California Large Energy Consumers Association
Submitted 02/26/2021, 04:43 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Oppose with caveats
CLECA understands the need to address concerns for summer 2021 to avoid repeating the outages that occurred during the 2020 heatwaves. It should be noted that the August 2020 heatwave was described as a 1 in 30-year event in the Final Joint Root Cause Report and the September 2020 heatwave was roughly a 1-in-70 weather event.[1] There are additional resources scheduled to come on-line this year. Therefore, given the reliability standard is 1 day in 10 years, the system should be better situated than last year.
The observed operation of batteries during the August and September heatwaves is concerning and the Joint Root Cause report does not discuss in sufficient detail the charging behavior of storage during periods of system shortage. On August 14-18 and September 5-6, 2020, there were five days when storage charged during either a Stage Emergency or when Reliability Demand Response Resources (RDRR) were utilized.[2] During all seven days, storage charged when the CAISO issued a Warning. August 14 is particularly troublesome because batteries were charging for about 30 minutes during a Stage 3 Emergency while customers were on rotating outage. An unanswered question is, “If storage was not charging, could the Stage 3 have ended sooner and power have been restored to customers sooner?” Per the DMM report on Third Quarter 2020 Performance, the charging while the Stage 3 was in effect during hour ending 21 was due to relatively low real-time prices which allowed batteries to charge economically.[3] CLECA assumes the other instances of when batteries were charging during Stage Emergencies and when RDRR programs were utilized occurred due to similar reasons economic dispatch awards. It appears the CAISO market model can produce price outcomes that are contrary to the system operator’s decision that there is a problem maintaining the required amount of operating reserves. In these situations, storage should not be charging based upon market model price results. With 1,800 MW of battery storage expected to come on-line by August 1, batteries suddenly charging during resource scarcity could cause a significant reduction in operating reserves and escalate a Stage Emergency or extend a Stage Emergency as was observed on August 14.
CLECA recommends a safety protocol be created. This would be similar to a ground fault interrupter (GFI) on electric circuits. If everything is working as expected, a GFI is not needed, but it is there to protect a person from a shock. The storage interrupt rule would be implemented whenever the CAISO issues a Warning or Stage Emergency and would prohibit real-time charging dispatches, with the exception of an exceptional (manual) dispatch instruction. For any Day-Ahead award for charging that was self-scheduled in Real-Time, if a Warning occurs the award would be permitted unless the operators issue a manual order to stop charging. Under a Stage Emergency, the day-ahead charging award would be canceled and charging prohibited. These interrupt rules would provide additional protection to avoid unnecessary customer service interruption, yet still allow the operator to issue a charging instruction if it was truly needed for reliability.
CLECA provided a similar proposal in its prior comments, but the CAISO has offered no explanation of why such a safety rule could not be implemented. CLECA is concerned that if price anomalies reoccur during a Warning or Stage Emergency and with a greater quantity of batteries on the system, the impact of increased charging, which reduces operating reserves, could subject customers to more outages, or extend the duration of an outage; these outcomes would be prevented if CLECA’s proposal is adopted.
[1] Final Root Cause report at 40.
[2] CLECA provided charts of battery performance on these days in February 2, 2021, comments, and has attached them again to these comments.
[3] DMM, Feb 4, 2021, Q3 2020 Report on Market Issues and Performance, at 126.
2.
Provide your organization’s comments on the export and load priorities topic:
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
Oppose with caveats
CLECA is concerned about the speed to implement the proposed changes without clearer documentation and examples of the proposed changes (five-minute, fifteen minutes, or hourly blocks and the use of real-time pre dispatch) that would impact the current RDRR programs both in how RDRR would be bid and the differences in dispatch results. The dispatch results need to be in compliance with the approved RDRR tariffs that establish notification and use limitations. Additionally, scheduling coordinators will need sufficient time to make the necessary changes to their systems to implement any changes that are adopted. Without adequate testing of system changes there is the risk of dispatch failures that might prevent RDRR from being utilized effectively.
CLECA is concerned that a rushed implementation could create unintended consequences and recommends this proposal be placed on a separate track to allow more collaboration with stakeholders.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
Oppose with caveats
CAISO’s minimum state of charge (MSOC) proposal appears to address a perceived shortcoming in the battery capacity contracts and market price incentives to ensure batteries have sufficient charge during periods of expected system need for capacity and energy. The CAISO has clarified that the MSOC proposal would only apply during times of expected scarcity such as Alerts and Warnings.
If the capacity contract has incentives for the provision of capacity during scarcity and there is the incentive to earn up to $1000/MWh for delivered energy, then both should provide sufficient incentive to maintain the proper MSOC. While we do not know the capacity payment provisions, the ability to earn $1000/MWh should still be a significant incentive to maintain an MSOC. Therefore, it is unclear what benefit the MSOC proposal will actually offer.
We are concerned it could create unintended consequences. During the February 22, 2021, stakeholder call, various parties expressed concerns with the MSOC proposal and there was insufficient time allowed for parties to ask clarifying questions on the proposal. There is clearly a lack of understanding of its potential impacts. CLECA is concerned about a possible impact that may occur prior to the hour when the MSOC rule applies. If there is scarcity, then it is possible a significant amount of battery charging may occur to meet the requirement. With 1800 MW of batteries, which is expected to increase over the next two years, the MSOC rule could actually create an operating reserve deficiency leading up to the compliance hour. This could lead to premature use of RDRR, which may then not be available later in the evening during the net load peak hours. It is also possible that the additional energy from storage would not actually be needed for the net peak, but the battery charging would have triggered the use of RDRR unnecessarily. The use of RDRR to facilitate storage charging needs to be discussed because that concept was not envisioned when the RDRR program was designed.
CLECA recommends that the CAISO MSOC proposal be delayed and studied further. Instead, CLECA recommends a safety interrupt proposal described in the response to question 1, which would be much simpler to implement. It also would prevent charging during critical hours which the CAISO’s MSOC proposal does not accomplish.
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
California Public Utilities Commission - Energy Division
Submitted 03/02/2021, 04:01 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Please see CPUC staff comments below.
2.
Provide your organization’s comments on the export and load priorities topic:
CPUC staff support prioritizing high priority exports equal to load (CAISO’s current proposal), with the remaining concerns described below, but does not support prioritizing wheeling transactions over high priority exports and load for the reasons explained in more detail below.
CAISO’s proposal appears to prioritize PT exports over internal load
While the CPUC staff supports CAISO’s proposal to prioritize high priority exports equal to load, CPUC staff is concerned about a few aspects of this proposal. First, it is not clear from the examples provided by CAISO in its appendix that load and PT exports will be given equal priority and that PT exports will not, in actuality, be given higher priority than load. Revising the example CAISO provided in its appendix, but changing the details, it appears that PT exports would be prioritized over load, as follows:
Integrated Forward Market Process:
- If an
import internal RA resource submits a bid above $0/MWh (for example $10) and it is needed to meet self-scheduled load, the cost of not meeting load is $1440. The cost of not meeting the wheel PT export is $1450. The wheel PT export will clear IFM and the import internal RA resource/load will not.
In addition, while this could potentially be reversed in the RUC process, it appears that it could be subsequently reintroduced or reversed in the HASP process, as follows:
Residual Unit Commitment Process
- If an RA
import resource that did not clear IFM is needed to meet the CAISO load forecast, the cost of not meeting load is $1600. The cost of not meeting the wheel PT export is $1600. The import RA resource or the wheel PT export will clear RUC.
Hour Ahead Scheduling Process
- If a real-time RA resource
import that economically bids greater than $0/MWh (such as $20) is needed to meet the CAISO load forecast, the cost of not meeting load is $1430. The cost of the wheel PT export is $1450. The RUC or RT wheel PT export will be served before CAISO load.
Thus, it would be helpful to understand how CAISO’s proposal provides equal priority to load and PT exports, when in fact it appears that, since all internal RA resources typically bid into the market (consistent with flexible capacity requirements), PT exports would always be prioritized. While some may argue that internal generation should self-schedule into the day-ahead market to avoid this outcome, this seems unlikely given flexible capacity requirements to bid into the day-ahead and real-time markets as well as the fact that the marginal resource is likely to be bidding, not self-scheduling.
This same concern arises with CAISO’s proposal regarding wheeling transactions. While CAISO’s proposal appears to prioritize wheels and load at the same level, in fact it does not do so in practice, as illustrated in the example below.
Assume that there are no imports, 8,000 MW of generation bidding in the north, 4,000 MW of load in the north, 4,000 MW of load in the south, 4000 MW of wheels (NW to SW) and 4,000 MW of north to south transmission capacity. While one might assume that under this circumstance that wheels and load would get equal priority under CAISO’s proposal and that wheels would be cut 2,000 MW and load would be cut 2,000 MW, careful analysis of CAISO’s example illustrates that the 4,000 MW wheel through CAISO’s transmission system would get priority and 4,000 MW of California load would be cut, using CAISO’s own example, but changing imports to generation in the north, as follows:
Integrated Forward Market
- If a
n import north path generation submits a bid above $0/MWh (for example $10) and it is needed to meet self-scheduled load, the cost of not meeting load is $1440. The cost of not meeting the wheel is $1450. The wheel will clear IFM and the import north path generation/load will not.
Residual Unit Commitment Process
- If an RA
import north path generation that did not clear IFM is needed to meet the CAISO load forecast, the cost of not meeting load is $1600. The cost of not meeting the wheel is $1600. The import north path generation or the wheel will clear RUC.
Hour Ahead Scheduling Process
- If a real-time north path generation
import that economically bids greater than $0/MWh (such as $20) is needed to meet the CAISO load forecast, the cost of not meeting load is $1430. The cost of the wheel is $1450. The RUC or RT wheel will be served before CAISO load.
In this case, it is CPUC staff’s understanding that under this circumstance, if generation bid greater than zero (which we would expect would always be the case), the generation would not be scheduled because it is higher cost than to not schedule the wheel and, as a result, California load would be cut, despite the fact that load serving entities had procured sufficient resources to meet their needs (assuming that these are all resource adequacy resources, but did not know that they would not be provided lower access to the transmission system in California than wheel through transactions).
Finally, CPUC staff observes that CAISO’s initial proposal regarding wheeling transactions appears consistent with FERC’s open access tariff, with open access tariffs of other entities, and with CAISO’s existing tariff regarding import allocation rights.
Regarding FERC’s Order 888, FERC stated that, “We conclude that public utilities may reserve existing transmission capacity needed for native load growth and network transmission customer load growth reasonably forecasted within the utility's current planning horizon. However, any capacity that a public utility reserves for future growth, but is not currently needed, must be posted on the OASIS and made available to others through the capacity reassignment requirements, until such time as it is actually needed and used.”
Further, other entities, such as BPA, provide either non-firm or firm point-to-point transmission service and only firm point-to-point service is given equal priority to native load, and firm point-to-point service is only granted if it does not impair the reliability of service to Native Load Customers…”
13.2(v) Firm Point-To-Point Transmission Service will always have a reservation priority over Non-Firm Point-To-Point Transmission Service under the Tariff. All Long-Term Firm Point-To-Point Transmission Service will have equal reservation priority with Native Load Customers and Network Customers. Reservation priorities for existing firm service customers are provided in Section 2.2.
13.5 In cases where the Transmission Provider determines that the Transmission System is not capable of providing Firm Point-To-Point Transmission Service without (1) degrading or impairing the reliability of service to Native Load Customers, Network Customers and other Transmission Customers taking Firm Point-To-Point Transmission Service, or (2) interfering with the Transmission Provider's ability to meet prior firm contractual commitments to others, the Transmission Provider will be obligated to expand or upgrade its Transmission System pursuant to the terms of Section 15.4. The Transmission Customer must agree to compensate the Transmission Provider for any necessary transmission facility additions pursuant to the terms of Section 27.
In addition, CAISO’s tariff includes provisions regarding import allocation rights (see section 40.4.6.2), which are allocated to internal load serving entities to pair with resource adequacy resources to ensure the reliable operation of the grid:
For Resource Adequacy Plans covering any period after December 31, 2007, total Available Import Capability will be assigned on an annual basis for a one-year term to Scheduling Coordinators representing Load Serving Entities serving Load in the CAISO Balancing Authority Area and, in limited circumstances, to Scheduling Coordinators representing Participating Generators or System Resources, as described by the following sequence of steps. (Emphasis added.)
