Comments on Issue paper GRM 2/13/25

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

APS appreciates CAISO’s efforts in evaluating the comments from previous stakeholder meetings and summarizing them in the Issue Paper.

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

No comment.

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

No comment.

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

No comment.

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

No comment.

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

No comment.

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

No comment.

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

No comment.

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

No comment.

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

No comment.

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

No comment.

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

No comment.

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

No comment.

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

APS encourages CAISO to improve the process of submitted an Automated RLCR in SIBR. We acknowledge the comment in the Issue Paper that potentially some market participants are using an API to automate submissions, however we feel that making the direct input to SIBR workable is a more sustainable solution. At times, vendor software goes down, and not having a workable solution directly in the market application can be very detrimental.  APS recommends CAISO develop a solution that allows participants to submit the change request at the fuel region level and automatically update the reference level for all resources mapped to that fuel region. Another workable solution would be to allow participants to select multiple resources to update at one time.

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

No comment.

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

To date, APS has used the Manual RLCR Process exclusively, due to the cumbersome nature of the Automated Process outlined in comments above. APS has concerns about the cutoff timing for the Real-Time Manual RLCR process, particularly when there is a need to procure intra-day gas at elevated prices relative to the fuel region index price. APS recommends that CAISO allow for a 2nd Manual RLCR cycle, after ID3, to more accurately capture incurred gas price volatility. Additionally, all Manual RLCR changes should run through the remainder of the gas day, including HE1-7 of the following calendar day. The HE1-7 mismatch can be very impactful during times when there are large swings in the gas prices day-over-day.

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

No comment.

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

No comment.

19. Please provide any additional feedback:

No comment.

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

Comments on the Gas Resource Management Issue Paper

Department of Market Monitoring

March 11, 2025

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Gas Resource Management Issue Paper.[1] The purpose of the ISO’s issue paper is to (1) explain the processes, tools, and mechanisms that exist in the CAISO market today as they pertain to gas resource management, (2) document key issues and discussions from the working groups, and (3) to pose targeted questions intended to solicit stakeholder feedback.

DMM understands this initiative is intended—at least in part—to facilitate accurate fuel cost representation by entities around the West that may participate in CAISO markets. Accurate accounting of gas fuel costs in dispatch and uplift decisions for resources beyond the CAISO balancing area is particularly important in the wake of the Western Energy Imbalance Market (WEIM) expansion and the implementation of the extended day-ahead market (EDAM).

DMM provides comments here on the following four issues raised in the issue paper:

• Informing fuel procurement. DMM supports the ISO’s plan to supply participants with the D+2 advisory market (D+2) results to reduce the uncertainty around gas procurement targets for day-ahead market schedules.
• Accommodating gas cost variation in reference levels. DMM believes that commitment cost and default energy bids used in the market software should reflect participants’ full resource costs without being unnecessarily high to drive up overall market prices. DMM recommends the ISO and stakeholders focus on ways to make more targeted changes or better utilize existing mechanisms to accommodate gas price spikes, rather than simply increasing reference levels or reasonableness thresholds.
• Accessibility of reference level change request (RLCR) process. DMM views the automated and manual reference level change requests as the appropriate mechanisms to handle short term gas price volatility that is not covered by normal reference levels. DMM encourages the ISO and market participants to identify potential procedural or informational improvements with the reference level change request process.
• Gas burn limitations. DMM agrees with the ISO that ISO policies should not disincentivize resources to follow gas pipeline instructions. DMM continues to recommend not including operation flow order (OFO) costs in reference level change requests. DMM also supports the ISO working with stakeholders in the WEIM to establish clear processes for managing intra-day gas limitations that maintain incentives to procure gas at least cost.

Comments

Informing fuel procurement

Stakeholders are concerned with the need to rely on evening or intra-day gas cycles because they do not have an accurate indication of what their day-ahead schedules will be during the timely gas nomination cycle. If resources must rely on less liquid intra-day gas cycles to meet their day-ahead schedules, they may face additional financial risk.

The issue paper states that in order to address this risk, market participants want greater flexibility to reflect gas costs above index prices. This would limit exposure to the risk of having to pay more for gas than what they expected when bidding into the day-ahead market. Market participants outside of the CAISO balancing area are concerned that high demand for intra-day gas will expose them to price spikes that day-ahead reference level calculations do not cover.

DMM agrees with the ISO’s assertion that additional flexibility to reflect cost expectations in the day-ahead market to accommodate infrequent gas price spike scenarios does not directly address this problem. In fact, creating reference level calculations that attempt to account for the universe of all possible gas price spikes may actually do more to harbor the exertion of market power than it does to represent fuel costs accurately. DMM reiterates the importance of maintaining reference level calculations that allow resources to reflect their costs appropriately without being unnecessarily high.

DMM also agrees that the ISO should instead focus on greater certainty around gas procurement targets to reduce un-hedged exposure to intra-day price spikes. DMM supports the ISO’s proposal to provide market participants with more accurate day-ahead procurement targets in the Next Day Gas Day 2 (GD2) horizon by supplying them with the D+2 results. This should reduce gas procurement uncertainty, and ultimately the exposure to intra-day gas price premiums, inasmuch as D+2 schedules are a more accurate indication of financially binding day-ahead schedules than the 48-hour residual unit commitment (RUC) schedules that market participants within CAISO currently receive.

Accommodating gas cost variation in reference levels

Some stakeholders are concerned that index-based reference levels do not accurately represent realized gas costs because they do not account for the spread of gas market prices, or premiums for fixed price contracts. Some stakeholders are also concerned about the mismatch between the gas and electric timelines, which may cause inaccurate reference levels for hour-ending (HE) 1 to HE7, and a lack of actual gas cost information in time to submit manual reference level change requests by the deadline for the day-ahead market.

In addition to discussion of these issues in the working group process, DMM has also had discussions with market participants in the WEIM about issues with minimum load costs that do not reflect updated gas costs, leading to higher gas burn when the optimization moves their resources to operate at minimum load of higher multi-stage generator (MSG) configurations.  DMM understands this situation can create operational challenges or significant added expense for resources that are attempting to manage limited gas supplies through energy bids, but are unable to do so to the same extent in MSG configuration minimum load costs. 

DMM recognizes that this issue may be particularly significant for entities in the Desert Southwest that have limited gas storage capabilities. Resources with limited gas storage that the optimization moves to the minimum load of a higher configuration in real-time than the market participant originally planned for may have difficulty reflecting higher intra-day gas costs by the deadline for manual reference level change requests. DMM recommends the ISO continue discussions with market participants to provide guidance on how best to reflect these gas limitations in the market.

