of export, not -6.0 kW to avoid double counting.

 As an interim solution, SCE recommends NEM and NBT participation be excluded until the CAISO coordinates with the CPUC, CEC, and other LRAs to establish the necessary rules, retail tariff design changes, and forecast processes to fully mitigate the double counting and compensation risks. This interim solution would still allow CAISO to move forward with Track 1 for non-NEM/NBT customers who are UDC-authorized for exporting to the grid and provide the state agencies with time to analyze and address the concerns raised by SCE and other market participants.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

SCE appreciates CAISO’s discussion of non-responsive load but believes the Draft Final Proposal does not fully resolve the concern.

The proposal may create incentives for aggregations to include passive load to absorb exports and maintain compliance with the resource-level no-net-export limit, even if measured performance does not reflect genuine dispatch-responsive behavior.

As noted in response to Question 4, CAISO should monitor this issue after implementation in coordination with DMM and LRAs.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

SCE offers two additional implementation considerations.

First, CAISO should clarify whether non-MGO PEMs must submit only net meter data or both net and generation meter data to ensure compensation is limited to incremental load curtailment.

Second, CAISO should clearly distinguish Track 1 from any future effort to allow exports beyond the Resource ID.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Sunrun appreciates the opportunity to comment on the DDEMI Track1 Draft Final Proposal and applauds the California ISO (CAISO) for the rigorous stakeholder process it has been conducting. Sunrun strongly supports modifying the Proxy Demand Resource (PDR) model to recognize end-use customer exports in performance measurement and the instant proposal makes important progress in that direction. However, as outlined below, the Draft Final Proposal is only the first step in addressing the lack of incentives behind-the-meter (BTM) distributed energy resources (DERs) have to meaningfully participate in the wholesale markets.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

The Draft Final Proposal takes important steps to enable the participation of exporting resources in PDR which will result in wholesale market participation of more BTM DERs.

In particular, Sunrun supports the CAISO’s finding that this proposal does not create issues of double compensation with Net Energy Metering (NEM) and the Net Billing Tariff (NBT). Customers can continue to participate in CPUC’s retail programs – NEM and NBT – and export as permitted in the instant proposal. The CAISO correctly argues that compensating these customers for exports does not create double compensation because those customers provide a different service in their response to market dispatches than they provide by participating in NEM or NBT. 

While the current proposal represents meaningful progress, it does not fully resolve the larger issue of limiting export to aggregated customer load. The requirement that each PDR aggregation remain a net load continues to limit the amount of flexible capacity that can participate in the wholesale market. Although the Draft Final Proposal recognizes exports at the end-use customer level, aggregations primarily comprised of battery storage resources, for example, will still have their dispatch constrained by customer load rather than the physical capability of the underlying storage systems.

Sunrun understands concerns regarding deliverability but notes that the CAISO has explicitly not scoped those issues into this stakeholder process. Sunrun encourages CAISO to develop an appropriate venue as soon as possible. Resolving deliverability questions will ultimately be necessary to unlock the full value of customer-sited storage resources for California.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

Sunrun supports the proposal with the caveat that additional improvements are needed to fully enable distributed energy resources to contribute to the CAISO wholesale market. 

As mentioned above, a venue for addressing the deliverability issues with BTM exports is needed to truly capture their value. Additionally Sunrun recommends that the CAISO create a new Track in this initiative focused on developing incremental improvements on the following topics:

• Metering requirements: Currently, CAISO does allow for device-level measurement via the Meter Generation Output (MGO) methodology, but the use of this pathway requires meeting ANSI C.12 accuracy and certifications. For smaller, residential-scale battery devices, this type of submetering is not common nor needed. For PDR aggregations, it is most important that settlement is accurate at the aggregation level. CAISO should therefore open a new track in DDEMI to revisit device-level metering requirements for PDR.
   