If wheeling transactions are given higher priority than RA or CPM resources with bids at zero or greater, then CAISO’s wheeling policy effectively renders the import allocation rights/assignment of available import capability meaningless.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
As stated in our previous comments, CPUC staff supports addressing known errors for the summer 2021 (e.g., accounting for resource de-rates in the capacity test and eliminating the double counting of mirror resources), but does not support CAISO’s proposal to add an uncertainty requirement to the capacity test or other changes that are not sufficiently vetted in this process.
CAISO proposes to enhance the resource sufficiency evaluation by making the following changes to its bid range capacity test that will:
- Account for resource derates and rerates.
- Ensure imports represented through mirror resources are not double counted.
- Include load uncertainty within each balancing authority area’s bid range capacity requirement.
CAISO explains that the first two changes are to address known software errors and the CPUC staff supports them.
Regarding the third proposed change, CAISO explains that “The inclusion of uncertainty within the bid range capacity test is reasonable to prevent a balancing authority area inadvertently leaning on the EIM to address its uncertainty. The uncertainty requirement will be added to the existing bid range capacity test requirements. The CAISO recognizes that its inclusion raises the requirements for a balancing authority area to pass the test. Nonetheless, this change is appropriate given that each balancing authority is ultimately responsible for meeting its load, including the uncertainty in its net load.” (Emphasis added.)
Given that this change does not appear to be tailored to enhance summer reliability, CPUC staff believe that it should be similarly deprioritized and addressed in a more comprehensive stakeholder initiative later this year. Further, CPUC staff are concerned that introducing software changes in this expedited fashion has the potential to introduce that have not been fully vetted and only those changes that are absolutely critical to summer reliability should be introduced in an expedited fashion.
In addition, CAISO notes that many market participants believe that there should be greater consequences for failing in the bid range capacity test, and have raised issues, including the introduction of sizable penalties. For example, PowerEx has proposal that the penalty for the bid range capacity test should be two-fold: that transfer capacities be reduced to zero and that penalty prices for any transfers above zero be set at $2000 per MWh.
CPUC staff agrees that this is an area for further consideration, but notes that penalties of this sort are a form of scarcity pricing, and in light of events that occurred this past month in Texas and the serious adverse effects of scarcity pricing on consumers, additional scarcity pricing such as those proposed by PowerEx and others in this proceeding should be considered in a more comprehensive fashion to reduce unintended consequences.
Finally, in its draft final proposal, CAISO introduces additional changes to penalty prices that were not sufficiently vetted in the stakeholder process. CAISO indicates that it intends to “[r]evise the penalty price parameters associated with the adjustment of EIM energy transfers submitted as base schedules (i.e., “Base ETSRs” and intertie schedules)” and explains this as follows:
During the events of September 6, the CAISO experienced high levels of north-to-south congestion that resulted in unintended interactions between the real-time market’s power balance constraint slack variable, loss penalty factors, and constraint shift factors. A condition arose where a mirror resource's locational marginal price exceeded the export protection penalty price. As a result, a mirror resource with Arizona Public Service was cut to 0 MW as part of the optimal solution. Effectively, an adjustment to an intertie schedule was determined to be the optimal solution prior to the relaxation of a congestion-based constraint modeled within the CAISO balancing authority area. To prevent this from occurring again, the CAISO is proposing to review and make changes to ensure penalty prices are set to appropriate values relative to each other such that base transfer schedules (base ETSRs) and EIM interchange schedules are not subject to economic adjustment due to congestion within another balancing authority area.
However, this element needs further discussion and clarification – as it was not raised or discussed in the stakeholder call or sufficiently explained in its draft final proposal. To this end – can CAISO clarify more specifically what issue occurred and precisely how is CAISO intending to address them? Absent additional information, CPUC staff does not support this proposed change.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
CPUC does not oppose providing a make-whole payment for real-time market hourly block economic imports during tight system conditions. However, CPUC staff notes the disparity in that CAISO is proposing to protect generators from adverse market outcomes, but not similarly protecting customers from adverse market outcomes. Nonetheless, CPUC staff appreciates that CAISO has limited these payments to only those hours when alerts, warnings or system emergencies are in effect and thus, is supportive of efforts to contain the costs associated with these out-of-market payments.
In addition, as this proposal moves forward, it would be helpful if CAISO could clarify what happens if an alert is issued, but if it is not followed by a warning or emergency – do these provisions continue to apply? Likewise, what if CAISO issues a warning that is not followed by an emergency – do these conditions still apply? In addition to answering these questions, it would be helpful if CAISO could explain its reasoning, especially for the question regarding situations in which there is an alert, but no warning.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
When CAISO is an energy emergency (EEA3), which CPUC staff assumes equates to Stage 3 emergency, CAISO is allowed to “arm load,” a process in which CAISO requests that load serving entities prepare to drop load and, a result, releases some of its contingency reserves to use as energy. CAISO proposes that during these conditions, it will release the contingency reserves into the market at the bid cap, which could be $2,000 per MWh, if there is cost-verified internal bid or an import bid above $1,000/MWh (e.g., $1,010 per MWh).
CPUC staff believes that this change is not warranted for this summer and should be considered in conjunction with system market power mitigation, scarcity pricing, and penalties for generators for failure to perform under stressed system conditions. It is not clear why load should pay scarcity pricing, but RA resources that potentially bid their way out of a day-ahead obligation – or otherwise fail to perform – are not similarly penalized. Further, given that CAISO would be at the stage of arming load, it would appear that by this point CAISO is out of generation and demand-side options, so it is not clear what the CAISO is actually incenting at these high prices (e.g., what purpose did scarcity pricing serve in Texas this past month). Further, this change may also conflict with FERC Order 831, which required cost-verification for bids above $1000 for internal resource and this could potentially circumvent that verification process. For these reasons, CPUC staff does not support this proposal.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
No comment at this time
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
Please see CPUC staff comments in the CAISO’s Resource Adequacy Enhancement’s initiative.
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
CPUC staff supports CAISO’s proposal to enhance its Open Access Same-time Information System (OASIS) to calculate and publish gross import and export schedules by intertie for the CAISO balancing area. This will provide needed transparency regarding imports into and exports out of the CAISO system, which will help participants and stakeholders assess conditions in real-time.
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
CPUC staff continues to support implementation of system market power mitigation as soon as practicable. If delayed and paired with scarcity pricing, CPUC staff encourages CAISO to consider performance penalties for RA resources, similar to penalties implemented in eastern markets as part of this broader discussion. As most economists are aware, penalties and incentives can accomplish similar objectives.
Calpine
Submitted 02/26/2021, 01:26 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
No position
Calpine applauds the CAISO for narrowing and prioritizing the list of initiatives that it will undertake prior to this coming summer. While we quibble with some details to the selected proposals, as a package we believe that they are manageable, sufficiently discrete and appropriate. In particular, we appreciate the elimination of potential software changes / disruptions during the summer peak season.
2.
Provide your organization’s comments on the export and load priorities topic:
Support with caveats
Calpine supports the CAISO proposal. It represents a reasonable, albeit imperfect solution to the pressing problem of the unmatched primacy of wheeling transactions. Treating PT exports, wheels and load similarly under most circumstances creates the platform for equitable open access. Although there are a limited set of circumstances when load may enjoy a priority (e.g., during PBC violations), the CAISO proposal places all of these transactions on a level playing field under all but highly unique circumstances. That said, we also support a future stakeholder discussion on the need for, and conditions necessary to secure longer term rights across the grid.
Calpine cannot support (without further clarification) one of the attestations suggested as necessary to support the PT priority for a non-resource adequacy export. Specifically, the proposal requires an attestation that the specified supporting non-RA resource “can support an hourly block schedule”. The draft tariff language is a bit more specific:
"The Scheduling Coordinator is attesting that its resource is reasonably expected to be available and provide the same MWh quantity for each of four (4) fifteen (15)-minute intervals in the applicable Trading Hour for which it submitted its Self-Schedule based on all information that is known or should have been known to the Scheduling Coordinator at the time of the submission. Suspected violation of this rule shall be subject to referral to FERC under section 37."
Each of these descriptions raises significant concerns. First, the tariff language seems to impose a new requirement that resource-specific PT exports MUST be matched with a self-scheduled supporting resource and that both the supporting resources and the self-scheduled export are managed by the same SC. This may be unintended and we have submitted tariff changes, separately, to clarify. Clearly, self-scheduling the supporting resource seems inconsistent with optimal dispatch or common contractual / commercial delivery commitments. Second, this requirement seems entirely unnecessary given that the CAISO can verify – through the proposed MasterFile flag whether the supporting resource is variable or dispatchable and therefore able to meet a continuous hourly dispatch.
Finally, and most significantly, an attestation of this kind would be exceedingly difficult for any officer (under the penalty of perjury or threat of enforcement actions) because they do not know a priori, the commitment status of the supporting resource. In fact, the ability of the supporting resource to precisely match the export quantity is determined by CAISO optimal commitment and dispatch, not by the owner/operator. In addition, optimal dispatch will not necessarily result in 4 identical 15-minute schedules.
Calpine recommends that since the CAISO has information in the Masterfile defining the capabilities of the supporting resource, that this portion of the attestation be eliminated in its entirety.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
No position
No further comment.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
Support
Calpine supports make-whole payments for RT imports under tight market conditions.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
Support
Calpine supports the proposal to release reserves at an energy price representing the then-applicable bid cap when the CAISO concurrently arms load-shedding to maintain contingency reserves.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
Support with caveats
Calpine supports the inclusion of RDRR in the RTUC/RTPD (15-Minute) market runs in addition to the RTD runs, which should allow LMPs to be set by RDRR resources and eliminate operator manual dispatches. In addition, we strongly support the proposal to include compensating load biasing when RDRR “supply” is dispatched – as a method of avoiding double-counting the effects of the resource.
We also support treating RDRR as “continuous” in the pricing runs – a proposal that as confirmed on the stakeholder call, allows RDRR to be treated similarly to Constrained Output Generators. This “continuous” modeling treats the block of RDRR as if it is continuously dispatchable and available to set LMP. This commitment to manage RDRR as a continuously dispatchable resource should be confirmed in the tariff. However, we do not support treating 60-minute RDRR as block loaded and unable to set LMP. In fact, we see no reason why 60-minute RDRR cannot be modeled as “continuous” and able to set LMP in HASP and subsequent market runs.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
No position
No further comments.
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
No position
No further comments.
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
No further comments.
Morgan Stanley Capital Group Inc.
Submitted 02/26/2021, 03:24 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Support with caveats
Morgan Stanley Capital Group Inc. (“MSCG”) appreciates the challenges CAISO faces for summer 2021 in balancing its obligations as a balancing authority for native load as well as adhering to open access principles as a transmission provider.
Many of these challenges are a result of the differing market paradigms between California’s markets (which include a separate capacity and CAISO’s organized energy markets) and the OATT model for transmission allocation of its neighboring balancing authorities (which is based on IRP planning and bilateral transactions for energy and capacity). There is insufficient time between now and summer 2021 to adequately align these different market structures.
As of today, the price signals in the western wholesale energy forward markets for summer 2021 have the Desert Southwest markets (Palo Verde and Mead) at a significant premium to both internal California energy markets (NP15 & SP15) and a much larger premium to the Pacific Northwest markets (Mid C). Market participants can be expected to follow price signals. This summer those price signals are showing that both exports from California to the southwest and wheelthroughs from Mid C through California to the southwest are economically rational.
The challenge is that California load serving entities have already contracted for much of the generating capacity inside California (through resource adequacy (“RA”) contracts) that would be relied upon to support exports from CAISO to the Southwest. Likewise, California load serving entities are relying on the same transmission lines to import the Import RA capacity and energy contracts they have executed with PNW suppliers that will be relied upon to support wheeling transactions through the CAISO to reach the Southwest. California load serving entities have been allocated Annual Maximum Import Capability (MIC) at the interties and in good faith have executed contracts to import on those transmission lines. It would be problematic to allow those annual or months long contracts to be displaced by wheelthrough transactions for one or two critical hours each day when California loads are relying on those same MWs.