Reference levels should not include asset management strategy costs

DMM agrees with the ISO that reference levels should not include costs related to a resource’s asset management strategy, such as contract premiums. Further, the issue paper cites DMM’s previous analysis that shows using an approximation of GD2 prices just prior to the day-ahead market run ensures that virtually all gas purchased in the next day market is within the default energy bid (DEB) and commitment cost scaled levels. This includes the reference levels for HE1-HE7.[2]

Increasing the reasonableness threshold may be inefficient

Some stakeholders suggested the ISO increase the reasonableness threshold to accommodate day-over-day gas price volatility. DMM agrees with the ISO on the impact an increased reasonableness threshold would have on reference level accuracy. If Next Day Gas Day 1 (GD1) is the appropriate gas price index (GPI) for HE1-HE7, GD2 is the appropriate GPI for HE8-HE24, and the real-time reference level that is based on GD2 is static for the day, then intra-day price changes from GD1 to GD2 may cause reference levels to over- or under-estimate actual costs, depending on the direction of the movement.  

However, increasing the reasonableness threshold to accommodate price decreases between GD1 and GD2 in order to make reference levels more accurately reflect actual costs during HE1-HE7 would do so at the expense of over-estimating costs in most hours. DMM believes it is inefficient to increase overall costs to accommodate the few times gas variability is not covered by reference level headroom and automated reference level change requests. Market participants can use manual reference level change requests if these other mechanisms do not cover their gas costs.

Some stakeholders also suggested the ISO increase the reasonableness threshold to accommodate gas price dispersion. DMM agrees with the ISO that increasing the potential for resources to reflect higher costs increases the risk of inflated costs in the market. It is not clear from the ISO’s example of the variance of index prices from February 12-19, 2021 how beneficial an increase in the reasonableness threshold would be to cover costs with a heavily skewed distribution of prices. An increase in the reasonableness threshold to cover these large variances on a relatively few amount of days would most likely be less efficient than the current practice of manual reference level change requests.

DMM believes reference levels should allow resources to reflect their costs accurately without being overly conservative for all hours. If reference levels over-estimate the marginal costs of resources, this can allow resources to exert market power up to those reference levels. DMM continues to highlight the importance of maintaining incentives for market participants to procure gas at the lowest possible cost.[3] If market participants can recover whatever gas cost they pay due to a high reasonableness threshold that accounts for the spread of gas market transactions, then participants lose the incentive to procure gas at lower costs, which could affect electricity prices. DMM recommends the ISO and stakeholders focus on ways to make more targeted changes for cases in which gas costs may actually exceed the indices, rather than simply increasing the reasonableness thresholds.

The ISO and stakeholders should determine if the administration costs of using dynamic input gas prices is worth the extra reference level accuracy

Stakeholders suggested the ISO also use dynamic input prices to accommodate day-over-day gas price volatility. DMM agrees that using the “correct” gas day price for HE1-HE7 would increase the accuracy of reference levels compared to actual gas costs for HE1-HE7 with large intra-day gas price volatility between GD1 and GD2. This increase in accuracy would not come at the expense of overestimating costs in other hours, like increasing the reasonableness threshold would. DMM also acknowledges that without sufficient evidence of a systematic underestimation of HE1-HE7 reference levels, administrative cost may be the determining factor when choosing to implement dynamic input prices.

GPI calculations should not be based off the highest cost fuel region that a resource can access

Stakeholders are also concerned with the difficulty generators that switch fuel regions or fuel-types may have reflecting their costs in the market. During working group discussions about resources that have unique supply arrangements with multiple suppliers, stakeholders suggested basing GPI calculations on either the highest cost fuel region or a weighted average across multiple regions rather than the lowest priced region. DMM agrees with the ISO that always simply using the highest cost fuel region disincentivizes competitive behavior.

DMM understands that participants may face unique fuel supply circumstances that result in costs that may not be reflected in the headroom afforded to default energy and commitment costs or reasonableness thresholds. DMM agrees with the ISO that market participants have access to other mechanisms—such as negotiated default energy bids (NDEBs), negotiated variable operations and maintenance (VOM), and opportunity costs—to help accommodate these unique cost circumstances. However, DMM does not oppose continued discussions to calculate a GPI that may better reflect unique or regionally specific fuel supply circumstances.

Accessibility of reference level change request process

DMM views the automated and manual reference level change requests as the appropriate mechanisms to handle short term gas price volatility that is not covered by normal reference levels. This is because it is more efficient to address these abnormal instances individually as opposed to creating overly conservative reference levels that inflate prices in all periods. However, stakeholders are concerned with the complexity of the reference level change request process, and the timing of when actual cost information is available compared to submission deadlines.

DMM has had discussions with market participants, and understands that the current reference level change request process and functionality may not accommodate some unique fuel supply arrangements. For instance, a participant may need to change gas hubs in the real-time, but cannot do so because the CAISO Masterfile only allows one gas hub for each resource. An NDEB is probably the best mechanism to accommodate this situation for energy bids. However, DMM encourages the ISO and market participants to identify potential procedural issues with the reference level change request process.

DMM also recommends the ISO continue discussions with market participants to determine if they need additional education to better utilize the manual change request process, or if there is a systematic issue with the timing of when market participants can reasonably get cost verified documentation such that manual reference level changes are unrealistic.

Gas burn limitations

Stakeholders are concerned that gas burn limitations issued by gas companies are not reflected in the market for WEIM balancing areas. DMM agrees with the ISO that ISO policies should not disincentivize resources to follow gas pipeline instructions. DMM continues to recommend not including OFO costs in reference level change requests. If participants can recover costs that signal gas system constraints through reference levels in the electric market, then their demand for gas may not be as sensitive to these price signals. DMM agrees with the findings from the Federal Energy Regulatory Commission (FERC) that this could jeopardize the reliability of the natural gas pipeline and transmission systems.[4]

In addition to discussions in the working group, DMM has had discussions with market participants in the WEIM about their ability to reflect fuel limitations in the market when they do not have gas storage. For example, participants without gas storage may purchase a fixed amount of gas in the day-ahead, and may not be able to follow their schedule in real-time if they use all of that supply earlier than expected in the operating day. In situations like this, some market participants have sought clarity on how best to communicate with the ISO about these limitations using tools such as bid prices, bid ranges, or outages.