• Device-level enrollment into CAISO: One of the biggest barriers to participating in PDR is the customer-level enrollment process, particularly the ShareMyData / Green Button process that is required to allow scheduling coordinators to access utility meter data for settlement purposes. Even for current device-level metering via MGO performance evaluation, it is Sunrun’s understanding that customers are still required to share their utility meter data. Since exports at the customer level have historically been prohibited, customer data was needed to limit device response to customer load. However, by allowing exports in PDR, there is no longer a need to measure customer utility data. Accordingly, Sunrun recommends that the CAISO  take up device-level enrollment issues as soon as possible in a subsequent track of this initiative.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

Sunrun continues to emphasize that the CAISO should identify a venue for the remaining issues – transmission deliverability and net export from aggregated customers – to be decided as soon as possible. In addition, another track in this stakeholder process to address the smaller issues of metering and customer data sharing is also needed.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

Sunrun is supportive of the CAISO’s proposal to generally apply the Track 1 settlement changes to all BAAs. Since the concern around allowing exports beyond the market-resource level is due to deliverability, BAAs that do not have the same deliverability concerns should be able to allow for exports beyond the market ID level.

Sunrun also supports applying the Track 1 proposal to both PDR and RDRR models, but applying the proposal to PDR is particularly important. As the non-emergency demand response market model, applying the proposal to PDR will ensure that exporting resources can be available to dispatch more economically across a variety of grid conditions.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

The CAISO continues to propose that exports be included in the baseline and then not counted as  performance. This means that not all incremental performance is being accurately measured. However, Sunrun understands the deliverability arguments the CAISO makes in the proposal and that those would have to be addressed before this issue could be resolved. We encourage the CAISO to undertake discussions on deliverability as quickly as possible in an appropriate venue so as to consider a more nuanced solution that addresses deliverability concerns while correctly crediting export performance. 

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

Sunrun supports the CAISO’s finding that customers’ participation in CPUC’s retail programs – NEM) or the NBT – does not create double compensation. 

Insofar as load curtailment is concerned, NEM and NBT customers are already permitted to participate in PDR and other wholesale DR programs without triggering prohibitions on dual participation. The CAISO correctly argues that compensating NEM/NBT customers for exports does not create double compensation because those customers provide a different service in their response to market dispatches than they do by merely participating in NEM or NBT. This proposal merely changes the level at which load exports are allowed – now at the aggregate level – and does not violate dual compensation principles. 

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

Sunrun supports that the CAISO is not requiring additional customer composition requirements or customer-level responsiveness standards as part of this track. As the CAISO correctly points out, there are already a number of safeguards including fines to protect against DR non-performance. 

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Tesla appreciates CAISO's continued engagement and the discussion at the July 9, 2026 stakeholder meeting. The Draft Final Proposal reflects meaningful, substantive progress, and we are pleased that CAISO has carried forward the core reforms Tesla supported in our July 1, 2026 comments. In particular, the Draft Final Proposal adopts our recommendations to: (i) remove the requirement that Scheduling Coordinators (SCs) "zero out" authorized exports at the end-use customer level; (ii) apply the reform across all Performance Evaluation Methodologies (PEMs) rather than only the metering generator output (MGO) methodology; (iii) apply reforms to both the Proxy Demand Resource (PDR) and Reliability Demand Response Resource (RDRR) models; and (iv) recognize authorized exports at the end-use customer (site) level.

We also greatly appreciate that CAISO directly addressed Tesla's request to confirm the eligibility of Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers. Overall, the Draft Final Proposal is well-reasoned and implementation-ready, and Tesla encourages CAISO to implement reforms by the end of Q1 2027 to provide a pathway for participation in summer 2027 season.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

Tesla views the Draft Final Proposal as a strong incremental step in the broader DDEMI and PDR reform process. Because the change is an accounting refinement rather than a redefinition of demand response, we continue to support an expedited path and the ISO's 2027 implementation target.

We are encouraged that CAISO adopted or affirmed several of the positions Tesla raised on July 1:

• Site-level export recognition across all PEMs and both PDR and RDRR (adopted);
• SC discretion to apply the resource-level export limit and determine which customers' intervals are adjusted (adopted);
• Baselines that reflect typical export behavior so that only incremental performance is compensated (affirmed); and
• Confirmation that NEM/NBT customers remain eligible to participate (affirmed).

