Comments on Discussion Paper - Gas Resource Management

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

APS appreciates the opportunity to comment on the CAISO’s Gas Resource Management Discussion Paper and looks forward to the inclusion of the working group’s recommendations into policy initiatives in the near future.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

On PS1, APS is supportive of expanding pre-DA runs to inform gas procurement decisions of market participants. APS would support further development in this area in regard to a “sanity check” or ability to limit inaccurate or nefarious data skewing the results. We believe this is a delicate balance to get bid quality that results in a run with value for this purpose, while managing any sort of ability to impact the output of the run by any single participant.

On PS4, APS supports the ability to increase the reasonableness threshold as a way to represent the varying prices that participants could procure at around the index price. The index is a weighted average of all transactions so there will naturally be volatility in the transaction price range which is what should be measured to establish the reasonable thresholds.

On PS5, APS believes that the CAISO and stakeholders should evaluate and implement the ability to have the market optimization model having the capability to dispatch units at one price for a finite amount of fuel and then transition to a different price for an additional finite amount of fuel, because fuel is procured at different price point. This could be an improvement for all hours of dispatch, but APS also agrees that the power markets should reflect the fuel price relevant throughout the full gas day (HE 1-7) and not only the calendar day.

On PS6, having the market optimization model factor in gas pipeline limitations is an important element for solving this problem and ensuring grid reliability.  Developing the capability to limit specific resources or a portfolio of resources based upon a finite amount of fuel or capability would be extremely useful for gas, hydro and storage resource optimization.  Used correctly it could help solve the price cap problem where resources are dispatched early in the day and not held for use across the peak hours. This solution would be ideal because it would also allow us to reflect true costs of the resource where we can inform the market that a certain unit or group of units (from the same pipeline) will incur penalties and allow us to bid the unit with the penalty cost added on would be helpful, and this could be coupled with the ability to dispatch units at one price for a finite amount of fuel and the increased price to add the penalty once it is applicable based on fuel usage. For burn limitations it will be necessary to allow for increases in real-time if feasible, because intra-day delivered gas can be procured.

On PS7B, APS finds this a high value recommended solution and hopefully one with little cost or time for development, so would encourage the rightful prioritization of this recommendation to improve the current Reference Level Change Request process.

On PS8A, APS would propose moving the time to the latest possible time feasible rather than a pre-selected time of 9AM, but would support if 9AM is the latest feasible time.

On PS9B, APS is supportive of allowing more flexibility in fuel regions assigned to resources and in particular like the first stakeholder recommendation here on taking the higher of the eligible fuel regions for a resource where a blending could result in the same problem of utilizing a single region where the blend doesn’t reflect actual costs if the participant procured from the higher priced region. APS requests evaluation of the ability to modify fuel regions references for resources intra-day, this could also work to support PS6 where one could switch to a fuel region that includes certain gas burn limitation issued and the associated price impact.

6. Please provide any additional comments on the gas resource management topic.

 No additional comments at this time.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

Please see the attached Comments from the Department of Market Monitoring.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

Please see the attached Comments from the Department of Market Monitoring.

6. Please provide any additional comments on the gas resource management topic.

Please see the attached Comments from the Department of Market Monitoring.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

 NV Energy supports the CAISO’s proposal to kick off the stakeholder initiative to begin working towards solutions for the problem statements developed during the working group phase.  The initiative should develop sufficient tools to aid EIM and potential EDAM participating Entities in managing gas constraints.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

NV Energy supports the three general high-level topics for discussion in the upcoming gas management initiative.  The gas management working group has developed problem statements that encompass the major issues that have been identified with a participant’s ability to manage gas nominations while participating in the CAISO wholesale market. The market initiative scope should cover all identified problem statements and encompass all areas that impact gas management. For instance, this initiative’s scope should cover market bidding methodology, market mitigation, market timelines, and any necessary analysis or reporting that is identified as a solution. The gas management issues have been ongoing for the Desert Southwest region in the EIM, therefore, these issues need resolution for the EIM as well as for participants that are considering the possibility of joining the Day Ahead Market.  

6. Please provide any additional comments on the gas resource management topic.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

PacifiCorp appreciates the opportunity to comment on the Gas Resource Management (GRM) Working Group discussion paper. PacifiCorp agrees with the problem statements and topics of discussion given in the discussion paper. PacifiCorp also agrees with the stakeholder recommended solutions and offers further recommendations on PS1, PS2 and PS8.  

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

PacifiCorp offers the following recommendations to be considered by the CAISO and stakeholders as starting places for future discussions on the problem statements.  