DMM recommends the ISO work with market participants to identify the situations where WEIM and future EDAM resources may need to manage limited gas supplies throughout the day, and develop clear guidance on how to manage these limitations. Where such limitations are economic, i.e., a matter of needing to purchase additional gas at a higher cost, the ISO and stakeholders should develop an approach to appropriately account for these costs in a manner that still incentivizes least cost fuel procurement.

[1] Gas Resource Management Issue Paper, California ISO, January 23, 2024: https://stakeholdercenter.caiso.com/InitiativeDocuments/Issue-Paper-Gas-Resource-Management-January-24-2025.pdf

[2] Comments on the Commitment Costs and Default Energy Bid Enhancements – Issue Paper, Department of Market Monitoring, November 29, 2016: https://www.caiso.com/Documents/DMMComments-CommitmentCostsandDefaultEnergyBidEnhancementsIssuePaper.pdf

[3] Phase 2 of Comments on the Commitment Costs and Default Energy Bid Enhancements – Issue Paper, Department of Market Monitoring, December 12, 2016: https://www.caiso.com/Documents/AdditionalDMMComments_CommitmentCosts_DefaultEnergyBidEnhancmentsIssuePaper.pdf

[4] California Independent System Operator Corporation, 172 FERC ¶ 61,263, September 2020, pp 14-15: https://www.caiso.com/documents/sep21-2020-letter-order-accepting-commitment-cost-default-energy-bid-enhancements-ccdebe-er20-2360.pdf

   New York Independent System Operator, Inc., 154 FERC ¶ 61,111, February 2016, p 18: https://www.ferc.gov/sites/default/files/2020-05/E-6_80.pdf

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

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. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

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. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

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. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

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. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

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. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

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. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region 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.

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

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.

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

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.

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

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.

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

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.

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

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.

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

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.

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

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.

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

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.

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

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.

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

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.

19. Please provide any additional feedback:

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 a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

We appreciate the CAISO restarting the Gas Resource Management stakeholder process.   Our comments focus on two main topics.  First, the bid submittal process needs to be flexible to allow for higher bids when a significant weather event is on the horizon as asset owners may not have a gas quote prior to the close of the DAM market to justify an RLCR.  Second, asset owners need a fair and equitable after-market cost recovery process for instances assets are dispatched uneconomically, either for RUC or exceptional dispatch. 

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

As noted during the stakeholder process, the current two-day RUC advisory is not very accurate or reliable, therefore, a more robust look ahead process would be required.  The D+2 and/or D+1.5 is a move in the right direction, however, there is one issue that has not been discussed.  What recourse would asset owners have if they purchase gas based on D+2 or D+1.5 forecast, but there is not a day ahead award?  Unless the CAISO intends to keep asset owners whole on purchased fuel, then we are not sure how asset owners could effectively use D+2 and D+1.5 forecasts.

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

No comments

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

No comments

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

There have been instances where the day-head gas market has not traded and therefore has not established a weighted average gas index price when ICE provides the data feed to CAISO.  In these instances when there is not yet a gas index, the CAISO should consider using the most recent gas offer price on ICE since it is most reflective cost of gas at that moment in time.  CAISO should refrain from defaulting to the previous day’s index.

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

The last 4 or 5 significant fuel supply events have been driven by weather and typically across weekends or holiday weekends.  When there is a predictable weather event, whether in the West or across the United States, CAISO should implement a scarcity protocol that would relax the bidding thresholds and allow asset owners to submit offers to better reflect potential fuel costs.   

The CAISO should explore ways to design a process to declare upcoming outlier events and raise reasonableness thresholds to better reflect the volatility price risk to asset owners.   CAISO could establish observable triggers driven by a combination of market indicators such as forecasted weather events, balance-of-the-month, next week and custom package gas and power prices. 

Take the trading activity around Martin Luther King day this year, for example.  An arctic blast was in the forecast for most of the US for the following week.   On Friday, January 17, 2025, the 4-day weekend gas package for most of the indices was around $7/MMBtu, but custom gas packages for the week of January 20th-25th were trading around $20/MMBtu.  Just by looking at the weather forecast across the continental US and where the balance-of-the-month and custom gas products were trading, one could rationalize that natural gas would be pulled to where its most needed.  A potential scarcity event could have been called on Friday to support bidding for the Saturday through Tuesday (4-day weekend package) and allow asset owners to offer higher Monday and Tuesday only bids that accounted for the potential gas price volatility.   

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

No comments

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

No comments

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

No comments

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

No comments

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

No comments

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

No comments

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

No comments

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

Two most frequent scenarios are when asset owners do not anticipate a dispatch because the units are uneconomic or it’s a Sunday for Monday bid submittal.  When a unit is uneconomic, the asset owner has no incentive to submit RLCR.  If the unit is dispatched in DAM, then its most likely too late to submit a RLCR in real-time because most, if not all, the output has cleared in DAM.  The other scenario, on Sunday morning submitting bids for Monday, the issue is that we typically cannot secure a gas quote for Monday to justify the RLCR.  Again, if the asset is dispatched in DAM, its too late to submit a RLCR in real-time because the asset has cleared the maximum output in DAM. 

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

As mentioned in question #14, in most cases, RLCR is not applicable because the assets have already been dispatched or RUCed to pmax in the day ahead market.

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

It's an overly cumbersome process.  Asset owners should be able to submit the new or target gas price, not bids based on the new gas price. 

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

No comments

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

No comments

19. Please provide any additional feedback:

After-market cost recovery process should be revisited.   There is the false perception that after-market cost recovery is guaranteed assuming asset owners have submitted automated or manual reference level cost requests (RLCR), however, asset owners are only kept whole to the gas price they submitted through RLCRs.  Asset owners should be able to receive full cost recovery through the after-market cost recovery process even if the actual gas price is higher than what they submitted through RLCR.  The gas price submitted through the RLCR process is an asset owner’s best guess on what prices will be in the future, therefore, the after-market cost recovery process should be flexible to accommodate actual fuel costs that can be verified. 

In addition, when units are dispatched uneconomically, either for RUC or exceptional dispatch, asset owners should be afforded the opportunity for after-market cost recovery.  Assets deemed uneconomic do no procure gas in the day ahead market.  However, if an asset receives a RUC or exceptional dispatch, then the asset must procure gas in the same-day market, but yet cannot submit RLCR for this dispatch because the asset was awarded in DAM.   Hence, asset owners should be allowed to submit for after-market cost recovery if same-day gas price exceeds the day ahead gas price index that was used to establish the DAM commitment costs and bids.