Therefore, MSCG is supporting CAISO’s draft final proposal until there is time for a more robust stakeholder process to more fully review these competing transmission allocation issues. At the same time, MSCG urges the CAISO to not be too conservative in preparing its load forecasts which will have a direct impact on the quantity of exports and wheelthroughs that will clear its markets, which the Southwest is relying on to help balance its own markets. Interconnectedness in WECC benefits all parties. California benefits greatly from interregional wholesale electricity trade and therefore should support exports and wheelthroughs to the Southwest region this summer to the extent they do not impact its own load reliability.
2.
Provide your organization’s comments on the export and load priorities topic:
Support with caveats
MSCG appreciates the CAISO providing detailed examples which outline how the scheduling priorities will work in practice.
CAISO is proposing to provide equal market priority to:
- CAISO load
- Exports supported by non-RA supply contracted to serve load outside the CAISO BAA (“PT export”)
- Wheel through self schedules across the CAISO BAA (“SS Wheel”)
Based on the presentation given by Idaho Power, the treatment of PT exports that are supported by non-RA supply appears inconsistent with how other BAs outside CAISO would treat such a transaction during a supply deficiency. For example, if a California LSE was to sign a contract with a generator in the PNW that booked reliable transmission to flow its energy to California, the only reason that schedule would be curtailed would be for a transmission outage or if that generator was offline, not a general energy/capacity deficiency. However, an important distinction is that should that generator in the PNW not be generating for a given hour or should it trip inside the hour the schedule would be immediately curtailed. CAISO has said that it does not have the functionality to know if non-RA supply inside its markets is not generating and there is insufficient time before summer 2021 to program these requirements. For this reason, MSCG is supporting CAISO’s pro-rata treatment of PT exports and CAISO load for summer 2021. A long term solution should provide reciprocal treatment so external BAs can reliably contract for California non-RA generation, similar to what California loads currently enjoy when contracting for supply outside California.
The detailed examples CAISO provided shows that SS Wheels will have the import leg set to $0, and the export leg set to the same priority as a PT export. This is to prevent ‘stacking’ of penalty prices whereby SS Wheels would have the highest total penalty prices, even higher than CAISO load. MSCG feels this is a workable solution for summer 2021 as it will allow CAISO loads that have contracted for annual or months long Import RA contracts to import those schedules to serve CAISO loads. Without such a priority order, and given the price spreads in the western markets, it would be reasonable to expect that wheel throughs could crowd out Import RA schedules on the PNW interties (COB and NOB). COB wheel throughs with priority rights would even pose a risk of filling up Path 26 on their way to the southwest markets thus causing issues for even internal system RA in northern California from serving loads in southern California.
MSCG however urges the CAISO to seek a better long term solution to handle wheel throughs. The issue with the above solution is that it will also give CAISO load priority for bringing in short term imports (those bid below $0) over SS Wheels, and not just priority on contracted Import RA. This could serve as a disincentive to long term contracting for Import RA supply going forward. A more robust solution would look to set aside transmission space for Import RA that has contracted with a California LSE and has associated MIC allocation. Any unused MIC capacity should then be available for hourly competition between SS Wheels, economic wheels and economic imports. This would provide a strong incentive for California LSEs to forward contact for additional import energy / capacity to go along with their allocated MIC, which was a key recommendation coming out of the summer 2020 heat wave reports.
This treatment would also be consistent with how imports from other BAs are handled under the OATT in bilateral markets. When a load serving entity outside California contracts for supply external to their BA they reserve Network Integration Transmission with a Designated Network Resource (that can be a market supply contract) and that transmission takes priority over wheelthroughs and short term transmission requests.
MSCG understands that a longer term process is required to determine how wheel throughs can compete with California loads for allocated MIC and for this reason is supporting CAISO’s draft final proposal for summer 2021 regarding scheduling priorities.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
No position
No position
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
Support
MSCG is supportive of CAISO’s proposal to provide make-whole payments for real-time market hourly block economic imports during tight system conditions. Having price certainty can be expected to attract more imports which will be critical during tight system conditions, where it is likely that other neighboring markets are also experiencing high prices. This change will allow the CAISO to better compete for available supply when importers would prefer a known price rather than an unknown FMM price. The additional scheduling priorities being implemented by CAISO for loads vs. exports should prevent any of this bid cost recovery ("BCR") uplift being used to serve exports.
The CAISO market notice should clearly identify the hours for when BCR will apply to imports and/or decremented exports with sufficient advance notice
MSCG believes that BCR on imports should be revisited after this summer as a long term initiative to improve import liquidity at all times, not just during stress conditions. In MSCG’s opinion the change made several years ago where HASP became advisory has been a contributing factor to a drop in economic participation and liquidity on the interties.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
Support
MSCG supports the CAISO’s real-time scarcity price enhancements as described in the presentation. Market participants follow price signals and it is important that those price signals are an accurate reflection of market conditions.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
No position
No position
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
No position
No position
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
Support
MSCG is supportive of greater transparency and the addition of an OASIS report showing gross exports and imports by interie.
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
Thank you for the opportunity to provide input.
Pacific Gas & Electric
Submitted 02/27/2021, 02:37 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
No position
PG&E supports the CAISO’s efforts to find near-term solutions to ensure grid reliability in Summer 2021, in coordination with the Emergency Reliability proceeding at the CPUC and the RA Enhancements initiative.
We note, however, that the scope in this initiative covers many complicated market rules which the CAISO has spent the last decade plus developing. Given the risk of implementation challenges and the potential for unintended consequences, PG&E requests the CAISO focus on discrete changes where there are clear benefits to reliability in the summer of 2021.
Foremost among the discrete changes that PG&E believes are critical to focus on are the scheduling priorities of exports, load, and wheeling. Given the role that market flaws related to scheduling prioritization played in the load curtailments in August 2020, PG&E encourages the CAISO to prioritize this issue above all others in this initiative. PG&E requests the CAISO to explain how the proposed solutions improve system reliability in summer 2021 and address known market challenges, such as ensuring that California’s capacity resources do not support exports during reliability events and are able to serve California load.
Additionally, PG&E requests that CAISO commit to an after-the-fact review to examine the effectiveness of the changes implemented through this initiative and hold additional stakeholder processes before making changes permanent. Any market rule changes that have not been developed through the standard (and complete) stakeholder process should have sunset provisions at the end of the summer of 2021.
PG&E appreciates the opportunity to engage the CAISO and provide further comments by topic in the sections below.
2.
Provide your organization’s comments on the export and load priorities topic:
No position
PG&E appreciates the CAISO’s efforts to further improve reliability by adjusting the export and load priorities. We believe this topic will have the greatest impact on reliability this summer. California saw rotating power outages last summer in part due to issues with the current prioritization. As there has been a significant amount of change to this proposal and it is still actively being discussed, PG&E is taking no position at this time. We are encouraged that the CAISO has made changes to the prioritization that should provide incremental reliability to the CAISO this summer. However, due to the significance of this issue, we ask the CAISO to consider some of the remaining questions and concerns we have about the proposal to further ensure reliability this summer.
Wheeling Proposal
PG&E believes the proposal will provide some incremental benefits to reliability by this summer. However, we have remaining questions regarding the potential impacts of self-scheduled wheel throughs creating congestion at the interties and internal to the CAISO, the market inefficiencies that could be incentivized, and the comparability of this proposal to the practices of other RTOs.
Improvements to Wheeling Priority
PG&E appreciates the efforts by the CAISO to make improvements to the current wheeling priority. We see three distinct improvements to reliability that this proposal makes:
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PG&E appreciates the CAISO’s clarification and correction of the current implementation of wheel-through priority that enforces penalty prices on both the import and export leg. As discussed at the MSC and other stakeholder meetings, CAISO’s use of penalty factors provided for a “super priority” which was not consistent with explicit policy language in the CAISO tariff or any stated policy intent. We are encouraged the CAISO has recognized the importance of fixing the current priority of serving load relative to wheeling transactions.
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PG&E also supports the improvement of prioritizing self-scheduled wheel throughs at the same level as native load regardless of the day ahead market results. As load conditions can change between the day-ahead and real-time markets, it is important that CAISO load will receive at least equal priority related to self-schedule wheels if load curtailments are necessary due to day ahead forecasting errors.
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The proposed implementation of penalty prices for imports, in combination with CPUC rule changes for non-resource specific RA imports,1 should provide some additional confidence that certain RA imports will be able to serve load during stressed system conditions.
Outstanding Questions
PG&E has remaining questions regarding the extent to which the proposal will address the reliability needs of California for Summer 2021. As PG&E has previously noted, the potential for large differentials in forward prices this summer between the Pacific Northwest and the Desert Southwest will likely increase the number of wheel throughs in the CAISO. As such, we would request the CAISO to explain how the proposed changes will maintain California reliability.
Questions about Wheel Through Congestion
PG&E has some concerns that congestion caused by wheel throughs could potentially create congestion at the interties and internal to the CAISO that could limit the ability for RA imports and internal resources to serve load.
In relation to the potential congestion created at the interties, PG&E wonders if the reliance on RA import bidding behavior may not provide sufficient reliability during stressed system conditions. PG&E would like to highlight that load curtailments may be necessary if any of the following scenarios allow enough wheel throughs to crowd out RA imports needed to support load during stressed system conditions:
-
Non-resource specific RA Imports Bidding at Zero: According to CPUC rules, these type of RA imports may bid at $0/MWh which would then mean the import would have the same priority as a self-scheduled wheel through. As PG&E understands the proposal, it would then be up to the optimization software to determine which transaction would flow.
-
Resource-specific RA Imports: The CPUC does not require any specific bidding practices for these types of RA imports. Individual LSE bidding behavior could therefore determine whether a resource-specific RA import or a wheel through would flow.
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Non-CPUC Jurisdictional LSE Bidding Behavior: These LSEs are not required to follow any specific bidding behavior for their import RA.
These concerns do not seem to be unfounded as historic bidding behavior appears to suggest that a significant portion of RA imports could be curtailed due to wheel through congestion. As the graph below from 2018 DMM analysis1 shows, not all RA imports bid less than zero or self-schedule and therefore would be subject to curtailment if there is congestion due to wheel throughs. While this bidding behavior could change due to the new CPUC bidding rules for import RA, our preliminary analysis suggests as much as 35% of import allocation rights are owned by non-CPUC jurisdictional LSEs. Extrapolating from the average import RA for August 2018, if 35% of the import bids were from non-CPUC jurisdictional LSEs then at least 1,500 of the 4,500 MWs could be curtailed due to self-scheduled wheel through congestion if these entities choose to bid above zero.
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PG&E is also concerned about the potential for these wheel throughs to create congestion internal to the CAISO that could prevent the CAISO’s ability to move power internal to the CAISO for reliability purposes. Specifically, PG&E sees the aforementioned price differentials creating wheel through congestion along north to south paths internal to the CAISO.
Due to the potentially high volumes of wheel throughs and the associated internal transmission need, PG&E questions the implications of the CAISO’s Transmission Study Plan not accounting for these flows. According to the Final Transmission Study Plan used in the 2020-2021 Study cycle (2020-2021 Final Study Plan), transfers on internal paths are modeled as required to serve load in conjunction with internal generation resources.? Path 26 has a 4,000 MW north to south transfer capability that is modeled either at or near its limit under summer peak conditions to serve load in Southern California.?Further, the plan also modeled Path 66 N-S and PDCI N-S at their limits and key paths into southern California being heavily loaded in order to reliably serve CAISO summer peak loads. If these paths are significantly impacted from wheel throughs, it could severely impair the ability for internal resources to serve load. We request that the CAISO explain how the current proposal would allow for CAISO to maintain reliability within its service territory given the conclusions from the Transmission Planning Process that indicate all available transmission is needed during summer peak conditions to serve CAISO load.
Inefficient Market Incentives
PG&E also requests CAISO to address some of the concerns we have regarding the possibility that this proposal could create market inefficiencies. This proposal could create the incentive for LSE’s to self-schedule their load, and the need for CAISO’s RA program to require self-scheduling of contracted supply to assure we get the power necessary for internal reliability in emergencies. These curtailment rules could create bad market incentives and could also undermine the CAISO’s existing economic co-optimization processes. Without the economic signals associated with the different products from the RA resources (i.e. energy, spin, regulation down, etc.) it would be difficult for the CAISO to produce efficient market results. Excessive energy self-schedules would displace possible AS capacity awards of RA resources and would limit the CAISO’s ability to modify awards in order to relieve binding congestion constraints without having to immediately jump to penalty prices. Removing economic load elasticity from the Day Ahead market could also reduce the CAISO’s ability to shape congested load pockets through established economic processes, further increasing the price spread between Day Ahead and Real-Time markets.