Two areas from our prior comments warrant continued attention as the proposal is finalized: (1) a commitment to scope exports beyond the aggregation resource, and the associated deliverability pathway and, (2) device-level metering/telemetry, in Track 2; These are clarifications that build on the Track 1 proposal.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

Support with caveats.

Tesla supports the Draft Final Proposal. Consistent with our July 1 comments, our caveats are clarifications rather than objections:

• Preserve a path to broader export recognition. The resource-level export limit is a reasonable near-term boundary, but we ask CAISO to formally scope exports beyond the aggregation resource for structured discussion in Track 2.
• Confirm that device level metering and telemetry issues are scoped in Track 2.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

Tesla recommends three targeted additions, each consistent with our July 1 comments:

• Track 2 scoping. Expressly add to the Track 2 scope: (a) exports beyond the aggregation; and (b) device-level metering and telemetry.
• Qualifying interconnection agreements and UDC review. Confirm that any approved distribution export interconnection qualifies across BAAs, and that the enhanced Utility Distribution Company (UDC) review of the new DRRS attribute leverages existing interconnection records within defined timelines so it does not become a new barrier to, or source of delay for, participation.

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

Tesla supports recognizing authorized end-use customer exports and accepts the resource-level export limit as a reasonable near-term boundary, as we stated on July 1.

We continue to believe, however, that this boundary should not be treated as permanent and we ask CAISO to scope this issue in Track 2.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

Tesla has no comments at this time.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

Tesla strongly supports CAISO's proposal to maintain eligibility for NEM and NBT customers. This directly resolves the confirmation Tesla requested on July 1 and eliminates a significant source of ambiguity for customers with distributed energy resources.

We agree with CAISO's rationale that retail export compensation and wholesale demand response compensation are distinct services under separate regulatory frameworks. Tesla encourages CAISO to maintain this position in the Final Proposal, and to continue coordinating with all stakeholders as the retail and wholesale frameworks evolve.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

Tesla supports the ISO's conclusion not to impose new aggregation-composition or customer-level responsiveness requirements as part of Track 1.

We also note that enabling exports beyond the resource level in a future phase would reduce any incentive to enroll non-responsive load solely to absorb exports, reinforcing our recommendation to scope that pathway in Track 2.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.

Tesla appreciates CAISO's responsiveness throughout this process and the incorporation of stakeholder feedback into the Draft Final Proposal. To summarize our recommendations:

• Advance Track 1 expeditiously on a Q1 2027 implementation timeline.
• Confirm that any approved distribution export interconnection qualifies across all BAAs, with a timely, non-duplicative UDC review of the new DRRS attribute.
• Formally scope in Track 2: (a) exports beyond the aggregation resource and the associated deliverability pathway; and (b) device-level metering and telemetry.

We look forward to continued engagement in both Track 1 implementation and Track 2 policy development.

1. Please provide your organization's feedback on the July 9, 2026 stakeholder meeting and the DDEMI Track 1: Draft Final Proposal – Reflecting End-User Exports in Demand Response paper.

Please see attached comments and illustration.

2. Please provide your organization's overall assessment of the Draft Final Proposal.

3. Does your organization support, support with caveats, oppose, or oppose with caveats the proposal? Please explain your rationale.

4. What revisions, if any, would your organization recommend before the proposal is finalized?

5. Please provide your organization's feedback on the proposal to recognize end-use customer exports while maintaining a resource-level export limit, including the discussion of market-wide and ISO balancing authority area (BAA) considerations.

6. Please provide your organization's feedback on the proposed settlement framework, including the hierarchical baseline adjustment factor methodology.

7. Please provide your organization's feedback on the ISO's proposal to maintain eligibility for Net Energy Metering (NEM) and Net Billing Tariff (NBT) customers, including the rationale for distinguishing retail export compensation from wholesale demand response compensation.

8. Please provide your organization's feedback on the ISO's discussion of non-responsive load.

9. Please provide any additional comments, implementation considerations, examples, or recommendations.