PS1 

• Incentivize participants to provide accurate two-day-ahead information and forecasts to improve two-day-ahead advisory schedules.  

PS2 and PS8 

• Allow scheduling coordinators to recover costs due to buying evening or intra-day gas, to cover day-ahead schedules, in excess of gas purchased at the day-ahead index to cover supply for RSE requirements.   

6. Please provide any additional comments on the gas resource management topic.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to submit comments regarding the Discussion Paper posted on May 21, 2024. SRP values the CAISO’s efforts in addressing gas resource management issues and supports the transition to policy development. SRP is encouraged by the focus on aligning gas procurement schedules with power market awards and improving resource specific cost adjustments. However, SRP requests further clarity on how these initiatives will take into account EDAM developments and requests CAISO to provide details in the issue paper.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

SRP appreciates the CAISO’s plan for transitioning to policy development for the Gas Resource Management initiative and the structured approach in developing an issue paper with the utilization of stakeholder feedback. SRP values improving fuel procurement certainty and aligning market timelines. However, while the Discussion Paper mentions the need to evaluate and evolve gas resources policies as a result of EDAM, SRP is concerned that it may not fully align with the EDAM development efforts. To enhance this alignment, SRP recommends that the Discussion Paper make clear there is need for a strategy and timeline for integrating gas management policies in tandem with the implementation of EDAM. Additionally, SRP suggests revising PS7A to ensure it also addresses the timing issues of the reference level change request process to ensure timely and efficient approvals. Below is a suggested modification to the PS7A:

The reference level change request process is complex and does not always lead to change request approval or a change request approval in the necessary timeframe.

6. Please provide any additional comments on the gas resource management topic.

No additional comments at this time.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

SDG&E appreciates the opportunity provided by the CAISO to comment on the Gas Resource Management Working Group Discussion Paper. The Working Group has primarily focused on how to better align and evolve gas resource management processes to meet the needs of market participants in light of upcoming EDAM implementation. The Working Group also discussed revisions to the problem statements and recommended potential solutions to explore in a future policy development phase.

SDG&E believes the topics identified in the Gas Resource Management discussion paper appropriately reflect the current issues market participants face and supports transitioning this work to the policy development phase, as recommended by the CAISO. SDG&E commends CAISO for seeking solutions that lead to more efficient use of gas resources in the market and looks forward to continued participation in this initiative.

Below, SDG&E offers feedback on several of the potential solutions outlined in the Discussion Paper.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

Problem Statement 1: SDG&E supports the stakeholder recommended solution for an early market run as a positive enhancement; however, we note there are far too many market variables at play that change day to day, and hour to hour, for any advisory schedules to have standing. While introducing a full, non-financially binding advisory market run may be a first step, SDG&E recommends there be additional consideration on how to improve the reliability (and therefore the confidence) of this new market run in future meetings. Without further consideration of the uncertainties associated with a non-financially binding advisory run, it is unclear whether this recommended solution would meaningfully address the issues identified in the problem statement.

Problem Statement 2: For fuel procurement certainty to increase in the timely cycle, CAISO would need to run its market and publish awards prior to the close of the timely cycle. Without this change, electric generators will be forced to continue to lean on intraday markets for awards that deviate from forecasts.

Problem Statements 3, 4, & 5: SDG&E supports these problem statements and is interested in exploring how to increase flexibility in accurately representing actual costs in the real time markets, whether through enhancements to the index price or from stakeholders more closely reflecting actual commitment costs.

Problem Statement 7B & 8A: SDG&E is supportive of the stakeholder recommendation for this problem statement.  

Problem Statement 9B & 10: SDG&E is supportive of exploring the stakeholder recommendations for these problem statements.

6. Please provide any additional comments on the gas resource management topic.

No comment.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

Vistra is supportive of this effort moving to a policy phase. We are supportive of the problem statements and recommendations summarized in the discussion paper. Vistra did not see two of our problem statements raised in these discussions and respectfully request the CAISO include these two additional issues in the upcoming issue paper.

Vistra respectfully requests that the two issues below are included in scope of the policy phase:

• Reviewing effectiveness and use of opportunity cost framework both calculated and negotiated.
• Evaluating new solutions to increase bidding flexibility for commitment costs to find a path to avoid mitigating commitment costs in all hours under our current bidding framework with cost-based offers subject to cost caps in all hours.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

6. Please provide any additional comments on the gas resource management topic.

Vistra submitted policy or implementation scope in the 2024 policy catalogue submission for a commitment cost bidding enhancements.[1] This scope requested CAISO along with stakeholders review the Bidding Rules Enhancements blended fuel region (included in discussion paper), Commitment Cost Enhancements Phase 3 opportunity cost effectiveness review, and Commitment Costs and Default Energy Bid Enhancements issue and feasible solutions. Vistra wants to clarify our ask is not for CAISO to implement all of these elements as previously discussed but to take the issue back up in this upcoming Gas Resource Management policy phase to explore whether these previous solutions were effective or if not propose new/refined solutions that will be effective. We respectfully request the CAISO address these outstanding issues in the upcoming effort.