Ideally, CAISO’s market design should incent both importers and participants wanting to wheel through CAISO to bid their actual supply cost in the market such that CAISO could choose the least cost set of resources. On a long-term basis, the market incentives created by the proposed changes are inefficient market design that could have ramifications for reliably serving CAISO load. PG&E understands that there is a limited timeframe to make these changes, but asks the CAISO to consider improved market design through further changes and stakeholder engagement later in 2021.
CAISO and Other BA Prioritization Practices
PG&E requests the CAISO to further analyze how the current proposal aligns with practices in other BAs and ISO/RTOs. As much as possible, adopting consistent priorities should be a consideration built into this process.
For example, our understanding is that other BAs and RTOs provide native load with the highest priority of transmission service. These other BAs ensure that their designated (i.e. RA) resources are able to reliably serve load during system emergencies through the planning processes for designated resources and processes for paying for transmission service on a long-term basis. CAISO accomplishes similar functions through the Transmission Planning Process, Resource Adequacy (RA) processes, and transmission rate design.
Therefore, we ask the CAISO to compare the different BA and ISO/RTO practices and consider adopting FERC-approved rules adopted in other jurisdictions that prioritize serving load at the highest level (and over other short-term needs).
Export Priority
PG&E is encouraged by the direction of the CAISO’s proposed prioritization for PT and LPT export prioritization, however, we have additional concerns which we request to be addressed as quickly as possible. The CAISO’s clarifications and additions since the last proposal resolve some of our concerns, specifically with the validation of PT exports. The proposed tariff rules provide some temporary reassurance that only resources that are contracted for and able to support an export can receive this status. However, we request that the CAISO pursue further changes to improve the validation processes for PT exports through future stakeholder engagement.
PG&E’s main remaining concern is focused on CAISO’s inability to ensure deliverability of these exports.
Specifically, our concern is that the CAISO’s inability to ensure the deliverability of an export could negatively impact the CAISO’s ability to serve native load. We are worried that due to the north to south congestion that we have observed during high load periods, exports out of southern California sourced from resources in northern California could negatively impact the reliability of the system. For example, exporters could potentially point to non-RA resources in Northern California (or other constrained areas) as the supporting resource for an export to Palo Verde where prices are anticipated to be high. If there is north to south congestion on major paths then energy in Southern California, which may be necessary to serve native load, may be required to serve an export while the supporting resource’s energy is stranded in the North. PG&E understands the CAISO’s time restrictions to implement additional deliverability validation in time for the summer, but requests that the CAISO commit to prioritizing the creation and implementation of these validation processes.
1. CAISO Department of Market Monitoring. Import resource adequacy report. September 10, 2018. Figure 1, Pg 2. http://www.caiso.com/Documents/ImportResourceAdequacySpecialReport-Sept102018.pdf
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
Oppose with caveats
PG&E opposes moving forward with this topic in this expedited initiative.
PG&E agrees with the CAISO that proposals to re-design the EIM resource sufficiency test do not fit in this initiative, which should focus only on steps that improve reliability this summer. EIM resource sufficiency test re-design proposals should be included in a standard stakeholder process.
As stated in previous comments, PG&E opposes the CAISO committing time to developing and implementing the proposal to include a net load uncertainty quantity in the Capacity Test, given the other higher priority efforts the CAISO is pursuing. Adding a net load uncertainty quantity on top of the existing Capacity Test would not change the measure of reliability for summer 2021. The proposal raises the requirements to pass the Capacity Test and increases the likelihood that BAAs fail the capacity test, resulting in capped transfers during potential emergencies. In the short term, this policy change seems more likely to jeopardize regional grid reliability during emergency conditions than to improve it. PG&E opposes this policy change because it does not advance the overall objective of this initiative to improve grid reliability during tight system conditions this summer.
While PG&E cannot support this topic as a whole, PG&E supports the proposed measures to correct identified software errors in the Capacity Test and to improve EIM coordination. In addition, PG&E seeks clarification and more details on the CAISO’s proposal to “revise the penalty price parameters associated with the adjustment of EIM energy transfers submitted as base schedules (i.e., “Base ETSRs” and intertie schedules)” on page 28 of the draft final proposal.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
No position
PG&E understands the need for the CAISO to consider additional market incentives to encourage additional import supply during emergency conditions when CAISO might otherwise have insufficient resources to meet load and reserve requirements. However, we also have concerns with the solution for this summer of providing make-whole payments to hourly block imports.
PG&E believes the proposed change could be a reasonable short-term measure to incent incremental supply during emergency conditions, but is concerned that removing the compensation risks associated with Hourly Block Schedules could result in an increase in their use over other, more granular or flexible Intertie Bidding options. Because of this, we believe that it is imperative that the impacts of this change be closely monitored. The CAISO and its Department of Market Monitoring should conduct both an ongoing evaluation of market Participants’ Intertie bidding practices during intervals identified for make-whole payments, and an after-the-fact cost-benefit analysis of this proposal to determine whether uplift costs associated with this change brought commensurate reliability benefits. In addition, PG&E strongly supports the CAISO’s proposal to suspend the make-whole payments if there is evidence of abuse or adverse market outcomes (such that the risks exceed the benefits).
Finally, the CAISO indicated its willingness to consider during upcoming initiatives alternative settlement options for hourly block imports during system emergencies, including using prices from the hour-ahead scheduling process (HASP). PG&E appreciates the CAISO’s willingness to review other options that may be more appropriate long-term solutions, and looks forward to continued engagement on this topic.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
Oppose with caveats
PG&E believes that prices during system reliability events should transparently reflect the shortage of supply, the use of reliability demand response resources (RDRR), and potential load interruptions. As a longer term solution, CAISO’s proposal seems to be moving the market in the direction of improving price transparency without placing an unpredictable burden on electric customers (versus the risks of implementing full scarcity pricing by summer 2021).
However, PG&E worries that the proposed enhancement could incent witholding (exacerbating reliability concerns), undermines the Order 831 price verification process, and does not provide sufficient visibility of bids in the market, which may greatly undermine the reliability benefits that it intends to provide. PG&E requests the CAISO to consider the following concerns and carefully refine the enhancement’s elements as part of a longer term effort, including (i) the triggering conditions, (ii) formulation of the bid price cap of released reserves, and (iii) the release and dispatch orders of the contingency reserves, as detailed below.
Questions/Concerns:
- PG&E is concerned that the proposal may create gaming opportunities for imports and internal resources to withhold.
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- PG&E requests the CAISO to clarify the conditions under which the enhancement will be triggered. According to the proposal,
“When the CAISO is in an energy emergency (EEA3), it is allowed to use generators providing contingency reserves to serve demand and meet its contingency reserve requirement by arming load.”
and
“When arming load to meet contingency reserve requirements, the CAISO proposes to release both contingent and non-contingent operating reserves at the bid cap price rather than at bid cost.”
It appears CAISO may or may not arm load in an EEA3 and it is not clear what other factors will contribute to triggering the enhancement. PG&E believes that it is critical for CAISO to consider and exclude the conditions which can be artificially created by market participants that may game the market.
- PG&E requests the CAISO to clarify the interaction of the proposed enhancement with FERC Order 831 and whether its cost verification process is applicable to bids over $1,000/MWh. The draft final proposal states,
“The CAISO will price the released reserves at the bid-cap price that is applicable at that time. For instance, during the bid-cap pricing now applicable, the released reserves will have a $1,000/MWh bid. Once CAISO’s proposed policies from its FERC Order 831 – Import Bidding and Market Parameters initiative, are effective, the released reserves will have an energy bid price of $2,000/MWh when (1) there is a submitted and cost-verified energy bid from a resource-specific resource greater than $1,000/MWh or (2) a CAISO-calculated “maximum import bid price,” used to screen the costs of imports, is greater than $1,000/MWh.”
PG&E is concerned with the inconsistency between the proposed enhancement and Order 831. Under Order 831, bids from both internal resources and imports need to be justified for their prices. The maximum import price is calculated using the hub index price that is hourly shaped, while internal resources are subject to direct cost justification. It should be noted that this mitigation mechanism is resource specific, while CAISO’s proposal is condition specific. If a maximum bid was of a lower price (e.g., $1,200/MWh), PG&E worries that the proposed enhancement could incentivize both internal resources as well as the import bids to physically withhold in the hope that the market is cleared at the hard price cap of released contingency reserves (i.e., $2,000/MWh).
- PG&E understands that the proposal intends to improve the price signal during system reliability events, which could be reduced under the current practice of arming load. However, PG&E believes that it is equally important for the price to reflect the resource costs and supply conditions. PG&E is concerned that the proposal (i.e., releasing the reserves at their energy bid cap) may compromise the cost reflection of prices by overstretching to the bid caps, which will ultimately distort market signals and place the financial burden on customers.
Alternatively, CAISO should consider inserting the bids associated with released Ancillary Service capacity at the higher of i) the Resource’s calculated Default Energy Bid (DEB) price or ii) the established market energy offer soft cap. PG&E believes that this methodology would satisfy the FERC Order 831 requirements that the resources justify any bids above the soft offer cap, as referenced above, while also ensuring that appropriate price signals are preserved within the market results.
- PG&E is concerned that the current practice of arming load and the proposal do not provide the necessary visibility of bids to market participants. Therefore, PG&E requests the CAISO to provide justification for overriding bids in clearly defined circumstances in its tariff language and to clarify the questions below:
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- How are the contingency reserves released before the enhancement? Consider an example with the following contingency reserves procured in the market:
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Res A
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Res B
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Res C
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Total
|
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20MW at $50/MW
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20MW at $10/MW
|
20MW at $100/MW
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60MW
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During EEA3, the CAISO calls for load arming of 30MW. Which of the following is true?
1) All reserves (Res A, Res B and Res C) of 60 MW are released into the market.
2) Reserves are ordered based on their energy bid prices and released based on the order of merit (i.e Res A of 10 MW and Res B of 50 MW are released
b. What impact does the proposal have on the release order and market dispatch of contingency reserves during load arming? According to the proposal, contingency reserves will be released at their bid price cap, which could alter the order of the bid stack of the reserves. In the example above, consider the two possibilities of bid price caps as below:
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Scenario
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Res A
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Res B
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Res C
|
|
I
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$1,000/MW
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$1,000/MW
|
$1,000/MW
|
|
II
|
$1,000/MW
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$2,000/MW
|
$1,000/MW
|
Scenario I shows an equal order and Scenario II changes the order of bid prices. We request the CAISO to (i) clarify whether the reserves will be released based on their bid prices or bid caps, and (ii) provide measures to justify the economic fairness, if the enhancement alters the dispatch results (e.g., in our example, Scenario II, Res C displaces Res B and is dispatched under the enhancement).
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- Finally, please explain the dispatch and pricing outcomes when reliability events (i.e., EEA) overlap with other system conditions. For example, according to the proposed draft tariff language,
“If Contingency Only reserves are dispatched through the RTCD, which as described in Section 34.5.2 only Dispatches in the event of a Contingency, such Dispatch and pricing will be based on Energy Bids using maximum Bid prices as provided in Section 39.6.1.”
Will the dispatch and pricing of contingency reserves released be based on maximum Bid price or the Energy Price cap, if EEA3 and a contingency happen concurrently in the system? PG&E urges the CAISO to think through the interactions of such scenarios. In addition, it is stated in the Tariff:
“If Contingency Only reserves are dispatched in response to a System Emergency that has occurred because the CAISO has run out of Economic Bids when no Contingency event has occurred, the RTED will Dispatch such Contingency Only reserves using maximum Bid prices as provided in Section 39.6.1 as the Energy Bids for such reserves and will set prices accordingly.”