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

n/a

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

The major consideration in the D+2 market is that the gas prices are unknown due to timing. Modeling the gas generation schedule is very difficult without knowing the main inputs, fuel, and dispatch prices. Operators must commit resources into the D+2 market prior to the DA/Timely cycle and without knowledge of whether the unit is economical to fuel and dispatch.

Further, the disconnect between the power and gas trading schedules presents additional challenges.

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

The gas generation schedule will have to be built blindly without insight into the DA gas or power prices. Gas generation is based and determined off the DA price power. So scheduling gas without either the gas or power prices is speculative in nature and increases risk.

A major solution would be synchronizing gas and power trading market DA trading schedules.

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

Imbalance reserves will help to mitigate some of the financial impacts of the D+2 uncertainty but will not help on the physical fuel procurement side. The gas markets can become illiquid after the Timely markets and there is concern that we may not be able to physically perform to D+2 or the imbalance reserves obligations which presents financial risk to the DA markets and risks financial penalties for noncompliance with pipeline restrictions. 

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

Idaho Power is a shipper on Northwest Pipeline, a bi-directional pipe, that relies on gas flowing either north or south to provide physical displacement capacity through compressors to meet firm shipper contract commitments. Northwest Pipeline calls on OFO’s or “Must Flow” orders to offset and create displacement by requiring shippers to nominate counterflow gas when net gas flows exceed compressor design capacity, flowing predominantly in one direction. OFO periods cause large price spreads between market hubs which exposes Idaho Power to financial risk. Idaho Power is often forced to buy gas at

drastically different market prices during the timely cycle due to market volatility or system constraints. Additionally, in many different situations, Idaho Power is exposed and forced to buy gas at higher market prices after timely cycles where pricing may not be known and may not be able to be accurately calculated into awards/bids.  Additionally, prices may not be able to be accurately calculated into awards and which may not be able to be accurately priced into Awards or are beyond what is captured this heightened cost may not be captured by the Default Energy bid (which is predicated on day ahead indexs).

Managing pipeline system limits and tolerances is an issue that Idaho Power struggles with daily and EDAM will further compound these challenges and problem.

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

Idaho Power would expect to see full recovery on expenses or losses accrued during Intra-day gas purchases and sales under extreme circumstances regardless of when the automate or manual RLCR is made or whether gas purchases are made outside of the approved or negotiated/blended fuel zones. 

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

n/a

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

Modeling multiple fuel zones helps to mitigate risk in the Timely markets. There is still risk associated in the Intraday cycles where Idaho Power may be forced to buy gas or show a bid/offer priced at a hub that is outside of a modeled fuel hub which presents mitigation risk.

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

n/a

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

The Negotiated DEB (higher of two fuel zone practice) should also apply to commitment costs. For organizations that are exposed to multiple fuel zones, the price spreads between hubs can be great and can have a large impact to the commitment costs if the wrong zone is selected in the GRT master file. Price spreads can arise at any time on any day and the current process to change fuel zone takes 3-5 business days in the GRT master file via CIDI ticket which causes exposure and mitigation risk to the DEB and the commitment costs. The process to change fuel zones for the DEB and commitment costs should be a quicker process.

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

The Negotiated DEB methodology is a certainly a step in the right direction and the same logic should be applied to the commitment costs. The Negotiated DEB methodology does reduce mitigation risk in the Timely cycle.

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

The price spread between Sumas and Stanfield has reached nearly 500%, where Stanfield has traded at a 500% premium above Sumas (May 19-21 2024) in the Timely cycle (DA markets). In situations like this, the commitment cost cap would not be sufficient to cover this dynamic price spread.

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

Yes

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

n/a

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

Price spikes/spreads arise when an event occurs on the pipeline which could be caused by a physical disruption like a rupture or weather. These events are unpredictable, and expenses incurred for intraday gas purchases under price spike scenarios should be easily recouped.

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

The manual RLCR is cumbersome and is an impractical tool to rely on due to the time submission constraints. 

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

Yes, gas burns and gas generation are predicated on the DA  price of power. The gas schedule is determined and compiled on a daily basis in conjunction with the power trading schedule. Not having insight into the DA power prices and especially the DA gas prices will make scheduling generation in the D+2 markets solely a guess. This will lead to an increase reliance on the Intra-day markets which in turn will create more volatility in the gas markets. The Intra-day markets are illiquid and Intra-day purchases are often made outside of the GRT fuel zone. Real time gas generation changes (especially changes made after the ID3 cycle) can impact the pipeline system reliability and put the system at greater risk especially during maintenance periods and peak days. These same changes pose risks which may cause a generator to trip offline due to low gas flows.    

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

n/a

19. Please provide any additional feedback:

n/a

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

NV Energy appreciates that CAISO initiated the Gas Resource Management stakeholder initiative to address ongoing issues in the EIM and concerns with gas management within EDAM. NV Energy is supportive of this stakeholder effort and offers the following comments for consideration. 

CAISO has indicated a willingness to consider enhancements to the D+2 advisory market run in order to provide a better estimate of the potential D+2 market run results. NV Energy supports this effort and the proposal for a D+1.5 advisory run to provide an updated estimate of the Day Ahead Market results prior to the Day Ahead Market and timely gas market deadlines. While it may take significant effort to develop the best possible advisory reports, NV Energy is committed to help identify improvements in order to achieve a report that could provide a more accurate forecast for gas usage. This feature has the potential to reduce reliability concerns regarding gas management and result in additional customer savings.

In addition to the advisory reporting considerations proposed in this stakeholder initiative, NV Energy is also supportive of discussions about a potential Day Ahead Market constraint for reliability. CAISO requested feedback in this comment template regarding whether this gas management issue may pose a reliability risk. NV Energy is concerned that the misalignment between the gas and electric markets could result in Day Ahead Market awards for gas resources sufficiently outside the timely gas nominations. Additionally, it is possible that the later gas market cycles may not be liquid enough for a market participant to meet the Day Ahead Market awards causing a reliability risk for the participant and the pipeline. Therefore, NV Energy would like to discuss the possibility of a Day Ahead Market constraint to inform the market about the variability that is even possible from gas resources. This constraint could indicate how much variability exists within the pipeline and gas markets for both the upward and downward Day Ahead Market awards.