[1] Vistra 2024 Policy Catalogue Submission, February 28, 2024, https://stakeholdercenter.caiso.com/Comments/AllComments/7229828e-d159-4450-b317-4026172a6b55#org-b7d9495f-ddbe-43fb-8e61-6bd585e36a9d.

1. Provide a summary of your organization’s comments on the discussion paper posted on May 21, 2024:

WPTF appreciates the opportunity to provide these brief comments on the CAISO’s Gas Resource Management Recommendations for Policy Development Discussion Paper. WPTF is pleased to see the issues being discussed in the working group phase to be at a point where they can transition into the policy development process. In the paper, CAISO indicates its intention to advance stakeholder recommendations to the policy development stage. WPTF seeks clarification from CAISO regarding whether problem statements lacking recommended solutions in the Discussion Paper will also progress to the policy development stage or if CAISO plans to discontinue these issues. For example, PS 7A is listed but does not have an explicit recommendation. WPTF strongly urges CAISO not to abandon these issues but rather to include them in the policy development phase for discussion of potential solutions. For instance, WPTF believes that PS7A, "The reference level change request process is complex and does not always lead to change request approval," could benefit from improvements and CAISO would be remiss to exclude it (and other problem statements) from further consideration.

2. Provide your organization’s comments on the proposed topics of stakeholder recommendations for policy development provided in the discussion paper:

WPTF’s comments below focus primarily on a few of the Problem Statements listed in the discussion paper.

PS7A: The reference level change request process is complex and does not always lead to change request approval

To reiterate, WPTF urges the CAISO to consider this in the policy development phase even though there is not an explicit recommendation listed in the Discussion Paper. We believe the CAISO could address this problem statement through both policy changes as well as process and system implementation changes. For instance, the process could be refined to accommodate multiple gas supply sources or weights that change based on factors like hour or resource output level. CAISO might also consider modifying bid validation and lockout rules regarding system errors, potentially allowing approvals on a per-hour basis instead of locking out every submitted hour and necessitating resubmission for the entire day, thereby improving approval timelines. Additionally, the process could be enhanced to allow batch submissions such that more than one resource request can be submitted at once, easing the lift from a process perspective on market participants.

PS9A, 9B, and 10 – Opportunity Costs and Fuel Switching

CAISO should strive to institute a flexible framework and procedure capable of accommodating potential substitutes to pipeline natural gas. This could entail establishing a robust structure capable of allowing fuel alternatives or blended fuels. Continuing with a fixed baseline of existing fuel supply assumptions may result in an inefficient future process resembling a game of whack-a-mole, wherein market participants navigate unpredictable and potentially inconsistent case-by-case assessments.

For any potential solution, the CAISO and stakeholders should consider items such as:

• How can market participants request a relevant blended fuel zone and determine their respective weights?
• To what extent are aspects of this request automated or governed by formulas, and what sources of price and other data justifications are deemed acceptable?
• Does the selection of a blended zone apply for an entire day, or can it be adjusted and revised hourly and does this answer vary for processes such as Day-Ahead (DA) or Real-Time (RT), or for resources committed in the DA phase?

Additionally, earlier in the stakeholder process, there was a notable discussion regarding how market participants encounter opportunity costs in their fuel selections, a concept seemingly acknowledged by CAISO at the time but only briefly referenced in this Discussion Paper in Appendix A. WPTF respectfully requests that the CAISO continue these conversations in the policy process to ensure they are adequately understood and addressed where necessary. We envision this would also include an evaluation of how well the existing opportunity cost processes are working in terms of establishing an effective opportunity cost adder to allow more efficient utilization of resources with recognized limitations.

Lastly, the working group discussions have previously touched on another issue that is not captured in the discussion paper. WPTF asks that the CAISO continue discussing the following issue in the policy process to ensure all issues raised in this working group effort are considered and not inadvertently dropped. Specifically, we ask that the CAISO continue discussing the issues regarding lack of bidding flexibility for commitment costs due to the current cap that may not always allow for costs to be accurately reflected and applies mitigation in all hours when not warranted. This was an issue previously discussed in CCDEBE but ultimately the approved policy was not implemented. 

6. Please provide any additional comments on the gas resource management topic.