Under the proposed enhancement, will the dispatch and pricing of the reserves occur through the RTED or the regular real-time market optimization process? PG&E requests that CAISO clarify the dispatch process and ensure the consistency of the proposal with current market practice in the final tariff language.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
Support with caveats
PG&E generally supports CAISO’s proposal to dispatch RDRRs in real-time pre dispatch (RTPD) so they can be optimally dispatched within a longer horizon, and for demand response resources to indicate in the master file how the resource will bid and be dispatched in the real time market (e.g., five-minute, fifteen-minute, or in hourly blocks).
However, PG&E urges the CAISO to provide examples of what limitations might be in place and illustrations of how this will work. Without examples, PG&E’s concern is that pulling RDRR into the RTPD may mean that some designations in the master file (e.g., start-up time, ramp rate, long start vs. short start) may not be respected. PG&E is concerned that if there are limitations and parameters that are not carried forward in RTPD, that infeasible dispatches could occur or that the dispatch would not align with the Base Interruptible Program’s retail tariff requirement for a 30-minute notification time. PG&E disagrees that these issues should only be addressed after the business requirement specifications (BRS) are developed in detail. These details are important for stakeholders to understand how the proposed changes could impact resources.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
No position
PG&E appreciates CAISO’s continued efforts to implement storage measures but has the following concerns with implementing this proposal in the summer 2021 timeframe.
There is a need for consistent telemetry between SCs and the CAISO’s operators — PG&E understands and agrees with the need for the CAISO to develop appropriate enhancements to their tools for storage resource telemetry: “Prior to summer 2021, the CAISO will develop a new screen for the operations team so that they can visualize a system summary of the storage fleet including details for each online storage resource including: current state of charge, site telemetry values, and maximum/minimum operating limits for these resources. Additionally, this screen will show capacity and state of charge aggregated for the storage fleet at the transmission level…The CAISO will develop an internal tool that will accept a specific threshold or target state of charge for storage resources from system operators and move those resources to a specific state of charge value. System operators will have the ability to specify hours in which these specific limits are issued to storage resources. This tool will help CAISO system operators manage storage resources in the real-time market.”
These statements raise the possibility that if these tools are not transparent, or not done in partnership with the SC of a storage resource, there could be discrepancies between what the CAISO sees as real-time telemetry and what the SC sees. PG&E would like to stress that any discrepancies (especially in state-of-charge) could have significant market impacts. Because bids are in the hands of market participants, as are limitations entered through OMS, if there are inconsistencies in what market participants see and what CAISO sees, these inconsistencies will cause intractable problems in managing state-of-charge. Market participants need to know that they’re seeing the same information CAISO is seeing for a minimum state-of-charge requirement to work properly. This situation can be avoided by the CAISO providing: (1) transparent and frequent communication with SCs on the implementation details of any new tools and visualizations, and (2) comprehensive testing environments/scenarios which demonstrate alignment between the CAISO’s telemetry and that of market participants.
Implementation of the MSOC requirement could have unforeseen effects — The CAISO’s current MSOC construct has the singular focus of protecting day ahead energy schedules in peak hours by means of an out-of-market constraint. However, what the CAISO should really be focused on is protecting the flexibility which batteries offer in dealing with unforeseen system conditions during high demand periods. If the MSOC was implemented as currently proposed, it’s possible that the constraint could force significant charging, and hence load, into hours just before hours when batteries received day ahead market awards (which aren’t guaranteed to be the hours of highest real-time need). This effect would in turn create a supply-demand imbalance during hours just before the critical hours, using the case of 2020 as an example. Likewise, there’s a strong incentive under such conditions for any discharge to be replaced with charging not in the next day’s solar hours, but immediately after the discharge schedule has been fulfilled, which might similarly lead to increased battery loads right after what were the 2020 critical periods, creating immediate risks to the system. The CAISO should be aware of the potential for unintended consequences such as these as they push to fast-track this proposal.
Considering the MSOC is triggered on days of tight system conditions, PG&E has concerns about the ability for market participants to manage their state-of-charge through their bids during these events, given that the real-time optimization horizon does not extend far enough to capture the evening peak. In other words, storage resources could be dispatched by the CAISO uneconomically earlier in the day, which lowers their SOC, and then subsequently forced to charge at high prices (leading up to the peak) to meet the MSOC. While the CAISO has relaxed the MSOC constraint to allow additional real-time discharge and then additional real-time charging, they have not yet demonstrated how market participants are protected from MSOC charging in cases where real-time market bids/schedules are not observed (e.g. under exceptional dispatch scenarios). If the CAISO cannot provide this confidence and/or adequate cost recovery mechanisms for state-of-charge impacts of uneconomic dispatch, they should revert to a more conservative approach towards the MSOC which preserves state-of-charge earlier in the day. Such an implementation would assure that no additional charging is required to ensure feasibility during the peak hours, whether or not there is any additional discharge in real-time.
Communication of the MSOC requirement is of paramount concern to scheduling coordinators (SCs)— In the RA Enhancements stakeholder call on 2/23/2021, it was identified that the MSOC could be imposed on any given day in real-time, even if there was not a RUC infeasibility in the day-ahead timeframe (applicable to that operating day). This approach conflicts with the CAISO’s statement that all MSOC commitments would be identified and communicated to scheduling coordinators in the day-ahead timeframe upon the conclusion of the RUC process. The RA Enhancements Final Proposal is absent any details on if/when the CAISO would notify SCs of the MSOC being imposed during this potential “real-time only” scenario, aside from saying that the decision will be made between 8-11am. PG&E would like to underscore the importance of the CAISO maintaining as much communication with scheduling coordinators as possible when it comes to a tool which manages a battery’s state-of-charge. Not only do state-of-charge values impact an SC’s real-time and day-ahead bids/schedules, they impact the resource’s operations as well. Considering this, implementation details such as communication commitments must be established and explained when the CAISO ultimately files at FERC.
The two-year sunset period should be modified to one year – If implemented, the proposed changes should be closely monitored after this summer and modified if necessary. A one-year sunset period would ensure that CAISO re-examines the impact of the changes and addresses any unforeseen effects as additional storage capacity continues to come online.
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
Support with caveats
The CAISO has proposed two additional miscellaneous items to include in this initiative:
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A new OASIS report that publishes gross import and export schedules by intertie
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BPM changes to enhance the independent study interconnection process, including:
-
removing the current cap on behind-the-meter expansions to the lesser of 125% of existing capacity or 100 MW
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allowing the CAISO to award available interim deliverability to independent study interconnection customers until earlier-queued project comes online
PG&E encourages the CAISO to expand the scope and impact of both of these efforts. First, PG&E supports the proposal to publish reports on gross import and export schedules by intertie. Access to import and export data close to real time will increase transparency and improve market participants’ understanding beyond the current reports on net imports and exports provided by CAISO and the DMM.
As an additional layer of transparency, PG&E would like the CAISO to require exporters using PT priority to include information regarding their resources used to supply energy. This information is necessary so that market participants can be confident that the exporter has the right to the non-RA energy and can receive PT export status, and resolve any disagreements based on differing views of contractual rights. If the CAISO believes this information is too sensitive for public release, the data could be shared with the DMM and the CPUC for review and another level of validation. PG&E believes this additional layer of transparency will help identify any other issues or concerns with rules and processes for these exports.
On the CAISO’s interconnection enhancements proposal, PG&E supports additional steps beyond those being proposed and offers the following recommendations to increase the amount of incremental capacity available this summer:
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Use existing tariff authority to expedite its Independent Study Process for new and existing resources
The CAISO should utilize its tariff authority to issue emergency authorization to expedite its Independent Study Process for new and existing resources. The most recent Resource Interconnection Forum indicates that eligible resources that qualify for the Independent Study Process (ISP) have an interconnection timeline of “eight months without deliverability”[1] which would not be useful for the Summer 2021 challenges if there is a need to construct any interconnection facilities. The CAISO has the Tariff Authority to waive the “timelines in the GIDAP to meet the schedule required by an order, ruling, or regulation of the Governor of the State of California, the CPUC, or the CEC.”[2] In addition to the tariff changes being envisioned with interim deliverability, it would be critically important to develop an expedited interconnection study process that could be evaluated in a timeline that supports the Summer 2021 needs. This same expedited ISP could be used to support the possibility of new resources seeking an interconnection and could be used to support the process for existing resources to install behind-the-meter expansion.
-
The CAISO should initiate another PMAX cleanup effort to identify generating resources with the ability to increase their output.
The PMAX cleanup effort was used to identify resources that were regularly exceeding their interconnection limit and became candidates to increase the point of interconnection limit with the interconnection agreement after an engineering evaluation. This same effort could also be used to identify resources that do not appear to be fully utilizing their interconnection capabilities. This information could then be used to confirm if this is due to a plant condition that can be repaired or real-time operating grid conditions that limit the output. This is a prudent step to ensure that existing resources interconnected to the grid can provide as much capacity as possible in support of the reliability efforts.
[1] http://www.caiso.com/Documents/Presentation-1-InterconnectionApplicationOptions-Process.pdf, page 6.
[2] http://www.caiso.com/Documents/AppendixDD-GeneratorInterconnectionDeliverabilityAllocationProcedures-asof-Sep9-2020.pdf, Appendix DD, Section 8.6
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
PG&E recognizes the implementation challenges with system market power mitigation for the summer of 2021 and looks forward to discussing system market power mitigation in the second half of 2021 along with scarcity pricing.
Given the identification of periods when the CAISO market is not competitive, we request the CAISO, in coordination with DMM, to continue to develop contingency plans that can be effectuated quickly to address any observed exercise of market power causing harm to California customers this summer.
Public Generating Pool
Submitted 02/26/2021, 03:22 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Support with caveats
The Public Generating Pool (PGP[1]) appreciates the opportunity to comment on the Market Enhancements for Summer 2021 Draft Final Proposal. PGP takes great interest in this initiative as there are PGP members who are EIM participants that were impacted by actions taken by CAISO during the high load conditions of Summer 2020.
PGP supports the creation of this initiative and shares the sense of urgency that measurable progress needs to be made on these topics prior to Summer 2021. The stakeholder discussion on the draft proposal provided additional information that was helpful. Summary comments on the proposals that PGP believes require additional clarification are as follows:
Export and Load Priorities: As an interim measure, PGP supports the objective of equitably balancing the reliability of serving CAISO load with the reliability of non-RA exports. However, it is not clear whether the proposed adjustments to penalty prices achieve this objective – especially for wheel-through schedules. PGP recommends that CAISO retain the status quo unless the methodology can be adjusted to ensure that it achieves the stated objective in all conditions.
CAISO staff stated at the web meeting that CAISO would develop an initiative that will create a process for forward procuring transmission for wheel-through schedules. PGP supports the creation of this initiative and also believes that such an initiative should explore whether balancing the reliability of CAISO load with the reliability of non-RA exports or achieving an OATT-like prioritization of non-RA exports over CAISO load is the appropriate long-term objective.
EIM Resource Sufficiency Test: PGP supports the proposed improvements to the capacity test. However, PGP believes there is still work required to increase the accuracy of the resource sufficiency evaluation (RSE) tests and to ensure the consequences for failing the tests discourages leaning. PGP is pleased that CAISO has committed to starting a stakeholder initiative to resolve these outstanding issues and would like CAISO to commit to completing and implementing such an initiative by spring 2022. PGP would also like CAISO to provide an estimate of how the proposed improvements would have performed during times when CAISO was in Stage 2 and Stage 3 emergencies in August 2020 as soon as feasible.
Real-Time Scarcity Price Enhancements: PGP supports the concept of releasing operating reserves at the bid cap price when arming load to meet contingency reserve requirements. However, the proposal states that “arming load” only occurs when CAISO is in an EEA3, but CAISO staff indicated at the web call that “arming load” occurred in August 2020 when CAISO was not in an EEA3 and implied that not every instance of “arming load” would result in releasing these reserves at the bid cap. PGP would like CAISO to clarify under what conditions “arming load” occurs and under what conditions releasing these reserves at the bid cap occurs.
[1] PGP represents eleven consumer-owned utilities in Washington and Oregon that own almost 8,000 MW of generation, approximately 7,000 MW of which is hydro and over 97% of which is carbon free. Four of the PGP members operate their own balancing authority areas (BAAs), while the remaining members have service territories within the Bonneville Power Administration’s (BPA) BAA. As a group, PGP members also purchase over 45 percent of BPA’s preference power.
2.