Finally, NV Energy supports an effort to reevaluate the market-based commitment cost approach to slowly raise the commitment cost bidding cap over time that was approved for the CCDEBE initiative but was not implemented. NV Energy understands that there are concerns that may need to be further addressed in this stakeholder initiative, but these concerns should not eliminate potential, previously- approved solutions and continue with the blunt instrument that exists today. Instead, the CCDEBE finalized design could be used as an initial starting point to begin the discussions to ideally end up with a better solution and design overall.

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

No comment. 

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

No comment. 

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

No comment. 

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

No comment. 

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

No comment. 

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

No comment. 

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

No comment. 

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

No comment. 

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

No comment. 

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

No comment. 

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

No comment. 

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

No comment. 

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

No comment. 

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

No comment. 

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

No comment. 

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

See comment in question 1. 

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

No comment. 

19. Please provide any additional feedback:

No comment. 

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

PacifiCorp appreciates the opportunity to provide comments for the Gas Resource Management initiative. The Company’s comments focus on the following topics:

D+2 advisory market run

Improving the tools available to market participants for procuring gas is a priority for PacifiCorp. While the D+2 advisory would provide PacifiCorp with information that could be used to procure gas for future days, more discussion is needed on the following areas:

• The advisory horizon could be expanded to include future days, which may better align with the gas trading timeline
• Analysis on historical data for WEIM entities may not provide much value because of the differences in how WEIM entities schedule resource compared to how resources will be scheduled in the EDAM. However, analysis showing how well the D+2 advisory predicts CAISO gas resource schedules could provide helpful insight into how well the D+2 advisory data performs for the CAISO balancing area
• The inputs will be very important to the accuracy of the D+2 advisory schedules, so PacifiCorp requests to see analysis on the accuracy of the inputs used for the D+2 advisory today
• An estimation of imbalance reserve requirements should be used for EDAM balancing areas
• The D+2 advisory should use bids for future days where applicable, and previous day bids where future day bids are not available
• Advisory prices are necessary outputs of the advisory market run to help inform gas procurement

Gas burn limits

The main risk PacifiCorp sees with respect to operational flow orders (OFOs) is resources may not be able to reflect the economic and reliability impacts of OFOs in their bids without being mitigated and incrementally dispatched. While incremental dispatch may not affect most of the resource capacity that is subject to mitigation, the effects can be particularly detrimental for resources that violate an OFO due to incremental dispatch. There are many challenges for finding enhancements to how market participants can manage this risk, but PacifiCorp believes there may be commonalities among gas pipeline companies that could be leveraged. It also seems that there may need to be more coordination between the ISO and gas pipeline companies to create an equitable and transparent enhancement.

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

PacifiCorp believes the scope of the D+2 coordination effort should also include potentially expanding the horizon of the advisory market run. PacifiCorp’s current understanding for the D+2 advisory is that advisory schedules for the next two days will be posted at 6pm. So fFor example, if the D+2 advisory is run on a Monday, it will provide advisory schedules for Tuesday and Wednesday. This is useful for procuring gas for Wednesday after HE7, but it is not useful for procuring Wednesday gas before HE7 and is not useful for procuring Thursday gas before HE7. Ideally, the D+2 advisory would be expanded to include more future days. In the above example where the advisory posts results at 6pm on Monday but the advisory is a D+3 instead of a D+2, the D+3 results would give market participants enough information to trade gas for Wednesday HE7 through Thursday HE24. More days of advisory schedules would also help market participants procure gas for weekends and holidays because the gas trading and power trading schedules will not change for the majority of WECC entities after EDAM go-live. PacifiCorp does not have a firm opinion on how many days in advance advisory schedules should be posted for but believes that more days should be considered because as it would add value for market participants.

It would be helpful for the ISO to create a timeline showing how the advisory schedules would overlap with the gas trading days. The ISO did something similar for the discussion about gas index prices and PacifiCorp believes it would also be useful for discussing the advisory market runs. This way, it will be easier for the ISO and stakeholders to see visually how market participants may be able to use advisory schedules for procuring gas.

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

There does not appear to be a good way to determine how accurate D+2 advisory results would be for market participants not currently participating in the CAISO day-ahead markets. Doing a historical analysis to determine if advisory schedules would have accurately predicted historical schedules seems unlikely to show accuracy of the D+2 because participants will behave differently once they join a day-ahead market. In PacifiCorp’s opinion, base scheduling practices today are too different from how the EDAM will optimize schedules in the future to do some sort of historical analysis.

Instead, PacifiCorp would find it useful to see how the D+2 advisory is performing compared to day-ahead schedules and prices for gas resources in the CAISO balancing area. As part of this information, PacifiCorp believes it will also be important to understand whether the gas resources have gas storage. Gas resources in California that have gas storage have much more flexibility to change their schedules. As such, PacifiCorp wants to know how accurate the D+2 advisory is performing for gas resources that don’t have a lot of gas storage to use and to see how accurate market prices are.

Furthermore, PacifiCorp would like to see how accurate the inputs to the D+2 are today. PacifiCorp believes the big challenge with the D+2 advisory will be the inputs. It is of course difficult to forecast loads and variable energy resources two days in advance. These forecasts will play a large role in the accuracy of the D+2 advisory though, so PacifiCorp wants to have an understanding of the limitations of the D+2 advisory due to forecast errors.

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

PacifiCorp believes using an estimation for the imbalance reserve requirements in the D+2 advisory would be best. From the CAISO Day-Ahead Market Enhancements (DAME) Business Practice Summary, it appears the CAISO will already be calculating advisory imbalance reserve requirements for D+2 and D+3.

Another improvement that could be made to the D+2 advisory is for the advisory to use submitted bids for future days instead of previous bids, as is done today. PacifiCorp’s understanding is that the CAISO has access to bids for future days for market participants in the day-ahead market and will have the same information for EDAM balancing areas after EDAM go-live. For scheduling coordinators that do not submit bids for future days, PacifiCorp supports using bids submitted for the previous day.

Lastly, PacifiCorp also wants the D+2 advisory to give market participants locational marginal prices (LMPs) along with schedules. From a trading perspective, this information is necessary to get a full picture of the advisory schedule accuracy. Actual prices being different than advisory prices by just a few dollars can change the market awards for some resources. If the advisory shows that it can accurately predict prices but not resource schedules, it will still provide useful information to market participants.

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

No comment.

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

No comment

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

No comment

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

No comment

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

No comment

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

No comment

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

No comment

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

No comment

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

No comment

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

No comment

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

No comment

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

No comment

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

PacifiCorp does experience challenges with operational flow orders on occasion, and they can happen at any time. It is not uncommon for OFOs to be issued during times when the electricity grid is experiencing stressed conditions due to high demand. The biggest risk PacifiCorp sees with respect to OFOs for gas resource management is not having bid flexibility to reflect costs due to potential mitigation. Today, gas resources that want to reflect the economic, and reliability, impacts of an OFO through their submitted bids risk being mitigated. Past analysis by the CAISO Department of Market Monitoring shows that there is not much resource capacity that is dispatched higher after being subject to mitigation. However, while infrequent, incremental dispatch due to mitigation is a risk for market participants because of the large financial and reliability impacts that can occur from violating an OFO. It is therefore important to PacifiCorp that this initiative find a way to help market participants better manage their gas resources when they are subject to an OFO.

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

PacifiCorp understands the challenges of equity, transparency and regulatory oversight when considering how to develop tools to manage OFOs. While PacifiCorp agrees that gas nomograms are not an ideal solution, the Company would find it useful for the CAISO to explain in a future meeting if, and how, market participants can work with the CAISO to develop a gas nomogram for reliability purposes. It may not be something most market participants use, but PacifiCorp believes the discussion will good information for market participants to consider.

In PacifiCorp’s opinion, an ideal enhancement would be to develop a process that allows market participants to reflect the impacts of an OFO through bids without risking being mitigated and incrementally dispatched. To PacifiCorp, this would likely mean that OFOs would change resource reference levels during times the resource is impacted by an OFO. From the CAISO’s perspective conveyed in the Issue Paper, it seems that the CAISO does not currently receive enough information about OFOs from gas pipeline companies to develop a standardized process. The CAISO is also concerned about allowing market participants to relay this information to the CAISO themselves. For PacifiCorp, it would be helpful for the CAISO to discuss in a future meeting about the information they currently receive from gas pipeline companies, when they receive it, and what they do with the information. Furthermore, PacifiCorp would like this initiative to further explore how the CAISO could receive timely information from gas pipeline companies on OFOs and if coordination between the CAISO and market participants could be improved with respect to how resources are impacted by OFOs. As stated by the CAISO in the February 13 meeting, there are differences in definition, timing and penalties of OFOs across gas pipeline companies. However, there may be certain commonalities that can be leveraged for an enhancement to how market participants manage their gas resources.  

19. Please provide any additional feedback:

PacifiCorp requests that in a future meeting, the CAISO discuss the timeline for next steps as proposed in the February 13 meeting. PacifiCorp appreciates the next steps articulated for each topic and agrees with the CAISO’s assessment. Having a timeline on the next steps will help PacifiCorp be prepared for active engagement in the topics that are most important to the company.

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to submit comments regarding the stakeholder call on February 13, 2025, and the related issue paper. SRP supports CAISO’s ongoing efforts to align gas procurement schedules with power market awards, enhance resource specific cost adjustments, and improve accuracy of the gas price index (GPI) used to calculate reference levels. SRP also encourages CAISO to continue exploring functionality to improve market efficiency with respect to gas limitations and cost recovery challenges.

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

SRP requests further transparency on the inputs and assumptions used to develop the D+2 advisory. Given that WEIM entities do not receive D+2 outputs beyond their base schedules, SRP would like clarification whether CAISO is considering any enhancements to provide WEIM entities visibility into how their base schedules impact broader market assumptions. Additionally, SRP seeks clarification whether there are enhancements planned to align advisory schedules with real-time market outcomes. Increased data availability for WEIM participants is highly valuable for planning purposes, and SRP encourages CAISO to prioritize enhancements that improve market participants ability to anticipate fuel needs and manage operational uncertainty.

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

SRP request additional clarification on how WEIM-only participants are accounted for in the D+2 advisory schedules and whether their inclusion aligns with operational needs. Further, Since the D+2 market run considers WEIM base schedules and forecasts but does not provide direct outputs to WEIM participants, SRP requests the CAISO confirm how these assumptions influence advisory results and whether any improvements are being considered to provide WEIM participants with greater visibility into these assumptions. Additionally, SRP requests further detail on CAISO’s methodology for assessing the accuracy of D+2 advisory schedules and whether improvements could be made to better align them with real-time WEIM outcomes. Given stakeholder concerns regarding alignment between the D+2 advisory results and real-time market outcomes, SRP requests CAISO consider improvements to forecasting for WEIM only entities, consistent with the goals of this initiative. SRP encourages CAISO to continue to ensure equitable treatment of WEIM entities as they represent a large portion of the market, and load forecast error on a D+2 basis may significantly impact changes to gas burn outcomes.

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

.

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

SRP requests timely approvals within the RLCR process and encourages the CAISO to consider a more flexible real-time model that better accommodates intra-day fuel procurement activities. SRP remains concerned that the RLCR process does not capture intra-day fuel procurement and that market participants must submit three separate manual requests to recalculate a single gas hub GPI. Given the complexity of the process, SRP seeks further clarification on how CAISO defines or quantifies costs as “systematically greater” than the GPI used for a resource. Additionally, the manual RLCR process does not always lead to approval or a resolution within the necessary timeframe, creating challenges for participants managing real-time fuel cost fluctuations.

To address these challenges, SRP suggests that CAISO assess whether an index for intra-day trading cycles could be developed.

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

There is a significant focus on D+2 timeline for gas procurement, while intra-day constraints such as pipeline Operational Flow Orders (OFOs) and significant opportunity cost of incurring pipeline penalties were a primary focus when the working group was initiated. SRP strongly urges CAISO to retain OFOs as a high priority item within the scope of this initiative to ensure they are adequately addressed.

Pipeline penalties continue to represent one of the largest financial risks for market participants. While resource supply offers can reflect added financial risk in bid curves, there is currently no mechanism to account for these costs within real-time default energy bids (DEBs) outside of after-market cost recovery requests. A gas-constrained resource in WEIM under an OFO could be mitigated down to its DEB, dispatched to serve load in another balancing area, and ultimately be unable to recover the full cost of doing so if a penalty is incurred and not reimbursed to the supplying Scheduling Coordinator.

CAISO noted that obtaining regulatory approval for market-based cost recovery mechanisms related to OFOs may present challenges. Given this, SRP requests CAISO explore alternative approaches to ensure pipeline penalties can be reflected in market pricing in a timely and transparent manner.

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

SRP acknowledges CAISO’s consideration of potential enhancements to the RLCR process and default gas scalars and encourages further evaluation of mechanisms to improve cost alignment with real-world procurement challenges.

SRP requests that the CAISO evaluate linking RLCR or intraday price updates to pipeline alert notices. SRP is supportive of aligning scalars with gas penalty pricing and tariff scalars at applicable gas hubs, as this approach would enhance consistency between market pricing and actual gas procurement costs. SRP encourages CAISO to consider the addition of an OFO-specific opportunity cost component, aligned with existing gas hubs by supplier, to improve pricing transparency and better match economic constraints to specific resources.

Additionally, SRP requests clarification on whether CAISO’s existing fuel region structure, that includes pipeline specific definitions, can accommodate penalty-specific hubs or if modifications would be necessary. Further, SRP suggests CAISO evaluate whether penalty-based fuel hubs could be dynamically applied during OFO conditions to ensure fuel costs more accurately reflect pipeline penalties in real-time.

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

.

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

.

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

.

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

SRP encourages CAISO to prioritize gas commodity price accuracy and the continued development of the GPI calculation procedure to ensure that reference levels accurately reflect real-time fuel procurement costs.

SRP also places high priority on the impact of OFOs on the reasonableness threshold and the need to establish effective mechanisms to modify threshold values when supply limitations occur. These constraints present a significant opportunity cost for market participants when gas constrained resources are mitigated in WEIM and unable to fully recover incurred penalties.

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

.

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

.

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

.

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

.

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

.

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

SRP seeks clarification on the intent of this question, as it is unclear whether CAISO is asking if stakeholders anticipate disregarding pipeline instructions or facing unavoidable reliability issues. SRP adheres to all gas pipeline instructions and manages gas burn limitations to mitigate and avoid risks posed to pipeline reliability.

However, the ability to effectivity manage gas in the market relies on receiving accurate and timely market awards. Limited visibility into the expected dispatch can create financial exposure due to penalties and may complicate how market participants manage gas burn within existing pipeline restrictions. SRP strongly supports further discussion on how increased market visibility would improve gas procurement decisions.

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

.

19. Please provide any additional feedback:

 No additional feedback at this time.

1. Please provide a summary of your organization’s comments on the February 13, 2025 stakeholder call and gas resource management issue paper.

San Diego Gas and Electric (SDG&E) appreciates the opportunity to comment on the Gas Resource Management (GRM) Issue Paper. SDG&E values CAISO’s efforts in addressing gas resource management issues and appreciates the depth and scope of the topics included in the paper. While most of SDG&E’s gas resources lie within the CAISO BAA and are supplied by California gas pipelines, benefitting from more efficient gas-electric market coordination, we also have resources outside of CAISO BAA that experience the challenges of making procurement decisions based on uncertain procurement targets. To that end, we offer the following discrete feedback for consideration.

2. Informing Fuel Procurement, General input on D+2 coordination efforts: Please provide your organization’s feedback on the scope of focus areas for D+2 advisory schedules: accuracy assessment, inputs and modeling assumptions, market data representation, and impact of imbalance reserves. Are there other areas of focus the ISO should consider?

Due to the misalignment between the electric markets relative to the gas trading day, gas resources must make procurement decisions without confidence in market awards. Increased awareness into the expected next day’s day-ahead market results should help inform what quantity of gas will be needed to meet those schedules, as procurement of intra-day gas might not always be available. While SDG&E believes there would be benefits from a D+2 advisory schedule, we mirror the feedback provided by other stakeholders regarding the confidence in, and accuracy of, this market indicator as a proposed solution to fuel procurement uncertainty.

SDG&E appreciates the inputs and assumptions provided by the CAISO, which seem to be a logical starting point for the assessment. Should the purpose of the advisory schedule evolve in response to stakeholder feedback (i.e. if the schedule extends to show D+3, D+4, etc.), the inputs and assumptions may require revisiting.

The CAISO also noted that stakeholders have requested that resource-specific gas burn information in MMBtus be published in addition to the MWh schedules. SDG&E is aligned with the stakeholders that made this request, as that this information would support gas procurement decisions. SDG&E urges the CAISO consider this enhancement in this initiative.

3. Informing Fuel Procurement, D+2 accuracy assessment: Please provide your organization’s feedback on developing an accuracy assessment for the D+2. What additional information could the ISO provide to inform stakeholders’ understanding of how accurate D+2 advisory results will be for gas generators, and market participants that are not currently participating day-ahead?

SDG&E is optimistic that the D+2 advisory schedule could be helpful in its gas procurement decision making process. As the D+2 schedules are non-binding and are used for advisory purposes, it will take sufficient time for stakeholders to develop confidence in the results. The development of an accuracy assessment will be critical for determining how useful this data will be. 

SDG&E supports the stakeholder request for the CAISO to provide data on the accuracy of inputs being utilized in the market run. In addition, SDG&E respectfully requests that the CAISO perform a retrospective benchmarking analysis to determine the accuracy of the D+2 advisory schedule. The CAISO should look at the accuracy of the predictive nature of the D+2 against previous market awards and present results which should include the accuracy of the D+2 across various contingencies, including periods with high gas prices, various weather patterns, situations when the grid is stressed, volatile periods, pipeline restrictions, etc. 

This question ends by stating that the D+2 advisory results will be for gas generators and market participants that are not currently participating in the day-ahead. SDG&E is seeking clarification regarding whether the D+2 is only being developed for and distributed to gas generators not participating in the day-ahead. 
 

4. Informing Fuel Procurement, Impact of imbalance reserves: Please provide your organization’s feedback on planned improvements to the D+2. Does your organization see value in using imbalance reserves, or published uncertainty requirements, as an indicator of uncertainty to support fuel procurement decision-making? What additional information could the ISO provide to inform market participants’ ability to use market results to inform gas procurement?

SDG&E supports exploring this topic further under the scope of this initiative in order to understand with more certainty how useful it may be to inform procurement decisions.

5. Accommodating Gas Cost Variation in Reference Levels, Gas Commodity Price Accuracy: Please provide your organization’s feedback on each procedure the ISO uses to calculate the GPI for reference levels: 1) Day-ahead GPI, 2) Real-time GPI, 3) Non-standard indices for weekends.

This initiative provides the CAISO an opportunity to make enhancements to the GPI. 

The GPI provided by the CAISO is for a calendar day, which does not align with the full gas day. Not only is this not an efficient or reliable way to optimize resources, but this also makes predicting the need for reference level adjustments more difficult.

SDG&E would like to note, however, that the GPI is less effective for resources outside of California, which also reduces the usefulness of the RLCR process for those resources. As the grid expands due to a focus on regionalization, this issue will affect more and more resources. 

In addition, the CAISO could consider creating an automatic increase to the 125% tolerance threshold when day-to-day gas costs see a significant increase. If the day-to-day gas cost variance meets a certain limit, the 125% cap could be raised by a predetermined percentage to account for the increased costs incurred. This increased cap could increase efficiency and reduce the volume of RLCR requests CAISO has to manage. 

6. Accommodating Gas Cost Variation in Reference Levels, Exceptional Circumstances: Please provide your organization’s feedback on the applicability of exceptional circumstances policy accommodates today. Under what specific conditions or scenarios does your organization experience, or expect to experience, issues with cost adjustments? What predictive methods might be used to make changes to accommodate exceptional circumstances more proactively?

SDG&E recommends that CAISO revise the 8am deadline for manual RLCRs, as it is extremely challenging to meet. Stakeholders likely do not have the actual gas cost information necessary to complete this process for the day-ahead market run by this deadline. It is SDG&E’s hope that this topic can be included in the scope of this initiative.

In addition, while not a particularly frequent occurrence, SDG&E believes additional flexibility during exceptional circumstances is critical. SDG&E experiences issues with cost adjustments during exceptional circumstances, specifically due to RUC awards, weather events, or during times of great pricing uncertainty. In order to create additional flexibility, the CAISO should consider including solutions that account for variation in cost for procuring incremental gas supply during critical events, especially considering how gas supply costs can be significantly higher during these periods.

7. Accommodating Gas Cost Variation in Reference Levels, Policy Considerations for Scalar Modifications: Please provide your organization’s feedback on the conclusions described in this section. Does your organization have suggestions for alternative methodologies to assess the efficacy of today’s default and reasonableness threshold multipliers? Does your organization have suggestions for methodologies to determine default gas scalars and reasonableness threshold multipliers?

The 125% adjustment is utilized regularly in the course of business, but SDG&E believes this scalar modification to be too conservative, especially during periods of significant uncertainty. Further, with increasing uncertainty in the market, flexibility for gas procurement becomes more important. Theoretically, SCs should be able to find same-day gas at 125% of the index price, but in practice, there are instances where volatility is so high that SCs are unable to find gas within the price range, requiring this increased flexibility to account for these changes in the market.

8. Accommodating Gas Cost Variation in Reference Levels, Unique Fuel Supply Arrangements: Please provide your organization’s feedback on modeling multiple fuel regions using pre-determined methodology. How does your organization prioritize revisiting a blended fuel region methodology?

SDG&E does not have any comments at this time.

9. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on including opportunity costs for gas generators registered as limited-use resources as a scope item. If this is a priority for your organization, please provide a suggested problem statement or additional details on your suggestion.

Opportunity costs for limited-use resources should be included in this initiative. Additionally, SDG&E believes this initiative is the appropriate venue for the consideration of the number of starts and the timing of the use of these resources prior to their award. Further, as these resources are only available in limited circumstances, the flexibility of the 125% cap should be enhanced to ensure the cost effectiveness of these resources.

10. Accommodating Gas Cost Variation in Reference Levels, Customized and Negotiated Resource Parameters: Please provide your organization’s feedback on the value of policy tools described in this section for addressing stakeholder identified problem statements.

SDG&E does not have any comments at this time.

11. Please provide your organization’s feedback on prioritizing policy development efforts to accommodate cost variation. Which of the tools described in Section 5, if any, are appropriate solutions to the issues your organization is facing? Why is the tool uniquely helpful for the issue(s) your organization has identified? Please provide your organization’s feedback on how to best assess these tools, and recommendations for enhancements: 1) GPI calculation procedure, 2) the reasonableness threshold, 3) exceptional circumstances for reasonableness threshold modifications, 4) customized and negotiated resource parameters, and 5) blended fuel regions.

SDG&E believes policy development efforts to accommodate cost variation should be considered a priority in this initiative. Unless other options for more targeted changes to accommodate price variation can be identified, the reasonableness threshold and associated scalar should continue to be assessed and enhanced to ensure that higher gas supply costs are properly recovered.

While SDG&E appreciates the current tools for exceptional circumstances, these tools are burdensome and may not always be feasible to be executed. These tools should be assessed and enhanced through this initiative.  
 

12. Accommodating Gas Cost Variation in Reference Levels, Prior Proposals to Transition to Market-based Commitment Costs, Commitment Cost Cap Analysis: Please provide your organization’s feedback on the conclusions described in this analysis. What other inferences can be made from this analysis? How can this analysis be expanded to illustrate whether or not the commitment cost cap currently offers sufficiently flexibility?

SDG&E does not have any comments at this time.

13. Accessibility of the reference level change request (RLCR) process: Has your organization taken steps independently to improve your ability to submit cost adjustment requests through the automated RLCR process? Or through the manual RLCR process?

SDG&E does not have any comments at this time.

14. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the automated process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the automated RLCR process?

SDG&E does not have any comments at this time.

15. Accessibility of the RLCR Process, the Automated RLCR Process: Please provide your organization’s feedback on assessing the impact and frequency of price spikes during real-time intra-day gas trading cycles 2-3. How often, and/or under what conditions, does your organization experience price spikes in intra-day trading cycles 2-3 that are not related with conditions relevant to the previous day or intra-day 1? Does your organization have suggestions for observable triggers associated with extreme gas price volatility in intra-day 2-3?

SDG&E does experience price spikes in intra-day trading cycles often. Observable triggers include the declaration of an OFO, weather related events, pipeline constraints, and pipeline maintenance events.   

16. Accessibility of the RLCR Process, the Manual RLCR Process: Please provide your organization’s feedback on the applicability of the use-cases described in this section. How well does the manual process accommodate the use-cases described in this section? Are there other scenarios in which your organization relies on the manual RLCR process?

SDG&E does not have any comments at this time.

17. Gas Burn Limitations: Does your organization experience, or expect to experience, challenges managing gas burn limitations that can pose a risk to gas pipeline reliability in addition to challenges with economic management?

SDG&E does not have any comments at this time.

18. Gas Burn Limitations, Tools for Efficient Daily Gas Limitation Management: Please provide your organization’s feedback on developing policy to more efficiently manage gas burn limitations. What challenges identified through previous efforts described in this section (i.e. modeling individual generators may not capture the interactions of multiple generators on a pipeline) are similar to, or materially different from, how your organization characterizes this issue? What additional information does your organization suggest the ISO should have to inform this effort?

SDG&E does not have any comments at this time.

19. Please provide any additional feedback:

SDG&E does not have any additional feedback at this time.