Provide your organization’s comments on the export and load priorities topic:
Oppose with caveats
In the straw proposal, CAISO proposed to prioritize non-RA exports higher than CAISO load and CAISO load higher than wheel-through schedules. PGP supported the prioritization of non-RA exports higher than CAISO load, but recommended that CAISO load and wheel-through schedules have equal priority.
After considering stakeholder comments, CAISO altered this proposal to attempt to provide equal priority to non-RA exports, wheel-through transactions and CAISO load. CAISO staff stated at the web meeting that there would be a future stakeholder initiative that would develop a process for forward procuring transmission capacity for schedules that wheel through CAISO’s BA. Furthermore, discussion at the web meeting called into question whether the proposed penalty prices achieved the objective of equitably balancing the reliability of serving CAISO load with the reliability of non-RA exports - especially for schedules that wheel through CAISO's BA.
As an interim measure, PGP supports the objective of equitably balancing the reliability of serving CAISO load with the reliability of non-RA exports. However, PGP believes that CAISO should re-examine its proposed penalty prices approach to ensure that these achieve the stated objective in all conditions. PGP believes that the status quo should be retained unless the methodology can be adjusted to ensure that it achieves the stated objective in all conditions.
In addition, PGP believes that CAISO’s commitment to a future initiative on wheel-through transmission access is critical. In addition to developing a process for forward procuring transmission capacity for schedules that wheel-through CAISO’s BA, this initiative should explore whether balancing the reliability of CAISO load with the reliability of non-RA exports or achieving an OATT-like prioritization of non-RA exports over CAISO load is the appropriate long-term objective.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
Support with caveats
In the straw proposal, CAISO referenced two previously identified issues with the capacity tests related to reflecting resource derates and eliminating double counting of mirror resources and proposed two additional improvements to the capacity test: include additional uncertainty requirements and exclude resources with a lengthy start-up time. PGP commented that it is not clear whether these improvements would have clarified what occurred last summer when market participants passed the RSE but ended up in emergency conditions and requested that CAISO provide an estimate of how all of these changes would have impacted the RSE capacity tests during emergency conditions in August 2020. PGP also recommended that CAISO specifically include EIM RSE Improvements in the scope of an existing initiative or create a new initiative with the outcome of this initiative resulting in an accurate RSE with failure consequences that are consistently applied to all market participants.
In the draft final proposal, CAISO stated that there was no simple solution for excluding resources with a lengthy start-up time and that portion of the straw proposal was removed from the draft final proposal. PGP understands that this is not implementable for this summer, but expects that CAISO will incorporate this improvement when time permits. CAISO also proposed to explore additional RSE enhancements and revisit failure consequences in a separate stakeholder process starting in the near future. PGP is pleased with CAISO’s commitment to move forward with this initiative and reiterates the interest to have this initiative started so that modifications can be implemented by spring 2022. CAISO staff indicated at the web meeting that they believed that these proposed improvements did not entirely “close the gap”, and PGP would like CAISO to provide an estimate of how the proposed improvements would have performed during times when CAISO was in Stage 2 and Stage 3 emergencies in August 2020 as soon as feasible.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
Support
PGP supports CAISO’s proposal of applying an import bid make-whole payment for real-time hourly imports as a way to incent suppliers to offer hourly block economic import supply to the CAISO real-time market during “tight system conditions”. PGP also supports the proposed definition of “tight system conditions” as either a day-ahead alert notice or a within day warning/emergency notice.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
Support with caveats
PGP supports the concept of releasing operating reserves at the bid cap price when arming load to meet contingency reserve requirements. However, the proposal states that “arming load” only occurs when CAISO is in an EEA3, but CAISO staff indicated at the web call that “arming load” occurred in August 2020 when CAISO was not in an EEA3 and implied that not every instance of “arming load” would result in releasing these reserves at the bid cap. PGP would like CAISO to clarify under what conditions “arming load” occurs and under what conditions releasing these reserves at the bid cap occurs.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
No position
PGP has no comments on this topic
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
No position
PGP has no comments on this topic
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
No position
PGP has no comments on this topic
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
PGP supports the proposal to have the EIM Governing Body as primary authority for RSE Enhancements and advisory for Export and Schedule priorities and Real-Time Scarcity Pricing Enhancements.
PGP supports the removal of System Market Power Mitigation from the scope of this initiative.
Salt River Project
Submitted 02/26/2021, 02:23 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Oppose
Salt River Project Agricultural Improvement and Power District (SRP) appreciates CAISO’s consideration of stakeholder comments on the January 27, 2021 Straw Proposal presentation. However, SRP continues to have significant concerns with the proposed changes articulated in the February 18, 2021 Draft Final Proposal.
While SRP understands the concerns driving CAISO’s accelerated action, CAISO is engaging in an unreasonable and abbreviated process to implement significant changes that may have severe detrimental effects on reliability in the Desert Southwest. It is not reasonable to implement rushed changes that alter longstanding market rules. SRP understands that time is of the essence and is willing to work with CAISO on an expedited basis to come up with a solution that meets the region’s needs and does not unreasonably shift reliability risk to other entities in the region.
SRP’s concerns relate to the following areas:
1) Load and export priorities: While CAISO indicates it intends to place load, wheeling transactions and price taker exports at the same level of priority, the proposal does not achieve this. Load in California will be prioritized over wheeling transaction, as illustrated in the examples CAISO provides.
2) Attestation requirement for Price Taker (PT) exports: SRP does not believe that the proposed attestation requirement for PT exports is workable. It will require revisions to existing commercial relationships, and the result will be PT exports being unfairly disallowed.
3) Process: SRP recognizes that CAISO has managed this stakeholder process on a very accelerated timeline in order to implement the changes before the summer. However, the accelerated timeline has meant very limited opportunity for CAISO to work with stakeholders to evaluate changes to longstanding market rules, such as those applicable to wheeling transactions. In addition, the Draft Final Proposal is the first time CAISO has articulated its proposal in writing other than presentations used to guide oral discussions. SRP requests that CAISO revise its timeline for implementation to allow for a reopening of the stakeholder process for additional feedback and discussions given the paramount importance of the proposed changes to export and load priorities.
In addition to commenting as part of the EIM Entities, SRP provides the following comments.
2.
Provide your organization’s comments on the export and load priorities topic:
Oppose
While SRP appreciates CAISO’s efforts to address its reliability problems that are forecast for Summer 2021, CAISO has not achieved its stated goal of aligning export prioritization with other Balance Authorities (BAs) in the West with its Draft Final Proposal. SRP recommends that CAISO retain the current export priorities and the current level of priority for wheel-through schedules until CAISO develops a more balanced regional solution, in coordination with stakeholders, that is respectful of historical rights and actually achieves the goal of equal treatment for wheels, PT exports and load.
SRP’s concerns stated in comments on the Straw Proposal remain for the Draft Final Proposal. SRP continues to see three significant problems with CAISO’s proposal:
-
- The proposal attempts to provide equal treatment to wheels, CAISO load, and PT exports, but effectively deprioritizes wheels relative to CAISO load.
- The proposal reduces the priority of Residual Unit Commitment (RUC) exports without generation relative to PT exports and CAISO load in the real-time market, transferring reliability issues from the CAISO Balancing Authority Area (BAA) to outside BAAs.
- The proposal does not consider the many opportunities and competitive practices, including open access to transmission, that occur in a forward environment that consider deliverability a foundational component. SRP, like many other utilities in the West, has secured a critical portion of its open needs for Summer 2021 prior to CAISO’s proposed Summer 2021 Enhancements. CAISO’s Draft Final Proposal puts SRP’s procurement efforts to date at risk.
With respect to wheel-through priorities, the Draft Final Proposal states, “The CAISO proposes to modify its market’s scheduling priorities to give equal priority to CAISO load, exports supported by non-RA supply contracted to serve load outside of the CAISO balancing authority, and wheel through self-schedules across the CAISO balancing authority area.” Given that CAISO does not have a long-term transmission reservation process, SRP agrees with the principle of equal priority for CAISO load, exports supported by non-RA supply contracted to serve load outside of the CAISO balancing authority, and wheel through self-schedules as each of these are necessary to serve load somewhere in the West; however, as demonstrated in the proposal appendix and acknowledged by CAISO staff during the February 22 stakeholder call, CAISO’s proposal does not achieve the equal treatment its proposal claims to establish. Page 15 of the Draft Final Proposal states, “if there are self-scheduled imports, CAISO load will be met over a wheel through schedule being accepted …” Furthermore, the examples detailed in the Appendix reveal that during the most critical, load-constrained hours:
- In the Integrated Forward Market (IFM) process, wheels are deprioritized relative to self-scheduled imports and import bids below $0/MWh.
- In the RUC process, wheels are deprioritized relative to IFM-cleared, non-RA imports that are both self-scheduled and economically bid. SRP requests clarification on the examples where the wheel or the import will clear as to which of the two will clear.
- In the Hour Ahead Scheduling Process (HASP), wheels are deprioritized relative to RUC import self-schedules and real-time import self-schedules or bids below $0/MWh.
SRP believes that CAISO’s examples demonstrate that the wheels are in fact lower priority than imports required to serve CAISO load.
As described in SRP’s previous comments, the proposed reprioritization of loads and exports is a significant modification of previous scheduling priorities that could directly impact the ability of Desert Southwest load serving entities to import power contracted to serve load. SRP has already purchased firm energy, backed by specific generation resources, from the northwest to meet a critical portion of its Summer 2021 needs, in reliance on the current rules. CAISO could curtail this firm energy to address insufficient supply within its own BAA, causing material damages to SRP and its customers. CAISO’s proposal fails to consider how these changes could result in reliability issues transferring from CAISO to Desert Southwest entities.
Similarly, deprioritizing RUC schedules without generation in the real time market relative to PT exports and CAISO load will likewise have a shifting effect, By separating RUC awards without generation in the priority list, these Day Ahead RUC awards are effectively non-firm in real time, creating additional uncertainties and reliability risks to BAAs outside of CAISO. This is a significant modification from past CAISO practices where export schedules awarded in the RUC process would maintain the highest priority through IFM/Real-Time. In changing the treatment, CAISO is fundamentally altering the certainty of any export schedules awarded in RUC such that SRP will not be certain of these awards until IFM/Real Time.
In addition to comments that remain unchanged from Straw Proposal comments, SRP has concerns with CAISO’s revisions to the exports component of the Draft Final Proposal, which includes added commercial obligations on non-Balancing Authority counter parties. These requirements could create greater uncertainty for exporting BAs and require changes to commercial contracts within a short time frame. For these limited non-resource adequacy relationships, SRP supports retaining status quo through summer 2021 or, alternatively, a simple validation process such as a BA attesting its own supply relationship is supported from non-resource adequacy capacity.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
Support with caveats
SRP appreciates CAISO’s efforts to make enhancements for summer 2021 and strongly supports CAISO’s proposal for a separate stakeholder process to further examine this topic. SRP requests clarification of the scope of CAISO’s proposed stakeholder process and encourages CAISO to include not only examination of failure consequences but also consideration of enhancements to improve the accuracy and effectiveness of the resource sufficiency evaluation.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
No position
No comments
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
No position
No comments
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
No position
No comments
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
No position
No comments
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
No position
No comments
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
SRP is concerned that CAISO is implementing material changes to its market through modifications to its Business Practice Manuals (BPM), rather than its tariff. In particular SRP objects to the September modification of the BPM to substitute the CAISO’s RUC process for the former IFM pricing run. The goal of this change was to distinguish high-priority from low-priority exports in the day-ahead market. However, the change did not properly achieve its goal and had measurable adverse effects on SRP in the day-ahead market. Long-standing FERC precedent dictates that provisions that “significantly affect rates, terms, and conditions” of service must be included in the tariff. There is no doubt that the September modifications and any subsequent modification to the priority of service significantly affects conditions of service. Along with the September modifications, SRP believes that any future change should be included in the CAISO’s tariff.
SRP supports CAISO’s proposal to exclude system market power mitigation from summer 2021 enhancements. SRP looks forward to CAISO and the stakeholder community taking a fresh look at potential enhancements.
SRP supports CAISO’s proposed EIM Governing Body advisory role classification for export, load, and wheeling priorities. SRP agrees with CAISO that changing the rules governing use of CAISO transmission will affect participation in EIM.
Six Cities
Submitted 02/26/2021, 02:44 pm
Submitted on behalf of
Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California
1.
Provide a summary of your organization’s comments on the straw proposal:
Support with caveats
The Six Cities generally support the CAISO’s Draft Final Proposal on Market Enhancements for Summer 2021 Readiness. As discussed in their previous comments in this initiative, the Six Cities base their evaluation of the CAISO’s proposals on the need to strike an appropriate balance between timely adoption of market enhancements that can reinforce system reliability for the summer of 2021 while avoiding design modifications that may produce unintended negative consequences outweighing anticipated positive impacts. The market enhancements described in the Draft Final Proposal generally appear to achieve such an appropriate balance.
2.
Provide your organization’s comments on the export and load priorities topic:
Support
The Six Cities support implementation of the scheduling priorities for load, exports, and wheeling transactions described in the Draft Final Proposal and summarized in Figure 2 at page 25. With respect to PT Export priority, the Six Cities support the proposals to require (1) designation of a supporting non-RA resource that has been forward contracted to supply an external load serving entity, (2) participation by such designated resources in RUC at $0.00/MWh up to the export self-scheduled quantity, and (3) re-bidding of the designated supporting resource in the real-time market to maintain PT priority.
With respect to scheduling priority of wheeling transactions, the Six Cities support the CAISO’s proposal to set the import leg of a wheel bid to a $0 import bid and the self-scheduled export leg of the wheel bid at PT priority. The discussion during the February 22, 2021 stakeholder conference indicated that this could result in imports to serve CAISO load having a higher priority than the import leg of a wheeling transaction under some circumstances. Such an outcome is entirely appropriate and consistent with the application of open access transmission principles to wheeling transactions. Transmission providers operating under conventional Open Access Transmission Tariffs (“OATTs”) are not required to offer firm transmission service when providing such service would undermine their ability to serve native load (“network customers”) or interfere with delivery of off-system resources committed to serve network customers. The CAISO’s proposal to grant priority to imports needed to serve CAISO load is consistent with the ability of an OATT transmission provider to reserve available transfer capability for service to network customers.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
Support
The Six Cities support the CAISO’s proposals to implement targeted modifications to the bid range capacity test applied in the resource sufficiency evaluation for the Energy Imbalance Market (“EIM”) to (1) account for resource derates and rerates, (2) ensure that imports represented through mirror resources are not double counted, and (3) include load uncertainty within each balancing authority area’s (“BAA”) bid range capacity requirement. In addition, the Six Cities support the proposed changes to improve EIM entity coordination described at pages 28-29 of the Draft Final Proposal.
The Six Cities agree with the CAISO’s determination that consideration of additional changes to the EIM resource sufficiency evaluation process and consequences of failing the resource sufficiency evaluation should be addressed in subsequent stakeholder proceedings. More extensive revisions to the resource sufficiency evaluation process are likely to involve complexities that cannot be considered adequately in the context of an initiative, such as this one, having a highly expedited timeline.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
Support
The Six Cities support the proposals (1) to provide for bid-cost make-whole payments for real-time market hourly block economic imports during tight system conditions and (2) to allocate uplift costs arising from such make-whole payments to CAISO measured demand (metered demand and exports) and any EIM transfers out of the CAISO BAA.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
Support
The Six Cities support the CAISO’s proposal to release both contingent and non-contingent operating reserves at the prevailing bid cap price, rather than at bid cost, under conditions when the CAISO is arming load to meet contingency reserve requirements and enable the release of reserves to supply energy. The Six Cities agree with the CAISO that release of operating reserves at the bid cap under conditions where load is armed to provide contingency reserves will provide a more appropriate price signal for tight supply conditions.
The Six Cities also agree with the CAISO’s determination that consideration of possible additional scarcity pricing measures should occur in the context of a separate stakeholder initiative timed to allow thorough evaluation of the complexities and potential unintended consequences of such measures.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
Support with caveats
The Six Cities support the proposals to modify the dispatch provisions for Reliability Demand Response Resources to encourage more efficient market dispatch of these resources. The Six Cities also support accounting for dispatched RDRRs in load forecasts for future intervals. However, as indicated in Slide 32 of the Straw Proposal presentation, the load forecast adjustment should reflect the expected performance of the dispatched RDRR.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
Support with caveats
Subject to evaluation of implementation practices and consequences, the Six Cities at this time support the proposals for operationalizing storage resources included in the Phase 1 Final Proposal for the Resource Adequacy Enhancements initiative. It is the Six Cities’ understanding that the CAISO proposes to advance those RA Enhancements Phase 1 items that are focused on the minimum state of charge and implement them for the summer of 2021 pursuant to the Draft Final Proposal in this initiative. At this time, the Six Cities also do not oppose the CAISO’s other proposals related to storage fleet preparedness, including the AGC algorithm changes related to regulation dispatch, the proposal to use Exceptional Dispatch if needed to manage the availability of storage resources during critical system conditions, and the proposal to develop new screens to enable CAISO operators to have visibility into the storage resource fleet. (See Draft Final Proposal at 38-39.)
The Six Cities continue to oppose advancement of the CAISO’s proposals related to the Must-Offer Obligation and bid insertion requirements for storage and mixed fuel resources previously recommended in the RA Enhancements initiative. However, the Phase 1 Final Proposal in the RA Enhancements Initiative does not prescribe Must-Offer obligations and includes Must-Offer obligations in the list of elements that require additional vetting in Phase 2 of the RA Enhancements initiative. The Six Cities understand, therefore, that the Must-Offer obligations for storage resources remain to be developed in Phase 2 of the RA Enhancements initiative.
The Six Cities support and appreciate the CAISO’s efforts in Phase 1 of the RA Enhancements initiative to target the state of charge provisions to limit their application to critical system conditions and to minimize interference with operational flexibility available to storage resources. Although the Six Cities at this time support potential application of Exceptional Dispatch to storage resources, the scope of discretion for CAISO operators to issue Exceptional Dispatch directives to storage resources appears to be extremely broad. The Six Cities continue to urge the CAISO to evaluate the effectiveness of the storage management measures that are implemented this summer once the summer period is over. Depending on the efficacy of these measures and whether the CAISO identifies any need for changes due to adverse market outcomes or other factors, there may be a need to either reevaluate these measures or to revise them as the CAISO gains experience with a growing storage resource fleet. To that end, the Six Cities support the proposal in the Phase 1 RA Enhancements Final Proposal to sunset the minimum state of charge provisions two years after implementation.
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
Support
The Six Cities support the CAISO’s proposals to (1) publish on the CAISO’s OASIS gross import and export schedules by intertie for the CAISO BAA, and (2) enhance the Independent Study Interconnection process by removing the cap on behind-the-meter expansions and providing for awards of available interim deliverability on a temporary basis. The Six Cities also support the CAISO’s determination not to pursue changes to the Resource Adequacy Availability Incentive Mechanism in the context of this initiative.
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
Although the Six Cities understand the challenges of evaluating and implementing market design changes under the accelerated time schedule necessarily applicable to this initiative, the Six Cities are disappointed that the CAISO has not addressed two potential market enhancements that could increase availability of resources for the summer period and appear to be susceptible to implementation on an expedited basis.
The Six Cities, therefore, continue to urge the CAISO to prioritize changes in the Maximum Import Capability (“MIC”) allocation process to address unused MIC allowances. Such limited revisions to the MIC construct would not seem to entail any undue complexity, and they would have an immediate impact of reducing unused MIC amounts, thereby enabling CAISO load serving entities to access additional RA imports.
In addition, as they have commented in the RA Enhancements initiative, the Six Cities urge the CAISO to consider allowing monthly RA showings to include different RA values for a specified resource for different days of the month, subject to the sum of the RA values for each day satisfying the monthly RA requirement for the LSE submitting the showing. As an example, for a resource eligible to provide RA capacity of 100 MW, the Six Cities propose that an LSE be permitted to include variable amounts of capacity from the resource (not to exceed 100 MW) for different days in a monthly showing, provided that the sum of the capacity values for all resources shown by the LSE for a given day equals or exceeds the LSE’s monthly requirement. Such variable showings currently are permitted for import resources, and the Cities request that the CAISO extend the ability to submit different RA values for a resource for days within a month to include not only import RA resources but also RA resources located within the CAISO BAA. Given that this practice is allowed for RA imports at this time, it would seem feasible to implement quickly for internal resources as well.
As the Six Cities explained in the RA Enhancements initiative, there would be significant, reliability-enhancing benefits of allowing variable daily RA values within monthly showings. If LSEs are required to show the same RA value for a given resource for each day of a month, they are likely to omit the resource from a monthly showing for any month in which there is a need to perform maintenance on the resource. By allowing different values to be submitted for RA resources for different days within a month, resources could effectively substitute for each other for different days (with the CAISO having full visibility in advance of the resources relied upon for each day) while maintaining the total RA shown for each day at the level of the LSE’s requirement. This would facilitate performance of regular maintenance, and, as importantly from the CAISO’s perspective, it would reduce incentives for LSEs to hold back RA capacity that has been contracted for by an LSE but is not needed to meet the RA requirement in a given month. It also would support additional bilateral trading of RA capacity among LSEs for substitute capacity purposes. Allowing variable daily RA values within monthly showings is likely to make satisfaction of RA requirements more efficient and thereby make more RA capacity available.
Southern California Edison
Submitted 02/26/2021, 04:14 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
SCE is concerned about the change in the Draft Final Proposal to not implement the system market power mitigation (SMPM) proposal in Summer 2021. The CAISO has proposed several scarcity pricing elements in this initiative, and it will be prudent to implement the SMPM measures for Summer 2021 concurrently with the proposed scarcity pricing provisions.
2.
Provide your organization’s comments on the export and load priorities topic:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
In the Draft Final Proposal, the CAISO proposes Option 2, i.e., the option to provide for a make-whole payment to bid price for real-time market hourly block economic imports (or decremental of day-ahead scheduled export). As stated in its prior comments, SCE believes that this proposal should be evaluated with the implementation of import bid cost verification and system market power mitigation. There was discussion during the Feb 11, 2021market surveillance committee (MSC) meeting that the proposed make-whole payment would apply to only those import resources that would have cleared in the hour-ahead scheduling process (HASP), or those export resources that would have cleared in the day-ahead market and receive decremental awards in real-time market. Therefore, it seems that the issue of paying a resource at an unverified cost would be limited to those resources. The CAISO should closely monitor bidding activity associated with the periods in which the make-whole payment rule is in effect and suspend the make-whole payment provisions when necessary, as proposed by the CAISO in Draft Final Proposal.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
SCE supports the proposal to defer consideration of scaling real-time market’s penalty prices relative to a $2000/MWh power balance penalty under tight system conditions. In addition, under FERC Order No. 831, the power balance penalty would be set at $2000/MWh when conditions to trigger the new $2000/MWh bid cap are met.
In the Draft Final Proposal, the CAISO continues to propose to release reserves at the bid cap price when short on contingency reserves from generation and arming load to meet the contingency reserve. The CAISO clarifies that the bid cap will be determined consistent with FERC Order No. 831 policy once adopted. In the Draft Final Proposal, the CAISO proposes to not implement system market power mitigation (SMPM) proposal for Summer 2021 as previously proposed.
SCE opposes the change to not implement SMPM for Summer 2021. The SMPM proposal has been developed over the past several years and is necessary to address findings from the department of market monitoring (DMM) and the CAISO that the CAISO market was not structurally competitive. Under the CAISO scarcity pricing proposal, a generator providing contingency reserve would have a bid inserted at $2000/MWh by the CAISO when load is armed, without cost verification on the bid and potentially set the market clearing price at $2000/MWh. This essentially circumvents the cost verification requirement otherwise under FERC Order No. 831 and results in unverified energy bids at $2000/MWh inserted into the market. It could also lead to potential capacity withholding in the contingency reserve market for generators to receive an energy bid at the bid cap. The scarcity pricing elements proposed by the CAISO under this initiative should not be implemented without implementing system market power mitigation at the same time as a safeguard measure to protect consumers.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
SCE generally agrees with the CAISO’s RDRR proposal, but has concerns and believes additional clarification is necessary. Typically, stakeholders get communications and notices about 12 to 18 months in advance of changes to CAISO systems and processes which allows stakeholders time to enhance, test, and successfully demonstrate performance of these proposed changes to ensure they perform as intended. If SCE is not provided sufficient time to enhance and test its systems, this may lead to RDRR dispatch failures this summer; thereby, potentially creating greater uncertainty or adding to grid reliability issues. SCE recommends that stakeholders are provided sufficient time to assess impacts and make changes to existing processes and systems affected by this proposal.
In addition to the affected systems and processes, CAISO’s RDRR proposal does not specify whether an emergency declaration is still required to dispatch an RDRR under the CAISO proposal.[1] SCE recommends that the CAISO specifically identify and state the condition(s) in which RDRR resources will be dispatched under this proposal.
[1] The BPM for Market Operations, at p.266, states the following; it is unclear if an RDRR resource would be dispatched through the market when the market clearing price is at or above the RDRR bid price, and whether an emergency declaration is a precondition to dispatch RDRR resources.
“Unlike the IFM application, RDRR resources will not be selected for normal dispatch unless the CAISO Controlled Grid is in one or more of the following conditions as provided in the associated operating procedures (see CAISO public website): For system emergencies, including Transmission emergencies; and Mitigating imminent or threatened operating reserve deficiencies For resolving local transmission and distribution system emergencies.”
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
SCE supports the inclusion of the provision in the proposal that the minimum state of charge (MSOC) requirement will sunset two years after implementation. As commented previously, SCE believes that it is important for the CAISO to develop a long-term solution that is optimal for energy storage resources to participate the CAISO markets.
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
SCE supports the proposal to implement an enhancement to Open Access Same-time Information System (OASIS) to calculate and publish gross import and export schedules by intertie for the CAISO balancing authority area (BAA) for the day-ahead and real-time markets. The relevant reports should make it clear how the gross import and export schedules in those reports may or may not include EIM transfers into and out the CAISO BAA for the real-time markets.
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
As commented above, it is important for the CAISO to take a balanced approach to implement SMPM and proposed scarcity pricing elements at the same time. The SMPM proposal has been developed over the past several years and should be implemented to provide necessary protection for consumers given the proposed scarcity pricing provisions in this initiative.
Western EIM Body of State Regulators
Submitted 03/03/2021, 09:24 am
Submitted on behalf of
Western EIM Body of State Regulators
1.
Provide a summary of your organization’s comments on the straw proposal:
Comments of the
Western Energy Imbalance Market Body of State Regulators to the
CAISO’s Market Enhancements for Summer 2021 Readiness Initiative
March 1, 2021
The Western Energy Imbalance Market (EIM) Body of State Regulators (BOSR) appreciates the opportunity to submit consensus comments on the CAISO’s Market Enhancements for Summer 2021 Readiness Initiative (“Summer Readiness Initiative”).[1] The EIM BOSR was created by the Transitional Committee when a governance structure for the EIM was initially contemplated. The BOSR is a self-governing, independent body composed of one commissioner from each state public utilities commission in which load-serving regulated utilities participate in the EIM, including the ISO real-time market.[2] This currently includes the states of Arizona, California, Idaho, Nevada, Oregon, Utah, Washington and Wyoming.[3] One of the BOSR’s responsibilities is to express a common position, where possible, in the CAISO stakeholder processes or to the EIM Governing Body on EIM issues.[4]
- Background on the Summer Readiness Initiative
Analysis of CAISO operations during the 2020 heatwave tight conditions reveals that the EIM Resource Sufficiency Evaluation is not working as intended.[5] A range of EIM stakeholders, including EIM Entities,[6] request that CAISO pursue simple and effective enhancements to the Resource Sufficiency Evaluation ahead of summer 2021 and commit to completing comprehensive enhancements as soon as possible thereafter, but no later than summer of 2022.
The Summer Readiness Initiative is an expedited initiative that focuses on limited market design changes that can be implemented in a short time frame. More comprehensive changes that will require more time for stakeholder engagement and to technically develop, analyze and implement proposed solutions will be addressed thereafter. The EIM Resource Sufficiency Evaluation is one of the issues included in the Summer Readiness Initiative. To implement adjustments to the market design by June 2021, CAISO will bring a final proposal before the EIM Governing Body on March 10, 2021, and the CAISO Board of Governors (“CAISO Board”) on March 25. The draft final proposal was posted on February 18, 2021. Final comments from stakeholders are due by February 26.[7]
The Summer Readiness Initiative covers a range of issues. The BOSR’s comments contained herein are on the EIM Resource Sufficiency Evaluation.
[1] Information about the Initiative is available at:
https://stakeholdercenter.caiso.com/StakeholderInitiatives/Market-enhancements-for-summer-2021-readiness.
[2] Charter, Energy Imbalance Market Body of State Regulators at 1 (March 1, 2016) (“BOSR Charter”). See also, Charter for Energy Imbalance Market Governance, V.1.1 (revised May 1, 2017), § 5.2.
[3] Load-serving regulated utilities from the states of Montana, New Mexico, Colorado and Texas have stated their intent to join the Western EIM. Commissioners from these states and the Province of British Columbia have been invited to participate in the BOSR.
[4] BOSR Charter, Purposes and Responsibilities at 1.
[5] See, e.g., BOSR Monthly Update Call (February 12, 2021), materials available at: https://www.westernenergyboard.org/wp-content/uploads/eim-bosr-2021-feb-12-muc-agenda.pdf; see also, CAISO’s Market Enhancements for Summer 2021 Readiness Draft Final Proposal (February 18, 2021) at 25-26, available at: http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-MarketEnhancementsforSummer2021Readiness.pdf.
[6] EIM Entities are Balancing Authorities (BAs) outside of the CAISO Balancing Authority Area (BAA) that participate in the EIM. Because CAISO’s BAA does not encompass the entire State of California; some of the EIM Entities are in California, e.g., Los Angeles Department of Water and Power.
[7] This initiative is moving on an expedited basis. The previous proposal, the “straw proposal,” is in the form of a slide deck posted on January 26. Market Enhancements for 2021 Summer Readiness, Straw Proposal slide deck, CAISO, pp. 16-20: http://www.caiso.com/InitiativeDocuments/Presentation-MarketEnhancements-2021SummerReadiness-StrawProposal.pdf. CAISO held webinar meetings on January 13, 27 and 29, 2021; recordings are available at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Market-enhancements-for-summer-2021-readiness. Mark Rothleder, Senior Vice President and Chief Operating Officer, CAISO, provided additional information to the BOSR at the BOSR’s monthly meeting on February 12, 2021. This meeting was open to the public.
2.
Provide your organization’s comments on the export and load priorities topic:
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic:
- EIM Resource Sufficiency Evaluation
The purpose of the EIM Resource Sufficiency Evaluation is to ensure each EIM Entity can adequately balance their own supply and demand prior to participating in the Energy Imbalance Market. The Resource Sufficiency Evaluation includes several components, with two key verifications:
- The Bid Range Capacity Test (“BRCT”) should verify that each Balancing Authority (“BA”) has enough capacity to meet its load and other obligations within its Balancing Authority Area (“BAA”).
- The Flexible Ramping Sufficiency Test (“FRST”) should verify that each BA has enough flexibility to move its resources to respond to changes in system conditions within its BAA.
An analysis of EIM operations during the tight conditions experienced in the Summer of 2020 reveals that the Resource Sufficiency Evaluation is not working as intended. For example, there were several intervals in the August 14-18, 2020, period in which the CAISO Balancing Authority (“BA”) was experiencing an energy emergency within its BAA but passing the BRCT.[1] In other words, it appears that the BRCT is not verifying each instance in which a BA lacks enough capacity to meet its load and other BAA obligations. Under the current market design, if a BA fails the BRCT it can continue to trade in the EIM at the level that it was trading prior to the detected failure. The Resource Sufficiency Evaluation is applied to all BAs participating in the EIM, therefore deficiencies in the operation or design of the tests are not limited to the CAISO BA. A poorly designed test can have both reliability and economic impacts on all EIM participants.
The BOSR strongly encourages the CAISO, ahead of summer 2021, to pursue simple and effective modifications and enhancements to the Resource Sufficiency Evaluation, such as the consequence of failing the BRCT, aimed at ensuring that all BAs participating in the EIM have sufficient resource capacity to meet their demand obligations prior to receiving the benefits of participation in the EIM. Further, the BOSR strongly encourages the CAISO to commit to completing a comprehensive review, and as appropriate, improvements as soon as possible thereafter, but no later than summer of 2022. The BOSR would like to take this opportunity to enunciate some key principles that should be applied to any option being considered for a market design change to the EIM Resource Sufficiency Evaluation.
Principle 1: The objective of the EIM Resource Sufficiency Evaluation is to ensure that all BAs participating in the EIM have sufficient resource capacity to meet their demand obligations prior to receiving the benefits of participation in the EIM.
Resource sufficiency is a foundational principle of the EIM and a requirement of participation in this voluntary market. Resource sufficiency embodies the principle of “no leaning” and establishes a level playing field for all EIM participants. BAs need to be “fully resourced” prior to participating in the EIM. This is a key element to the success of the EIM and the market design should support and enforce it.
Principle 2: Enhancements to the EIM Resource Sufficiency Evaluation should be of the highest priority.
As discussed above, resource sufficiency is a foundational principle of the EIM, therefore, if the market design is not consistent with this principle, it should be of the highest priority to correct the market design, particularly because a test that allows for leaning could have both reliability and economic consequences. The BOSR is encouraged by CAISO’s recent statements that prior to summer 2021 some adjustments to the BRCT will be made to address some of the accuracy issues, that an out of market consequence will be explored if the test is failed, and further, that a more comprehensive solution will be explored thereafter.[2] The BOSR strongly urges CAISO to make sufficient adjustments to the BRCT prior to summer 2021 to make sure the test is accurately, uniformly and effectively applied and to commit to the development and implementation of a comprehensive solution to both the test and the consequence of failure prior to summer 2022.
Principle 3: The Bid Range Capacity Test (BRCT) should focus on whether a participating BA has enough resource capacity to meet its demand obligations.
As set forth above, the BRCT is not detecting capacity deficiencies under certain circumstances. The evaluation for capacity should accurately measure each BA’s supply and demand to determine correctly if the BA is resource sufficient. Design enhancements should be investigated to ensure:
- Supply resources included in the BRCT are confirmed physical resources and counted in a manner that is consistent with their actual operating capability.
- Demand reflects all BAA obligations including peak load, load uncertainty and reserve obligations.
Principle 4: Failure consequences of the BRCT should provide appropriate economic incentives for the BAs to use forward procurement to acquire sufficient resource capacity to meet their demand obligations in advance of their participation in the EIM.
Under the current construct, EIM entities that fail the BRCT are allowed to trade in the EIM at the level that they were trading prior to the BRCT failure, and no other penalties are applied. Some stakeholders have proposed that, as a penalty, the transfer limit be set at zero, with any further transfers set at the bid cap. Other stakeholders have argued that this type of scarcity pricing is a complex policy issue that could have unintended consequences and that limiting transfers between BAs when an area fails a resource sufficiency test could decrease the overall efficiency of the EIM market dispatch. The BOSR believes that the failure consequences of the BRCT should provide appropriate incentives for BAs to use forward procurement to acquire sufficient resources to meet their demand obligations in advance of their participation in the EIM, and avoid imposing significant economic harm on other BAs. It is critical that the consequence of failing the BRCT is properly calibrated to a failure of the capacity test and that it sufficiently incentivizes participants to be resource sufficient as a prerequisite to participation in the EIM. Further, the consequence should be tailored sufficiently to avoid negatively impacting the BAs that passed the test and have qualified to participate in the imbalance market.
In conclusion, as the EIM Governing Body exercises its primary authority over this issue, it should apply the above principles to evaluate any proposal offered by the CAISO that impacts the EIM Resource Sufficiency Evaluation. The BOSR appreciates this opportunity to provide consensus comments on the Summer Readiness Initiative.
[1] See Footnote 5 in Section 1 of Comment Matrix.
[2] Comments by Mark Rothleder, CAISO, at the BOSR February 12, 2021 public meeting.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic:
8.
Provide your organization’s comments on the other items considered in this initiative as described starting on page 39:
9.
Additional comments on the Market Enhancements for Summer 2021 Readiness draft final proposal:
