Comments on December 4 meeting and the Updated Discussion & Issue Paper regarding Uplift & Default Energy Bid (DEB)

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

ACP-California appreciates CAISO’s efforts to improve storage design and modeling and to address a variety of topics through this initiative. Penetration of storage resources in the CAISO footprint (and the future EDAM footprint) has increased significantly over the last several years and is poised to continue growing as an essential clean grid reliability resource. It is imperative to continue to modify and improve various aspects of how storage is incentivized to participate in the market as more experience is gained. It is also critical to recognize that CAISO has limited resources and that it will be necessary to focus this initiative, and future efforts, on those items with the most impact on improving reliability, affordability and supporting clean energy in the West.

To that end, ACP-California offers preliminary thoughts on the four tracks of issues being considered within this initiative, highlighting those that we believe will have the biggest impact on reliability, affordability, and supporting clean energy. We recommend CAISO focus resources on those topic areas that will offer the most improvements to customers, storage operators, and CAISO’s grid operations, alike.

Additionally, within the Uplift & DEB portion of the initiative we recommend some areas where we believe increased focus and effort is warranted and others where proposals can be postponed due to their lack of impact and level of effort required. We also note, this element of the initiative could be paused if it would provide additional resources to focus on the other elements of the proposal and to quickly work towards resolution of critical issues, including around outage management and foldback.

Prioritization of the Tracks within the Overall Initiative

CAISO has categorized the efforts in this initiative into four tracks:

• Outage Management
• Uplift and Default Energy Bids (DEBs)
• State of Charge (SOC) Management; and
• Mixed-Fuel and Distribution-Level Resources

Of these – depending on the ultimate proposal – the impacts of Outage Management appear to have the biggest impact on affordability and reliability, as they could result in new Resource Adequacy Availability Incentive Mechanism (RAAIM) penalties or in consequential reduction to energy storage’s ability to participate in the RA and energy markets. We therefore recommend CAISO focus more time and attention on this topic, and a more durable and cost-effective method of addressing foldback than on some of the other, highly complex and resource intensive topics in this initiative. Notably, ACP-California continues to have strong concerns with CAISO’s proposed approach addressing non-linearity, which would only reflect the range unaffected by foldback in the CAISO’s Master File. This approach limits the amount of energy available for optimization by the market and appears too focused on the CPUC’s RA definitions (making it problematic for EDAM Entities with different RA rules). It would also degrade the value of storage in the market, thereby requiring additional resources in excess of what is actually needed for system reliability and unnecessarily increasing costs. We ask CAISO to focus efforts on finding an agreeable and implementable solution to the foldback/non-linearity as a key priority in this initiative. We do not believe the current CAISO proposal achieves that goal. Instead, we recommend additional review of the proposal from REV Renewables and other stakeholders. We look forward to more details from the CAISO in the meeting later in January.

SOC management is another important topic that deserves attention and focus from the CAISO, as there are proposals that could improve SOC management and may provide significant benefits to ratepayers and storage operators alike. For example, there may be performance-based alternatives to artificial restrictions on SOC which would enable better optimization.

We also believe there are reasonable proposals, such as those from NextEra on Mixed-Fuel resources, which may be easy to implement and, therefore, could be prioritized.

While Uplift and DEBs are important, there is also significant complexity in implementing modifications needed to address the challenges, as evidenced by the Issue Paper released on December 12^th. Below we offer some thoughts on topics within this track to prioritize, but overall recommend CAISO simplify its scope to the items that can reasonably be tackled without diverting significant resources from other, higher-priority topic areas. Alternatively, the CAISO could consider if it’s appropriate to pause this track of the initiative to focus resources on other proposals.

Prioritization of the Topics within Uplift and DEB

ACP-California recommends against spending its limited resources on day-ahead BCR elimination or other revisions to day-ahead BCR at this time. Given the limited impact of these changes, and the upcoming market changes with implementation of the Day-Ahead Market Enhancements, this topic area does not warrant significant focus. We recommend pausing additional efforts on day-ahead BCR for storage and only taking up this issue after addressing other, more impactful proposals in this track of the initiative, as well as the other tracks of the initiative.  

To support most of the real-time BCR proposals, it seems that it will be imperative to increase the accuracy of DEBs for storage and make them more granular than the day-ahead DEBs used today. Notably, CESA’s proposal for real-time BCR is reliant on accurate DEBs. Therefore, CAISO should devote more effort in this initiative to improving DEBs for storage, which will, in turn help support improved real-time BCR.

ACP-California would also support pausing uplift and DEB discussions at this time if it would provide more support and resources for the other tracks of this initiative, which are likely to be more impactful.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

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3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

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4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

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5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

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6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

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7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

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8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

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9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

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10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

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11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

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1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

AES appreciates the opportunity to discuss the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bids. AES recognizes that CAISO has conducted extensive analysis on current BCR drivers and we value this foundational work. However, consistent with prior comments, AES emphasizes the need for a comprehensive and holistic discussion regarding the appropriate uplift framework for storage resources before implementing modifications to day-ahead or real-time BCR mechanisms. AES supports the working group's focus on three interconnected issues—state-of-charge management, default energy bid enhancements, and uplift redesign—which must be addressed together to improve storage market outcomes.

AES recognizes that Appendix A consolidating storage constraints is a valuable first step toward holistic review. However, AES is concerned that the current initiative scope may be constrained by analysis within the existing BCR framework rather than first establishing the foundational design principles for a storage-specific uplift mechanism. AES recommends prioritizing the development of a storage-specific uplift framework that can serve as the foundation for subsequent modifications to other market design elements. 

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

AES agrees that day-ahead BCR payments to storage are minimal given the 24-hour binding optimization horizon. However, AES does not support immediate elimination of day-ahead BCR for storage as a standalone modification. AES recommends that discussions regarding day-ahead BCR modifications be sequenced after the stakeholder community has engaged in a holistic discussion of the appropriate uplift framework for storage. Such modifications may prove unnecessary or counterproductive if a different uplift paradigm is ultimately adopted. Additionally, with upcoming Day-Ahead Market Enhancements (DAME) deployment, new market products may create different drivers for day-ahead uplift, making premature elimination inadvisable. AES supports continued monitoring by DMM for uplift-seeking behavior.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

AES recognizes that multiple factors drive real-time uplift, including initial SOC interactions, exceptional dispatch, local market power mitigation, seemingly "out-of-merit" dispatch in the binding interval, and ancillary service constraints. AES notes that DMM's analysis showing 24% higher revenues from multi-interval optimization suggests that storage resources generally benefit from current market design. However, AES agrees with CESA and other stakeholders that outlier resources experiencing more frequent seemingly out-of-merit dispatch merit consideration in any future uplift mechanism.

AES supports further analysis on whether constraints such as the ancillary services state-of-charge constraint are optimal in design or whether alternative approaches—such as real-time ancillary service re-optimization—could reduce the need for these constraints and associated uplift. However, any fundamental changes to ancillary service management should be carefully evaluated to ensure reliability is maintained.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

AES supports the three guiding principles outlined in the paper, particularly the need to develop a separate and distinct uplift mechanism specifically designed for storage. However, AES recommends that CAISO first establish broader consensus on what this mechanism should achieve before pursuing individual modifications. AES agrees that storage resources should not be insulated from the consequences of their own bidding behavior, but should receive protection against uneconomic dispatch caused by market design elements or ISO actions outside their control.

AES agrees with the principle that determination of whether shortfalls are attributable to bidder or market operator actions is essential. However, AES notes this determination is complex and will require detailed analysis and potentially new monitoring protocols. AES recommends that CAISO develop clear methodologies for making these determinations before implementing any new uplift mechanism.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

 AES supports the DEB problem statement and guiding principles. AES emphasizes that improvements to storage DEB methodology should be prioritized as a near-term deliverable because accurate default energy bids are essential for effective local market power mitigation and can reduce reliance on real-time uplift mechanisms. AES supports ensuring that all storage resources—whether participating in day-ahead, EDAM, or WEIM-only operations—can access improved DEB methodologies.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

 AES supports improvements to storage DEB methodology to better reflect real-time opportunity costs and conditions. AES acknowledges that different approaches vary in complexity and feasibility. AES recommends that CAISO evaluate options that enable real-time DEB updates or time-of-day DEB structures when system conditions materially change between day-ahead and real-time, rather than pursuing hourly real-time DEBs which may be unduly complex given the short lookahead horizon of real-time processes.

AES agrees with stakeholders that enhancing DEB accuracy is preferable to exempting storage from local market power mitigation. Maintaining mitigation protects ratepayers while improvements to DEB methodology enable storage to accurately reflect real-time costs.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

AES recommends that changes to day-ahead uplift be aligned with and sequenced after the development of a new real-time uplift framework for storage. AES does not view elimination of day-ahead BCR as a standalone modification, but as one element of a broader rethinking of storage uplift consistent with the guiding principles. AES supports pausing discussions on day-ahead BCR modifications until the stakeholder community has reached agreement on the appropriate uplift framework.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

AES recognizes that ancillary service constraints are necessary to ensure storage resources can deliver their day-ahead awards. However, AES supports continued discussion of whether real-time ancillary service re-optimization could reduce the need for these constraints by enabling the market to balance the tradeoff between maintaining ancillary services and other operational needs. Such re-optimization could improve efficiency while maintaining reliability.

AES recognizes that full real-time ancillary service re-optimization represents a significant implementation lift but notes that partial re-optimization in the fifteen-minute market may be more feasible. AES recommends that CAISO continue evaluating the technical feasibility and benefits of ancillary service re-optimization as part of the broader uplift framework discussion.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

No comments

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

 AES supports continued development of a real-time make-whole payment design specific to storage resources. AES recommends that this effort proceed with careful attention to distinguishing between shortfalls caused by storage operator actions and those caused by market design constraints or ISO actions. AES recognizes that the conceptual frameworks presented (Options A, B, and C) each introduce different tradeoffs in terms of regulatory risk, implementation feasibility, and effectiveness.

AES supports prioritizing real-time uplift design before pursuing day-ahead modifications, as storage economics are primarily driven by real-time arbitrage opportunities. AES recommends that CAISO develop detailed design specifications, including a methodology for determining causation of shortfalls, before proceeding with implementation.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

AES recommends that CAISO prioritize the following sequencing for the Storage Design and Modeling initiative: (1) Complete a holistic discussion on appropriate uplift framework for storage; (2) Develop and implement storage DEB enhancements; (3) Design and implement storage-specific real-time make-whole mechanism; and (4) Make sequenced modifications to day-ahead uplift and initial SOC requirements informed by prior steps.

 AES recommends against implementing new system-wide SOC constraints, as these may drive uneconomic dispatch and increase rather than decrease uplift needs. Market transparency combined with improved DEB methodology and a well-designed real-time make-whole mechanism should enable storage resources to respond efficiently to system conditions.

AES emphasizes that any uplift framework modifications should balance several objectives: (1) incentivizing efficient bidding and SOC management; (2) ensuring storage resources are compensated for uneconomic dispatch outside their control; (3) maintaining reliable ancillary service delivery; and (4) minimizing implementation complexity and regulatory risk. AES looks forward to continued engagement with the stakeholder process to develop an uplift framework that achieves these objectives.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) Storage Design and Modeling Uplift and Default Energy Bid (DEB) Working Group Updated Discussion Paper (Discussion Paper). CalCCA agrees with the problem statement documented in the Discussion Paper that the current bid cost recovery (BCR) mechanism could incentivize inefficient bidding by insulating batteries from losses associated with bidder behavior.^[1] CalCCA also supports the Discussion Paper’s principles, including the need to: (1) develop a separate and distinct BCR mechanism for storage resources; (2) incent assets to be able to deliver their awards, while eliminating incentives for strategic bidding behavior; and (3) determine whether the losses were incurred due to bidder behavior (and therefore may not warrant uplift) or due to market algorithms or CAISO action (and therefore may warrant uplift).

CalCCA is concerned by the CAISO’s proposal to remove BCR for storage resources in the day-ahead (DA) timeframe. The CAISO states that “all non-negligible instances of DA bid cost recovery paid to batteries identified by Department of Market Monitoring since 2022 have been exclusively associated with interactions between scheduling coordinator-submitted parameters (e.g., minimum and maximum operating limits, self-schedules, outages) and the DA optimization, causing uneconomic market dispatches.”[2] However, it is not clear that this will always be the case, especially given that the CAISO is in the process of implementing significant reforms to the DA market. In addition, the use of storage on the grid is still in its early stages, and it is unlikely that the market has seen all the interactions that storage will have in the DA market. For this reason, if the CAISO moves forward with its proposal to eliminate DA BCR for storage, it should report to market participants quarterly for two years after implementation on the amount and cause of DA BCR that storage resources would have received had they been eligible. Doing so will allow stakeholders to determine whether the basis for not allowing DA BCR remains true or, if not, what measures need to be taken to define DA BCR in a manner that follows the principle that BCR is available only when losses are incurred due to market algorithms or CAISO action. 

The CAISO should seek to enhance its DEB methodology to account for real-time conditions and its BCR methodology to compensate storage resources for net losses over the day. More accurate DEBs should improve market efficiency and reduce the need for uplift. A targeted BCR methodology for storage should better ensure delivery of awards while eliminating incentives for uplift-seeking behavior.

The Discussion Paper summarizes various stakeholder proposals for enhancing the DEBs. CalCCA does not yet take a position on these various proposals but recommends that the CAISO further explore DEB enhancements rather than pursue modifications that would exempt storage resources from local market power mitigation (MPM) and uplift payments. MPM is a critical component of the CAISO’s market design to prevent suppliers from exerting market power, maintain competitive market outcomes, and ensure just and reasonable rates for customers. The CAISO should therefore seek to enhance the tools and methodologies used to manage storage resources in the market and provide uplift payments without exempting the technology from MPM.   

The CAISO should require the submission of the DA initial state-of-charge (SOC) parameter within a certain accuracy range. In general, scheduling coordinators (SC) should be responsible for accurately reflecting their resources’ characteristics rather than relying on a default value. CalCCA supports adopting a mechanism to incent submissions within a pre-defined accuracy range. If an SC does not select a value despite the requirement to do so, then the CAISO should include a default value. If the default value is outside the accuracy range, the resource should be ineligible for uplift.

[1]            Discussion Paper, at 17-18.

[2]            Discussion Paper, at 8.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

See response in Section 1.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

See response in Section 1.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

See response in Section 1.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

See response in Section 1.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

See response in Section 1.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

See response in Section 1.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

See response in Section 1.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

See response in Section 1.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

See response in Section 1.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

See response in Section 1.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

The California Energy Storage Alliance (CESA) appreciates the opportunity to discuss the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bids. CESA has provided comments on these issues throughout 2025. CESA looks forward to discussing actual market design proposals in 2026. CESA reiterates its initial comments in this initiative: we “should discuss the foundational changes regarding SOC management and then how the related design considerations such as BCR, DEB, and other design elements need to be modified to support efficient use of storage in the market.”

As CAISO highlights, there are close to 20,000 MW of storage resources operating in the WEIM which is an increase from 500 MW in just 5 years. CESA continues to recommend a holistic review of how storage is modeled and dispatched in the day-ahead and real-time markets. The past several years, CAISO has been reactionary to unintended impacts to bid cost recovery. The perception is that the CAISO’s starting position is to eliminate bid cost recovery (BCR) for storage versus identifying the root cause of the market dispatching storage inefficiently. 

CESA is appreciative of Appendix A - CAISO Storage Resource Constraints: Existing Rules and Planned Enhancements. The appendix does a good job of consolidating the storage-related constraints in a single document. This is a great first step toward meeting CESA’s request for a holistic review of storage constraints. However, it is important to understand how each of the constraints is implemented in the market – which variables are held fixed, which are allowed to change, and what their priorities are. When a variable is held fixed, this leads to uneconomic energy dispatches which may or may not warrant a make-whole payment.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

Day-ahead BCR is extremely low because the full 24-hour horizon is financially binding. DMM should continue monitoring for uplift-seeking behavior. CAISO should focus on developing an appropriate real-time make-whole payment designed specifically for storage. An appropriate real-time make-whole design would ensure storage resources are not harmed over the course of an operating day in the event of uneconomic dispatches that are outside the storage operator’s control. After the real-time make-whole design has progressed, the appropriate changes to day-ahead BCR should be considered given the interactions between day-ahead schedules, initial SOC estimates, and real-time BCR. 

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

CESA agrees that interactions with the initial SOC, exceptional dispatch, local market power mitigation (impacting both discharging and charging), out-of-merit dispatches in the binding interval, and ancillary services constraints can all result in the need for a real-time make-whole payment. Also, limitations in the length of the real-time market horizon and the decision to protect AS award rather than re-optimizing hamper the ability to efficiently dispatch storage for the balance of the day.

CESA does take issue with CAISO’s position that out-of-merit dispatches in the binding interval are “seemingly” out-of-merit. Since the full real-time market horizon is not financially binding, only in the event that system conditions remain unchanged will the advisory dispatch materialize when the market is financially binding. If a storage resource was not discharged in the binding interval to provide energy because the resource would be paid a higher price to discharge later, then if CAISO was correct there would be greater revenue surplus which decreases the need for a real-time make-whole payment. Likewise, if a storage resource was dispatched to charge uneconomically in the binding interval because the spread between its charge bid and discharge bid was economic over the horizon, then the storage resource would have a shortfall in the first interval that is more than covered by the subsequent interval’s revenue surplus. This would then negate the need for a real-time make-whole payment. Since system conditions do change is the exact reason a real-time make-whole payment design is necessary. 

Lastly, a key market design element of the flexible ramping product (FRP) was to ensure resources were indifferent between being dispatched out-of-merit for energy. This is because that cost would be reflected in the appropriate FRP award/price in the upward and downward directions through the settlement of forecasted movement. For example, if a resource was not dispatched to provide energy because it is needed to meet the next interval’s net load forecast, the opportunity cost would be reflected in the FRP up price of forecasted movement. The sum of the energy price and the FRP up price less the FRD down price should be consistent with the energy bid. Given FRP prices are consistently zero, CESA requests the CAISO ascertain why storage out-of-merit dispatches are not resulting in non-zero FRP prices. As CAISO data showed, 16% of resources receive out-of-merit dispatches in the binding interval in excess of 10% of all binding intervals. Thus, there should be far greater instances of non-zero FRP forecasted movement prices.   

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

CESA supports DMM’s continuing monitoring for strategic bidding behavior. CESA does not ethat storage operators are incentivized to proactively use bids to manage the SOC to maximize arbitrage value between the day-ahead and real-time market. The issue is that if the storage operator incorrectly forecasts future real-time system conditions – for instance, they discharge too early – they are not exposed to the full consequences of not meeting their day-ahead schedule. The problem statement should reflect the fact that the existing BCR framework does not accurately account for the unique inter-temporal use-limitations of storage. Thus, a new real-time make-whole payment design needs to be developed.

CESA believes that the first two guiding principles are actually the correct problem statement: (1) there is a need to develop a separate and distinct uplift mechanism specifically designed for storage, and (2) the storage uplift mechanism should incent assets to be able to deliver their awards and schedules while eliminating incentives for strategic bidding behavior.

CESA agrees with guiding principle number 3. When developing the real-time make-whole payment design, it must be determined if a shortfall was caused by (1) storage operator actions or (2) market operator actions. If the shortfall is caused by the storage operator, then the shortfall should not be eligible for a potential make-whole payment. If the shortfall is caused by the market operator, then the storage should be eligible for a potential make-whole payment. Note that the term potential is important, because only if the storage resource is uneconomic over the course of the full day will it receive a make-whole payment. Thus, only in outlier situations where aggregate shortfalls exceed the aggregate profits across the operating day, is there a payment and corresponding uplift.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

CESA largely agrees with the DEB problem statement and guiding principles. CESA requests the problem statement include a need to be able to adjust the DEB using Reference Level Change Request similar to traditional resources and that storage should not have their charge bid range overly mitigated.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

CESA believes (1) the real-time DEBs cannot be based solely on day-ahead inputs, (2) the storage DEB should be calculated consistently across the WEIM footprint, and (3) the real-time DEB should be updated for the balance of the day if system conditions change significantly between day-ahead and real-time. Also, as CESA highlighted in the Price Formation Enhancements - Rules for Bidding Above the Soft Offer Cap[1], the DEB needs to position storage correctly in the system-wide bid stack. For example, why would the real-time storage DEB ever be lower than a gas resource or an intra-day limited hydro resource? 

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/85588b88-39b0-488a-9a74-e29598d8b3dd#org-954b55ca-1324-44b8-9e29-22de3bd38acd

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

CESA supports determining changes to day-ahead uplift to be aligned with the new real-time make-whole payment design. CESA does not view elimination of day-ahead bid cost recovery for storage resources as a standalone modification, but as part of a broader rethinking of storage uplift. 

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

The implementation of the ancillary services state-of-charge constraint (ASSOC) is a perfect example of the CAISO being reactionary rather than having a holistic review of how storage is managed in the market optimization. When it was identified that the ASSOC could lead to high BCR payments, the CAISO presented the issue to the Market Surveillance Committee and immediately filed to eliminate BCR when the ASSOC is binding. Another approach, which would have been consistent with treatment of other resources when their ancillary services awards became unavailable, is to remove the resource’s award and subject it to no-pay provisions. The CAISO made the policy decision to uneconomically dispatch storage resources to preserve AS awards with minimal discussion with stakeholders. In the context of the new real-time make-whole payment design, does this policy decision mean the market operator is causing the shortfall and thus the storage operator is eligible for a real-time make-whole payment?

The CAISO’s Price Formation Enhancements initiative recently removed from its scope the re-optimization of AS in the real-time market. The current CAISO policy initiatives roadmap has removed AS re-optimization through 2028. The presentations of PG&E and Vistra demonstrated that if CAISO was to fully re-optimize AS, the ASSOC would work efficiently and determine the most cost-effective resources to meet energy and AS requirements across the entire fleet. Also, full AS re-optimization would replace AS no-pay with re-procurement at the real-time price for unavailable day-ahead AS awards for all resource types.

Appendix A - CAISO Storage Resource Constraints: Existing Rules and Planned Enhancements   does a good job of consolidating the storage-related constraints in a single document. This is a great first step in meeting CESA’s request for a holistic review of storage constraints. However, it is important to understand how each of the constraints is implemented in the market and which variables are held fixed, which are allowed to change, and what their priorities are.  When a variable is held fixed, this leads to uneconomic energy dispatches which may or may not warrant a make-whole payment. Holding AS awards fixed in the real-time market drives uneconomic energy dispatches

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

CESA believes the day-ahead initial SOC should be considered as part of the new real-time make-whole payment design. 

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

CESA believes Option A is insufficient. It does not address the potential for out-of-merit dispatches to cause a storage operator to have costs in excess of revenues over the course of a day. As CAISO data showed, 16% of resources receive out-of-merit dispatches in the binding interval in excess of 10% of all binding intervals. A real-time make-whole payment design must protect against the CAISO market causing storage operators to lose money over the course of an operating day.

CESA looks forward to more detailed design discussions on the conceptual framework (Option B) CESA proposed in July 2025. The conceptual framework seeks to differentiate between when potential shortfall is caused by the storage operator and when it is caused by the market operator. The market operator establishes the real-time DEB. Thus, if the storage operator bids consistently with the DEB, then the market operator is responsible for causing the potential shortfall and the storage operator is eligible for a real-time make-whole payment if necessary to cover its costs over the full day. If the market operator observes changes in system conditions between day-ahead and real-time, the market operator should adjust, or allow to be adjusted, the real-time DEBs for the remainder of the day. The conceptual framework enables monitoring of the real-time make-whole payments to evaluate if the real-time DEB is sufficient to enable storage operators to reflect real-time energy conditions. For example, if real-time make-whole payments are high, this could be caused by too low of a real-time DEB is too low which lead to an increase, in cases where the storage resource was dispatched earlier than its day-ahead schedule.

CESA views the Vista proposal (Option C) as the opposite bookend to DMM’s approach to eliminating BCR generally unless a need for an uplift payment is identified.  Vistra, on the other hand, would eliminate market design elements that can cause uplifts that are outside the storage operator’s full control. CESA agrees the framework is a “compromise” in which the CAISO ceases certain practices that drive storage dispatch in exchange for the complete elimination of uplift or make-whole mechanisms for storage resources. CESA agrees that if CAISO wants to drive storage dispatch, that these market operator actions should be eligible for real-time make-whole payments when over the course of an operating day, the market operator incorrectly managed the storage dispatch.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

CESA supports providing additional transparency regarding the system state of charge. This additional information will inform storage operators of changes in system conditions from day-ahead to real-time and inform real-time bidding decisions. CESA opposes implementation of a system-wide SOC constraint in the optimization. This constraint would drive up uneconomic dispatch, increasing the amount of real-time make-whole payments. 

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

Comments on Storage Design and Modeling

Updated Discussion and Issue Paper on Uplift and Default Energy Bid

Department of Market Monitoring

January 8, 2026

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Storage Design and Modeling Uplift and Default Energy Bid Working Group Updated Discussion and Issue Paper dated December 12, 2025.[1]

DMM supports the ISO addressing storage bid cost recovery (BCR) issues and enhancements to the storage default energy bid (DEB) as top priorities. DMM recommends the ISO prioritize incremental improvements to the storage DEB without further delay, and independent of any proposed revisions to storage BCR.

Specifically, DMM recommends that the ISO place priority on taking near term action to:

1. Create a standardized storage DEB option for Western Energy Imbalance Market (WEIM) resources, and
2. Implement software changes to allow the default energy bids to vary hourly.

DMM recommends the ISO fast-track these enhancements separately, while continuing to discuss storage uplift issues and further refinements to the storage DEB, such as the specific values the DEB may take on at different times of the day.

While DMM continues to support an hourly storage DEB that reflects estimated intraday opportunity cost associated with future intervals and changing real-time conditions, DMM recommends the ISO prioritize development of a simpler storage DEB that incorporates some degree of intraday variability and attempts to address dynamic market conditions.[2] This simpler approach may only result in two or three values of the DEB at different points in the day, but could be much easier to implement and would likely still be a substantial improvement over the current storage DEB.

DMM continues to recommend a default position of no BCR for storage resources, with only narrowly defined exceptions where BCR is necessary to promote efficient bidding and market outcomes of storage resources.[3] The ISO and stakeholders have not demonstrated that day-ahead (DA) BCR for storage resources is necessary to support market efficiency and therefore DMM supports eliminating BCR for storage resources in the DA.

One scenario in real-time (RT) where uplift may be appropriate is when storage resources are dispatched less efficiently due to local market power mitigation. Instead of continuing to have broadly applicable RT BCR for storage resources to address this situation, DMM recommends ISO and stakeholders focus on alternative compensation mechanisms to provide RT uplift to storage resources in certain instances of bid mitigation, while specifically targeting BCR or other uplift payments as appropriate for other identified scenarios.

DMM continues to support addressing the current lack of incentive for storage resources to submit accurate DA initial state-of-charge (ISOC) parameters. DMM believes this can be achieved through establishing a default of no BCR for storage resources. DMM supports requiring DA ISOC submission independent of the BCR issues. DMM continues to recommend strengthening the tariff language to better define expected use of the DA ISOC in order to promote reliability and discourage misuse of this parameter.

DMM recommends consideration of market enhancements that would enable re-optimization of ancillary services in real-time. Until those updates are in place, DMM does not support the proposals made by stakeholders to change the ancillary services state-of-charge framework.

Comments

The ISO should prioritize incremental improvements to the storage DEB

DMM has previously noted issues with the current storage DEB and has long recommended the storage DEB be refined to better incorporate real-time intraday opportunity costs.[4] In particular, since the DEB is static across all hours of the day, the DEB does not account for how intraday opportunity costs vary across the day. In addition, the utilization of day-ahead prices does not account for differences that can materialize between the day-ahead and real-time, and prohibits WEIM resources from being able to utilize the storage DEB.

While DMM continues to believe the most accurate DEB would vary hourly and dynamically reflect real-time conditions, DMM also recognizes that development of such a DEB may involve significant design and implementation complexities. Therefore, DMM recommends that the ISO and stakeholders prioritize an incremental approach to storage DEB enhancements and concentrate on the software updates required to make this approach feasible. Specifically, DMM recommends that the ISO modify the software to enable storage DEBs to vary hourly and provide an option for WEIM resources to utilize the storage DEB. While a simplified storage DEB may only have two or three different values within the day, software changes that would allow different values each hour would provide a flexible implementation that would not predetermine the number of different values within the day or the hours in which different values apply.

The ISO should place priority on creating an option that enables WEIM resources to utilize the storage DEB

WEIM resources are currently unable to utilize the storage DEB option available to resources within the CAISO simply because there are no day-ahead market prices for WEIM areas that can be used in calculating the DEB.  DMM recommends the ISO create an option that leverages other price data to implement the storage DEB calculation for WEIM resources.

Currently, market participants must use the negotiated DEB (NDEB) process to establish a version of the storage DEB for WEIM resources. This calculation typically utilizes default generation aggregation point (DGAP) prices, along with an hourly shaping factor multiplier that captures volatility between day-ahead and real-time. After the scaled hourly prices are calculated, the opportunity cost component is equal to the n^th highest hourly scaled DGAP price, similar to the storage DEB calculation available to CAISO resources. DMM recommends the ISO consider a solution similar to this approach that could allow the storage DEB calculation to be utilized by all WEIM storage resources, without the need for an NDEB.

DMM would support a simpler storage DEB that does not vary for each hour, but allows use of several different values for different periods of the day

While DMM recommends the ISO implement software changes that allow the DEB to vary hourly, DMM recognizes that hourly DEBs may be more challenging to calculate. DMM would support an incremental enhancement to the storage DEB design that allows the DEB to take on two or three values across the day, rather than 24. The purpose of implementing a software change that enables hourly variation in the DEBs is to allow flexibility in assigning values to individual hours and to support future enhancements that may calculate hourly intraday opportunity costs.

The primary objective of the variability of storage DEBs is to allow hours with the greatest intraday opportunity costs to have higher DEBs, but not to apply these higher DEBs in hours where the intraday opportunity costs are much lower—particularly during net peak hours when market conditions are tight and market power can be more easily exerted. Therefore, DMM would support a storage DEB that focuses on providing more headroom for storage resources during hours leading up to the net peak hours and less headroom during the net peak hours when intraday opportunity costs are much lower. A third value between these values might also be used to estimate opportunity costs in the remaining hours of the day when recharge opportunities are plentiful before reaching the highest priced hours of the day during the net load peak.

DMM recommends an approach that does not hard code the net peak hours and hours that tend to be those leading up to the net peak, as these hours likely change seasonally and there may be changes in long-term trends as well. DMM believes that implementing software changes that enable DEBs to vary hourly would allow for a more sophisticated mechanism that designates which hours the DEBs should provide more or less headroom, and would position the ISO to potentially adopt an hourly storage DEB design in the future.

DMM continues to recommend storage resources only be eligible for BCR under specific situations where BCR is deemed appropriate

DMM continues to recommend a bottom-up approach to BCR which assumes storage resources should not be eligible for BCR, and only adds eligibility under specific situations where deemed appropriate.[5] Therefore, DMM continues to support the ISO’s proposal to eliminate DA BCR for storage resources, as the ISO and stakeholders have not demonstrated that DA BCR for storage resources is necessary to support market efficiency.

DMM believes a similar approach should be taken for RT BCR, but acknowledges that bid mitigation may result in situations where it may be appropriate for storage resources to receive RT BCR. DMM recommends a targeted approach to providing uplift in this or other situations where appropriate, instead of providing RT BCR eligibility by default and seeking targeted exclusion of RT storage BCR payments.

DMM does not believe rules establishing the removal of DA BCR should be deferred until the implementation of the extended day-ahead market (EDAM) and day-ahead market enhancements (DAME).  DMM does not believe that these market changes would necessitate providing DA BCR for storage resources to maintain market efficiency, particularly for EDAM. While DAME introduces new products that could potentially affect DA BCR, the ISO and stakeholders have not identified other circumstances in which DA BCR for storage resources would be necessary.

Given that the current DA BCR framework is well documented to produce unwarranted BCR payments and be susceptible to gaming, DMM continues to recommend a default position of no DA BCR for storage resources, but recommends the ISO and stakeholders work to identify situations under DAME where DA BCR payments may be necessary, developing targeted uplift approaches as appropriate. While DMM acknowledges there may be unforeseen interactions with new DAME products, the period following EDAM and DAME go-live before new storage BCR rules are implemented would allow the ISO to address those additional cases in a targeted manner before any BCR rule changes are implemented.

As DMM has previously stated, allowing storage resources to receive RT BCR for day-ahead buybacks due to insufficient state-of-charge removes their exposure to real-time prices, and fails to incentivize efficient bidding for storage resources in the real-time and can lead to inefficient market outcomes.[6] DMM continues to recommend that storage resources only be eligible for RT BCR under specific situations where deemed appropriate. DMM acknowledges that uplift may be warranted when local market power mitigation leads to inefficient dispatch of storage resources and recommends these and any other specifically identified scenarios be carved out specifically.

The working group should discuss alternatives to appropriately compensate storage resources whose dispatch was impacted by bid mitigation

The Option A approach in the issue paper follows the bottom-up approach recommended by DMM. This approach would remove eligibility for both DA and RT BCR but would create a mechanism to provide uplift to storage resources in certain scenarios where their bids were mitigated. DMM previously supported an approach like the mechanism used to compensate storage resources that are exceptionally dispatched to hold state-of-charge. The ISO indicated that applying this mechanism more broadly would impose a significant implementation burden and could make Option A less feasible.

DMM requests the ISO provide additional information about why the wider application of this mechanism would create such a substantial burden. DMM’s understanding is that the counterfactual calculation is a post-production process, so it is unclear to DMM why increasing the number of counterfactual runs would impose such significant technical challenges as to significantly jeopardize the feasibility of Option A. DMM requests that the ISO provide a clearer explanation of which aspects of the compensation mechanism make broader applicability so burdensome, and allow consideration of alternative approaches that avoid the ISO’s concerns.

Although Option A may require a significant implementation effort, DMM notes that Option B would also require a significant implementation effort, would introduce numerous challenging design issues, and may not address all of the scenarios where storage resources would receive unwarranted BCR. To accurately determine which intervals storage resources are bidding inefficiently would require more sophisticated DEBs, potentially more complex than the incremental improvements currently being discussed in the working group.[7] Aside from the difficulties in assessing whether the bidding behavior was efficient, DMM believes that designing a framework that systematically identifies which intervals with inefficient bidding behavior result in shortfalls in other intervals will be extremely challenging.

DMM does not see Option C (eliminating BCR and mitigation of storage resources) as a workable approach, as it would be inappropriate to eliminate mitigation of storage resources. DMM recommends the ISO prioritize discussion of a potential alternative for addressing uplift associated with local market power mitigation of storage resources to make Option A more feasible. A more easily implementable compensation approach would capture the benefits of Option A while avoiding the shortcomings of Options B and C.

DMM continues to support changes aimed at increasing the incentive for resources to submit accurate day-ahead initial state-of-charge and recommends strengthening the tariff language to better define how this parameter should be used

DMM supports the ISO’s proposal to address the current lack of incentive for storage resources to submit accurate DA ISOC parameters. DMM believes this can be achieved by removing BCR eligibility for day-ahead buybacks due to insufficient SOC along with the ISO’s proposal to require the submission of DA ISOC as part of DA bids. Outside of the BCR context, DMM continues to support the ISO requiring the submission of the DA ISOC parameter for reliability purposes.[8]

DMM also continues to support strengthening the tariff language to better define the expected use of DA ISOC. Specifically, DMM recommends the tariff language highlight that the parameter should be used to reflect a physical expectation of how the resource will be positioned in real-time at the beginning of the operating day, and explicitly state that it is not to be used solely for the purpose of effectuating a desired day-ahead schedule for economic purposes.

DMM supports the ISO considering real-time optimization of ancillary services, but strongly recommends maintaining the ASSOC constraint until such a large policy initiative is taken

DMM continues to support the ISO considering enhancements to re-optimize ancillary services (AS) in real-time.[9] However, until such a policy change is implemented, DMM does not support the proposals made by stakeholders to change to the current ancillary service state-of-charge (ASSOC) framework.[10]

DMM does not support providing bid cost recovery for uneconomic dispatches due to the ASSOC constraint. Costs associated with state-of-charge management to ensure deliverability of awarded ancillary services are costs of storage resources providing ancillary services, and like other operating costs, should be borne by the resource and factored into market bids. By providing BCR for uneconomic dispatches of storage resources associated with maintaining ancillary services, storage resources do not face the full cost of their ancillary service provision. Providing BCR associated with the ASSOC constraint binding may also incentivize dependence on the constraint instead of incentivizing resources to take more efficient actions to manage state-of charge leading up to ancillary service awards.

Ensuring storage resources are properly incentivized to provide their ancillary service awards is necessary for market reliability. DMM does not believe that subjecting storage resources to AS no-pay when ancillary service awards are undeliverable is sufficient incentive for storage resources to be available for their ancillary service awards. Additional constraints and market incentives are necessary to support reliability by ensuring deliverability of awarded ancillary services.

[1]  Storage Design and Modeling Uplift and Default Energy Bid Working Group Updated Discussion and Issue Paper, California ISO, December 12, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Storage-Design-and-Modeling-Updated-Discussion-and-Issue-Paper-on-Uplift-and-Default-Energy-Bid-Dec-12-2025.pdf

[2]  Comments on Storage Design and Modeling Working Group Presentation on November 12, 2025, Department of Market Monitoring, November 26, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-nov-12-2025-working-group-presentation-nov-26-2025.pdf

[3]  Comments on Storage Design and Modeling Working Group Presentation on September 29, 2025, Department of Market Monitoring, October 14, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-sep-29-2025-working-group-presentation-oct-14-2025.pdf

[4] Comments on Storage Design and Modeling Working Group Session 2 and 3, Department of Market Monitoring, March 7, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-working-group-sessions-2-and-3-mar-07-2025.pdf

[5]  Comments on Storage Design and Modeling May 28, 2025 Presentation, Department of Market Monitoring, June 11, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-may-28-2025-presentation-jun-11-2025.pdf

[6] Comments on Storage Design and Modeling Working Group Presentation on June 30, 2025, Department of Market Monitoring, July 16, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-jun-30-2025-working-group-presentation-jul-16-2025.pdf

[7]  Specifically, it would be imperative for DEBs to vary hourly under the Option B framework. Bidding in any hour can affect BCR eligibility in all other hours. Therefore, it would be very important for the DEBs to vary hourly to ensure resources are properly ineligible/eligible for BCR in other hours. For instance, if a DEB is too high, then resources may be bidding to charge at reasonable prices but if it’s not higher than their DEB, this could trigger the resource to be ineligible for BCR in a following hour as it may appear the resource was not bidding efficiently to ensure a charging schedule.

[8]  Comments on Storage Design and Modeling Working Group Presentation on November 12, 2025, Department of Market Monitoring, November 26, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-nov-12-2025-working-group-presentation-nov-26-2025.pdf

[9]  Comments on Price Formation Enhancements: Discussion Paper and Stakeholder Recommendations, Department of Market Monitoring, October 14, 2024: https://www.caiso.com/documents/dmm-comments-on-price-formation-enhancements-discussion-paper-oct-14-2024.pdf

[10] Comments on Storage Design and Modeling Working Group Presentation on August 14, 2025, Department of Market Monitoring, September 5, 2025: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-aug-14-2025-working-group-presentation-sep-05-2025.pdf

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

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

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

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

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

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

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

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

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

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

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

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

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

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

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

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

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

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

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

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

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

Energy Division staff (ED Staff or Staff) of the California Public Utilities Commission (CPUC) develops and administers energy policy and programs to serve the public interest, advises the CPUC, and ensures compliance with CPUC decisions and statutory mandates. ED staff provides objective and expert analyses that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California.[1]

ED Staff appreciates the ISO’s summary of ongoing stakeholder discussions in the Updated Discussion and Issue Paper regarding Uplift & Default Energy Bids (DEB). Staff support the uplift and DEB problem statements and guiding principles presented by the ISO in the Updated Paper. Staff emphasize the need to design a separate and distinct uplift paradigm for storage resources that better represent their unique characteristics and eliminates opportunities for strategic bidding. The current Bid Cost Recovery (BCR) framework does not create strong incentives to ensure resources are managing their state-of-charge (SOC) accurately and can distort bidding incentives for storage resources resulting in less reliable day-ahead (DA) schedules and increased costs for ratepayers through uplift payments that are generally not warranted. We urge the ISO to adopt the Department of Market Monitoring’s (DMM) near term solution as it best addresses the concern of storage resources unfairly maximizing BCR payments, which are unjust and costly for ratepayers.  

Staff supports: 

• Eliminating DA BCR for storage resources. 
• Not allowing Real Time (RT) BCR eligibility, with the exception of a few limited and specific scenarios (i.e. exceptional dispatch and local market power mitigation) 
• Requiring battery operators to submit DA Initial State of Charge (ISOC) for transparency and reliability, but ensuring no RT BCR for storage resources buying back day-ahead schedules due to insufficient SOC. 
• Developing hourly storage DEBs that are dynamic and reflective of changing opportunity costs in real-time. 
• DMM’s proposed Option A for RT BCR for storage resources (see question # 10) 

[1] More information about the CPUC Energy Division is available at: https://www.cpuc.ca.gov/about-cpuc/divisions/energy-division. 

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

According to DMM, all day ahead BCR since 2022 has been exclusively associated with interactions between scheduling coordinator-submitted parameters and the day ahead optimization, causing uneconomic market dispatches. The ISO and DMM have identified instances in which assets are able to replicate parameter combinations that result in uneconomic schedules repeatedly over several days. [2] The ISO and DMM agree that this current framework is susceptible to uplift-seeking behavior. 

ED Staff strongly supports eliminating BCR for day-ahead schedules submitted by battery resources. The current model is susceptible to gaming and can distort bidding incentives for storage resources resulting in less reliable DA schedules and increased costs for ratepayers through uplift payments that are generally not warranted. 

[2] Pg. 8, Updated Discussion and Issue Paper on Uplift and DEB, CAISO, December 12, 2025. 

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

The ISO categorizes the drivers of real-time (RT) uplift into two groups:  

• Drivers related to scheduling coordinator action.  
• Drivers related to market design or ISO action. The ISO and stakeholders have identified four main sources of negative revenues associated with this driver that may warrant uplift: exceptional dispatch, mitigation, seemingly “out-of-merit” dispatch, and the impact of constraints related to ancillary services.  

ED Staff comments on the market design drivers of RT uplift below: 

1. Interactions between initial state-of-charge (ISOC) and scheduling coordinator action: Staff supports DMM’s recommendation to eliminate RT BCR for storage resources buying back DA schedules due to insufficient SOC, by default. ED Staff is concerned that if DA schedules are not deliverable in real time, strategies to utilize BCR can especially undermine reliability during peak/stressed conditions when storage is depleting energy earlier in the day to maximize BCR and market revenues. As California continues to expand energy storage capacity to meet its clean energy goals and enhance reliability due to a large fleet of variable energy resources, an inefficient BCR framework that enables routine uplift payments that are directly attributable to bidder behavior, will become an increasingly costly problem for ratepayers. As a potential enhancement, the ISO has proposed requiring the submission of a DA initial state of charge (DA ISOC) parameter as a prerequisite to help determine DA RT BCR eligibility. The submission of a DA ISOC is currently optional, not required. Although ED Staff supports better incentives for storage resources to submit accurate DA ISOC parameters for overall transparency, we highlight DMM’s comment that even if resources submit accurate DA ISOC estimates, continuing to provide RT BCR for DA buybacks due to insufficient SOC still results in inefficient bidding incentives and inefficient dispatch of storage resources in real-time. [3] 

2. Exceptional dispatch: ED Staff agrees with the ISO and stakeholders that exceptional dispatch may be considered a warranted driver for uplift, if the resource realizes a net loss across the day.   

3. Local market power mitigation (LMPM): Staff agrees with the ISO and stakeholders that LMPM may be considered a warranted driver for uplift, if the resource realizes a net loss across the day.   

4. Seemingly “out-of-merit” dispatch: The ISO should eliminate RT BCR associated with this driver. DMM’s analysis on the net revenue impacts of MIO from the September working group shows that schedules with MIO are generally held neutral to losses, and sometimes end up experiencing a net benefit. ED Staff is concerned that payments to storage resources from this driver can be in excess when factoring revenue gains. 

5. Ancillary service constraint: ED Staff supports making storage ineligible for BCR during intervals when the ancillary service SOC constraint applies as it will help prevent unjustified and excessively high RT BCR payments.  

[3] Comments on Storage Design and Modeling Working Group Session 10, DMM, November 26, 2025.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

ED Staff supports the uplift problem statement and guiding principles presented by the ISO in the Updated Discussion and Issue Paper. [4] Staff emphasizes the need to design a separate and distinct uplift paradigm for storage resources that better represents the resources unique characteristics, and eliminates opportunities for strategic bidding and unwarranted payments, which are costly and burdensome for ratepayers.? 

[4] Pgs 17-18, Updated Discussion and Issue Paper on Uplift and DEB, December 12, 2025. 

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

ED Staff supports the uplift problem statement and guiding principles presented by the ISO in the Updated Discussion and Issue Paper. [5] ED Staff emphasizes the need to develop storage DEBs that are not static and reflective of changing opportunity costs throughout the day. 

[5] Pgs 19-20, Updated Discussion and Issue Paper on Uplift and DEB, December 12, 2025.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

ED Staff supports further discussions on a conceptual framework related to storage DEB improvements and recommends an approach that incorporates hourly DEBs, as articulated by DMM. [6] The current DEB design does not capture an hourly opportunity cost, static DEBs could be too high or too low relative to the opportunity cost of that hour. ED Staff is concerned about the unintended outcomes that may lead to unwarranted uplift costs which are passed on to ratepayers. This is a high priority topic, particularly in light of potential changes in system-wide offer caps. ED Staff is concerned that without accurate DEBs in the changing market landscape, price formation will be negatively impacted. ED Staff supports DMM’s recommendation to pursue an incremental approach towards the development of dynamic, hourly DEBs [7] and ongoing monitoring of market outcomes.  

[6] Comments on Storage Design and Modeling Working Group Session 2 and 3, DMM, March 7, 2025.

[7] Comments on Storage Design and Modeling Working Group Session 10, DMM, November 26 2025.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

See comment #2. ED Staff supports eliminating DA BCR for storage resources. Most storage DA BCR is due to bidder behavior. Stakeholders have not shown that BCR is necessary in this context for market efficiency.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

No comments at this time.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

See comment #3. ED Staff supports the requirement to submit DA ISOC for transparency and reliability. In the context of BCR, ED Staff strongly supports eliminating RT BCR eligibility for day-ahead buybacks as a result of insufficient SOC, by default.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

ED Staff appreciates the ISO’s recap of the various conceptual frameworks as presented by DMM, CESA, and Vistra. ED Staff provides comments on each proposed pathway below: 

Option A: ED Staff supports DMM’s recommendation to a) eliminate DA BCR for storage resources b) assume a default of no RT BCR eligibility for battery storage resources, with certain limited exceptions, such as revenue losses due to local market power mitigation (LMPM), and c) eliminate BCR associated with SOC limitations reported through the outage management system. Staff consider DMM’s approach the most appropriate path forward at this time to avoid excessive unwarranted payments to battery storage resources which are costly for ratepayers.   

Option B: ED Staff agrees that identifying whether a shortfall was due to a resource’s action or ISO action is an appropriate starting point to determine whether uplift is warranted. However, CESA’s conceptual framework relies on a proposed “bidding test” to determine if a battery resource is bidding consistently with RT conditions. This framework relies heavily on storage DEBs which are currently not reflective of dynamic opportunity costs that storage resources experience. Adopting this approach without an hourly storage DEB does not create confidence that these resources are bidding efficiently and may enable more frequent instances of unwarranted BCR when DEBs are not reflective of the resource's true intra-day opportunity cost. ED Staff supports further discussion on storage DEB enhancements as a high priority item in this initiative, but urges the ISO to avoid delays to enhancing the BCR framework as presented by DMM in the interim.

Option C: ED Staff does not support Vistra’s proposal to eliminate most storage uplift mechanisms in exchange for the ISO eliminating various market mechanisms, i.e. market power mitigation (MPM) and ancillary service constraints. The mechanisms Vistra proposes to eliminate are intended to ensure reliability and protect ratepayers from the risk of high local energy prices. As stated by the ISO, eliminating market power mitigation introduces significant regulatory risk and creates other concerns that may be disproportionate to the issues at hand. [8]

[8] Pg 36, Updated Discussion and Issue Paper on Uplift and DEB, December 12, 2025.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

No comments at this time.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) appreciates the opportunity to comment on the California Independent System Operator Corporation’s (CAISO) December 4, 2025 meeting on CAISO’s Storage Design and Modeling Initiative (December 4 Workshop)[1] and the December 12, 2025 Discussion and Issue Paper (CAISO Issue Paper).[2]

Cal Advocates provides the following comments on the December 4 Workshop and the CAISO Issue Paper:

• CAISO should adopt Option A for Real-Time (RT) storage bid-cost recovery (BCR) with a revised compensation approach that screens for material instances of warranted bid-cost recovery (BCR) due to Local Market Power Mitigation (LMPM).  CAISO should couple Option A with an updated Default Energy Bid (DEB) that captures time-varying RT opportunity costs.
• CAISO should eliminate RT BCR for storage resources except for circumstances of exceptional dispatch and LMPM.
• CAISO should enhance the RT storage DEB to reflect varying real-time storge opportunity costs.
• CAISO should eliminate day-ahead (DA) BCR for storage resources. 
• CAISO should maintain the ancillary service state-of-charge (ASSOC) constraint to ensure that storage resources have sufficient state-of-charge (SOC) to deliver energy from their awarded ancillary services.
• CAISO should require storage resources to submit initial SOC parameters.
• CAISO should coordinate with the California Public Utilities Commission (CPUC) to inform the CPUC’s qualifying capacity (QC) accreditation method for energy storage, subject to an impact study on the resulting changes to the storage fleet’s overall QC value.

[1] CAISO, Working Group on Outage Management, Uplift & DEB, and Mixed-Fuel & Distribution-Level Resources, December 4, 2025 (December 4 Workshop).  Materials available at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

[2] CAISO, Storage Design and Modeling Uplift and Default Energy Bid Working Group Updated Discussion and Issue Paper, December 12, 2025 (CAISO Issue Paper).  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Storage-Design-and-Modeling-Updated-Discussion-and-Issue-Paper-on-Uplift-and-Default-Energy-Bid-Dec-12-2025.pdf

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

CAISO should eliminate DA BCR for storage resources.  Please refer to Cal Advocates’ prior comments on day-ahead uplift.[1]  Cal Advocates does not have additional comments on the drivers of day-ahead uplift at this time.

[1] Cal Advocates, Comments on the November 12 Hybrid Meeting, Working Group Session 10: Uplift and Default Energy Bids (DEB), State-of-Charge Management, and Mixed-Fuel and Distribution-Level Resources, November 26, 2025 (Cal Advocates November 12 Comments), response to Question 5.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/7ebde4c4-2e11-413b-a307-d130a5313c5c#org-2f64b51e-9ed3-469d-a83b-93bdc4ee4075.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

CAISO should eliminate RT BCR for storage resources except for circumstances of exceptional dispatch and LMPM.  Please refer to Cal Advocates’ prior comments on real-time uplift.[1]   See Cal Advocates‘ response to Question 10 below for additional comments on concepts for real-time uplift.

[1] Cal Advocates November 12 Comments, response to Question 5.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

Energy storage should be eligible for BCR when revenue shortfall over the trading day occurs due to CAISO market action.  Energy storage should not be eligible for BCR when revenue shortfalls over the trading day occur due to operator action.  Please refer to Cal Advocates’ prior comments on the uplift problem statement and guiding principles.[1]   See Cal Advocates' response to Question 10 below for additional comments on concepts for real-time uplift.

[1] Cal Advocates, Comments on Revised Straw Proposal on Outage Management Meeting on Aug. 14, 2025, September 4, 2025 (Cal Advocates August 14 Comments), response to Question 7.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/a35d7182-e62e-4559-93c0-80ede736ceba#org-5948f86f-6979-42b0-b490-b0f75556dea7.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

The storage RT DEB should reflect varying real-time storge opportunity costs.  Please refer to Cal Advocates’ prior comments on the real-time DEB.[1]  See Cal Advocates' response to Question 6 below for additional comments on concepts for the storage DEB.

[1] Cal Advocates November 12 Comments, response to Question 9.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

CAISO states that an update to the storage DEB to reflect time-varying conditions is consistent with the DEB consensus principles[1] and could enable the conceptual frameworks for BCR reform, including Cal Advocates’ preferred Option A.[2]  CAISO could base time-varying DEB values either on real-time market data or on data from the day-ahead market.  However, CAISO indicates that its development of a DEB based on real-time market data is limited by the approximate 4-hour advanced timeframe over which data is available in the RT market.[3]  CAISO states that this window may be too short to capture the operational characteristics of 4-hour batteries.[4] 

Alternatively, CAISO indicates that it could develop time-varying DEB values based on DA market information for the RT market to capture changing opportunity and energy costs.[5]  These could be hourly values or, if aggregated, longer periods.  Either approach would more accurately capture high midday opportunity costs and low peak period opportunity costs, and would be an improvement over the current static RT DEB.  The varying RT DEB would reduce the number of LMPM mitigated bids and would result in more efficient battery dispatch.[6]  By reducing the number of LMPM instances, the change would reduce the computational complexity of LMPM settlement for BCR under Option A.  CAISO should pursue a solution to the implementation of RT DEBs that is feasible and that offers improved accuracy over the current static DEB.

[1] CAISO Issue Paper at 19.

[2] CAISO Issue Paper at 20.

[3] CAISO Issue Paper at 21.

[4] CAISO Issue Paper at 21.

[5] CAISO Issue Paper at 21. 

[6] DMM, Comments on May 28, 2025 Storage Design and Modeling Presentation, June 11, 2025 (DMM May 28 Comments) at 1.  Available at: dmm-comments-on-storage-design-and-modeling-may-28-2025-presentation-jun-11-2025.pdf..

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

CAISO should eliminate day-ahead uplift for storage resources.  Please refer to Cal Advocates’ prior comments on day-ahead uplift.[1]  Cal Advocates does not have additional comments at this time.

[1] Cal Advocates August 14 Comments, response to Question 7.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

The ASSOC constraint is a necessary market enhancement that ensures storage resources have sufficient state-of-charge to deliver energy from their awarded ancillary services.  Please refer to Cal Advocates’ prior comments on ancillary service constraints.[1]  Cal Advocates does not have additional comments at this time.

[1] Cal Advocates August 14 Comments, response to Question 7.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

CAISO should require storage resources to submit initial state-of-charge parameters.  Please refer to Cal Advocates’ prior comments on day-ahead initial state-of-charge.[1]   Cal Advocates does not have additional comments at this time.

[1] Cal Advocates, Comments on Uplift & DEB, State-of-Charge Management, and Mixed-Fuel and Distribution-Level Resources Meeting on Sep 29, 2025, October 10, 2025 (Cal Advocates September 29 Comments), response to Question 2.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/c9903a4c-a900-47d2-b362-51c768a52e73#org-92173f73-939c.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

CAISO provided a summary of the three primary stakeholder concepts for the reform of RT energy storage BCR.[1]  CAISO should implement Option A, which is based on CAISO’s Department of Market Monitoring’s (DMM) proposal and CAISO’s Market Surveillance Committee’s (MSC) position on RT BCR.[2]  Option A would eliminate RT BCR except for instances of warranted BCR caused by exceptional dispatch or LMPM induced revenue shortfall.[3]  CAISO should implement Option A with a modified compensation approach, as described below.

CAISO indicates that Option A would require CAISO to extend the current counterfactual BCR market re-run for exceptional dispatch to LMPM.[4]  CAISO suggests that instances of LMPM BCR occur more frequently than instances of exceptional dispatch.  CAISO states that these more frequent LMPM instances could pose implementation challenges due to the complexity of the calculations and the computational requirements needed to settle mitigated bids.[5]  However, CAISO also indicates that it may be possible to revise the compensation approach to limit implementation risks.[6]

CAISO’s DMM and MSC indicate that mitigated bids comprise only 3% of storage RT BCR.[7]  Moreover, CAISO indicates that, while 25% of annual resource days are impacted by mitigation, as few as 8 annual resource days have impacts larger than $10,000 in total mitigation related BCR across all storage resources.[8]  DMM’s analysis suggests that CAISO could revise the compensation approach to limit the number of required counterfactual runs only to instances of material amounts of BCR based upon the amount of megawatts mitigated and the associated DEB and offer price.  CAISO should also explore alternative means to revise the mitigation compensation approach.

Furthermore, Cal Advocates supports DMM’s recommendation that CAISO should implement dynamic DEB values in the RT market to reduce instances of bid mitigation.[9]  DMM indicates that DEBs that more accurately capture opportunity costs that vary during different periods of the day would further limit the number of material instances of mitigation-caused BCR.[10] 

CAISO should implement Option A coupled with a time-varying DEB in the real-time market, as discussed in Cal Advocates’ response to Question 6.

[1] CAISO Issue Paper at 28-36. 

[2] CAISO Issue Paper at 29.

[3] CAISO, Storage Design and Modeling Working Group on Outage Management, Uplift & DEB, and Mixed-Fuel & Distribution-Level Resources Stakeholder Meeting Presentation, December 4, 2025 (CAISO December 4, 2025 Presentation) at 76.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Design-and-Modeling-Dec-4-2025.pdf.

[4] CAISO Issue Paper at 29.

[5] CAISO Issue Paper at 30.

[6] CAISO December 4, 2025 Presentation at 77.

[7] MSC, Opinion on Storage Bid Cost Recovery, November 1, 2024 at 19.  Available at: https://www.caiso.com/documents/market-surveillance-committee-final-opinion-storage-bid-cost-recovery-nov-01-2024.pdf

[8] CAISO, Storage Bid Cost Recovery (BCR) and Default Energy Bid (DEB) Enhancements, October 9, 2024 at 42.  Available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Storage-Bid-Cost-Recovery-and-Default-Energy-Bids-Enhancements-Oct-09-2024.pdf.

[9] DMM May 28 Comments at 1.  Available at: dmm-comments-on-storage-design-and-modeling-may-28-2025-presentation-jun-11-2025.pdf.

[10] DMM May 28 Comments at 3.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

Cal Advocate remains concerned that there may be adverse cost impacts for ratepayers if CAISO adopts its proposed changes that would limit the operational range of storage to the range that is unaffected by foldback.[1]  To mitigate potential ratepayer harm and impacts to the value of storage on the grid, CAISO should first conduct a study to quantify monthly impacts to the net qualifying capacity (NQC) of the storage fleet.  If the fleet-wide impact is significant, CAISO and the CPUC should either consider a phased-in approach to update the QC values in the CPUC’s resource adequacy (RA) proceeding or develop an alternative to CAISO’s proposed solution.  CAISO should present this monthly NQC impact study prior to, or along with, a CAISO proposal to adopt the change to correct the parameters that the CPUC uses to inform its QC accreditation methodology.

[1] Cal Advocates November 12 Comments, response to Question 3.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

Pacific Gas & Electric (PG&E) appreciates the opportunity to comment on CAISO’s discussion and issue paper regarding Uplift and Default Energy Bids for storage resources. The paper is well written and provides thorough and clear explanations of the foundational concepts and issues around uplift and default energy bids (DEBs) for storage. The paper also dives into the most intertwined market mechanisms: scheduling constraints for ancillary service (AS) on storage, initial state-of-charge (SOC), system SOC, and real-time uplift.  

PG&E’s feedback to CAISO on this paper, and the initiative’s direction, can be summarized in four key points:  

1. PG&E believes CAISO has clearly defined problem statements around bid cost recovery (BCR) and uplift. 

2. PG&E believes there is significant policy development work to be done before any policy changes can proceed. 

3. PG&E is supportive of moving forward on policy development with the caveat that any proposal must include a full understanding and facts on the impact imbalance reserves may have, given storage’s expected role in providing this product. Storage resources are expected to play a significant role in providing imbalance reserves up and down. It is possible, though not certain, that the recently implemented changes in battery BCR, and the DAME implementation’s introduction of additional imbalance reserve and reliability capacity products and revenues, may materially affect each of the proposals as well as their relative desirability. 

4. In the near-term, there are two areas that have come up during the working group meetings that could move through the initiative quickly (or even attached to Outage management track) that might have a positive impact on the market. 

a. Require batteries to submit an initial start of charge for the day-ahead (DA) market 

b. REV Renewable’s proposal to model fold-back in the real-time markets, with the qualification that PG&E does not believe extending REV’s proposal to day-ahead would be of value or immediately feasible. 

Both efforts seem viable, worth pursuing, and unlikely to need operational experience with imbalance reserves to implement. PG&E suggests moving forward with these proposals into the policy phase while continuing to develop the three options, as well as continuing to explore whether there may be other options. 

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

PG&E agrees with the CAISO/DMM identification of the primary drivers of day-ahead uplift as operator bid settings or possibly limits introduced via Outage Management System (OMS) which force uneconomic battery charge or discharge: in effect, self-scheduling, which for all other resource types results in loss of BCR eligibility. The battery case is complicated by the cross-temporal effects of battery bid or OMS actions, which may extend across the horizon of the day. 

However, there remain use cases in which batteries may not be fairly compensated; i.e., may see negative revenues for a day relative to their accepted bids. These include mitigation to prices that do not represent a reasonable estimate of opportunity costs; optimization gaps that result in suboptimal dispatch, especially of marginal resources; and solutions that leave no buffer for inevitable inaccuracies in representing actual ramp rates, storage limits, or charging efficiencies. 

With the addition of inter-temporal reserve commitment limitations (for IR and RC), DAME expands the number of intervals and constraints that must align with scheduling coordinator (SC) parameters, primarily SOC bounds. This can potentially exacerbate the same parameter-optimization inconsistencies identified as the primary DA uplift driver. As stated in the issue paper, day-ahead uplift may prove necessary with the deployment of the imbalance reserve and reliability capacity products.

PG&E is supportive of moving forward on policy development with the caveat that any proposal must include a full understanding and facts on the impact imbalance reserves may have, given storage’s expected role in providing this product.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

PG&E agrees with CAISO’s assessment of the drivers of real-time uplift. As has been previously determined from other CAISO comments, two factors PG&E believes CAISO identified correctly include the influence of battery operator market actions, and the separation exceptional  dispatch (ED) from other sources of uplift and ED’s treatment as a non-issue in the context of this initiative. 

PG&E believes there are limitations in CAISO’s combined DEB/BCR framework that should be further explored in policy discussions. This was revealed in the discussion of mitigation and out-of-merit real-time dispatch awards. The fundamental premise of CAISO’s existing battery DEBs is that a historical price (from the previous day or from the current day’s day-ahead market) can properly represent a battery owner’s opportunity cost of dispatch now versus dispatch in the future. The questions that should be considered aren’t just whether these losses happen to batteries infrequently, but whether the approach taken is so incorrect as to require a remedy. Note that in considering both issues, CAISO’s historical data analysis does not necessarily indicate the magnitude of future losses. 

PG&E would like to offer aspirational principles for bid cost recovery that should apply regardless of the magnitude or limited set of resources affected by incorrect bid mitigation or out-of-merit dispatches. The objectives of bid cost recovery reforms (or “make whole”) should meet the following criteria:

1. Mitigation to a DEB that fairly represents each battery’s true opportunity costs, with some consideration for the fact that batteries include opportunity costs in their bids representing values beyond the CAISO’s market horizons; and  

2. Out-of-merit dispatch that results in negative net revenues should, in general, be compensated, irrespective of the CAISO’s rationale for such dispatch.  

PG&E is skeptical of analyses that argue for compensation even when there is not a net revenue loss for the day: battery operators are free to change their bidding strategies to correct for such outcomes.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

We believe CAISO has well defined problem statements and is heading in the right direction regarding policy development. However, we have specific comments regarding the language of the guiding principles and assumption of storage participation in the market.  

The guiding principles might appropriately be revised to read: 

1. There is a need to develop a separate and distinct uplift mechanism specifically designed for storage. Batteries should, in general, recover their assessed opportunity costs of discharge in the market as bid, unless CAISO can make a convincing argument that it is able to mitigate bids to batteries’ true opportunity costs without before-the-fact price certainty. 

2. The storage uplift mechanism, or another cost recovery mechanism, should incent assets to be able to bid their assessed opportunity costs and deliver their awards and schedules while eliminating incentives for strategic bidding behavior. Strategic bidding behavior, i.e., exercise of either locational or system market power, should be mitigated based on price-setting behavior under pivotal supplier tests, and should potentially be performed after-the-fact rather than in the LMPM market runs. 

3. In determining which negative revenues should be considered in the storage uplift calculation, stakeholders generally agree that: 

a. Negative revenues attributed to bidder behavior may not warrant uplift in setting operational constraints, or OMS limitations should not warrant uplift. 

b. Negative revenues attributed to market algorithms or ISO action (e.g., exceptional dispatch, seemingly “out-of-merit” dispatch in the biding interval due to market design and constraints, mitigation) on a 24-hour total may warrant uplift. 

PG&E is uncomfortable with this issue paper’s focus on batteries being uniquely insulated from exposure to buyback of day-ahead awards in real time but agrees with the summary of the problem statement that existing bid cost recovery rules incentivize inefficient bidding. In fact, other resources are generally exposed to buyback of day-ahead awards only if they experience outages that would be seen by the market in OMS. Other resources have no economic incentive to buyback day-ahead awards at a loss. Batteries, on the other hand, may be forced by CAISO’s market model to buy back their awards due to SOC constraints modeled in the market processes. Batteries have two mechanisms for protecting themselves from such buyback: they can set target end of hour SOC constraints to force SOC to remain feasible to their day-ahead awards (which forces uneconomic charge and discharge that is not eligible for BCR), or they can attempt to bid so as to achieve the charge and discharge they want relative to the risk of buyback. If there were no bid mitigation (as in Vistra’s proposal relative to BCR), they would in principle be able to completely hedge the buyback risk. Therefore, in principle, bids intended to hedge buyback risk should not be subject to mitigation (and this becomes the threshold criterion in CESA’s BCR reform proposal, where it is assumed batteries bidding above the known DEB are signaling their unwillingness to dispatch in the binding interval precisely because of the buyback risk).

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

PG&E agrees with the guiding principle that the storage default energy bid should be designed in a way that allows for the reflection of changing real-time constraints and opportunity costs. It’s important to understand storage operators’ true opportunity cost in the day-ahead and real-time markets to properly understand how well the CAISO’s DEB calculations can approximate them. 

The true day-ahead opportunity cost-based bid’s driver is assumed to be the opportunity cost of exceeding the normal cycle of a maximum of four hours discharge in one day, based on the resource adequacy expectations of four-hour batteries as well as the throughput expectations assumed under warranty contracts and optimization of battery life. There is no explicit end of optimization horizon value, but the opportunity cost acts as a surrogate of that value in future markets. Notably, the opportunity cost in the final hours of the day-ahead market (after the highest value net peak hours) will be based partly or wholly on carryover value into hours not represented in the day-ahead market. 

PG&E’s understanding is the true real-time opportunity cost, in contrast, is defined as the shadow price on incremental discharge in the binding interval considering potential uses of the battery over a real-time market horizon, and the future value of storage retained at the end of the real-time horizon (to be used, for example, to satisfy day-ahead market awards in later hours). This value will be different every hour of the day. 

PG&E believes there is a gap between CAISO’s estimate of opportunity cost and the battery operator’s own estimate of its opportunity cost. This identified gap stems from the fact that none of the currently defined battery default energy bids are based on a forecast of prices in relevant market optimization. Moreover, because the day-ahead DEB is based specifically on a local market power mitigation (LMPM) run, and the real-time DEB is based specifically on DA market prices, there is some likelihood that on average the calculated DEBs will be values below the battery operators’ own assessed opportunity costs. 

Accordingly, the guiding principle of the default energy bid calculation in both markets should be to enable batteries to bid their true opportunity costs with some level of assurance; this can be done not by trying to calculate the battery operator’s true opportunity costs, but by implementing a multiplier on the calculated DEB that has a high probability, based on historical or simulated market results, of covering the battery operator’s true opportunity costs. A multiplier significantly higher than 1.0 may be needed in all real-time markets except those in which the net peak hours are binding, and even in these hours there may be differences between hours if true opportunity costs are rising or falling over that period. 

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

As previously stated, PG&E believes there is significant policy development work to be done before any policy changes can proceed. Enhancements to the storage DEB should accomplish the following: 

1. Account for an operator’s true variable and opportunity costs in both the day-ahead and real-time markets. 

2. Support efficient dispatch outcomes that align incentives across energy, AS, and IR products. 

Considerations in an improved DEB methodology should include forecast accuracy, buyback cost treatment, multi-day cycling patterns, and co-optimization across energy, AS, and IR markets.  

As mentioned above in question 5, PG&E believes that the guiding principle of the default energy bid calculation, and subsequent enhancements, in both day-ahead and real-time markets, should be to enable batteries to bid their true opportunity costs.  

The three proposed solutions put forth in the issue paper attempt to address this gap in the DEB methodology, but each has their own issues:  

• Cost proxies fail to capture the time-varying opportunity costs. Data incorporation beyond the DA market using cost proxies such as DGAP & MIBP fail to fully capture the time-varying opportunity costs of storage because they are location-based proxies that do not account for resource-specific valuations which include the many listed opportunity costs above like multi-interval optimization and SOC-based price-forecasted future values. 

• Updating DEBs relies on day-ahead and administrative inputs. Updating DEBs in real time and static “time-of-day" DEBs improves the current DEB methods to incorporate time-varying considerations but still relies on DA and administrative inputs.  

• Hourly DEBs require more robust short-term price forecasting. Hourly DEBs best account for an approximation of a battery operator’s true opportunity costs but requires a more robust short-term price forecast not currently implemented in real time several additions of SOC parameters, and unrealistic continuous recalculations. 

PG&E is skeptical of attempts to construct hourly varying opportunity costs to approximate battery operators’ true opportunity costs because there is an inherent conflict between what CAISO can estimate without any kind of binding price forecast as battery opportunity costs and what batteries themselves, based on their internal price forecasts, estimate. One way of addressing this conflict might be to enable CAISO to set upper bounds on battery opportunity cost assessments, avoiding the need to calculate specific values. With similarities to the proposed “time-of-day" DEB, PG&E suggests an hourly varying upper bound on the multiplier allowed on the currently calculated DEBs. We believe this might provide a simpler and more incentive-compatible approach to constraining battery discharge bids.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

Please see our response to Question 2. 

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

Real-time ancillary service re-optimization should be explored as a future major market initiative; this is consistent with PG&E's suggested storage-related enhancements. 

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

PG&E supports requiring batteries to submit an initial start of charge for the day-ahead market. While this proposal is not noted as “options” in the issue paper (or expected to be in the issue paper regarding mixed fuel storage resources), it seems viable, worth pursuing, and unlikely to need the operational experience with imbalance reserves.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

PG&E is supportive of moving forward on policy development, but there is significant policy development work to be done before any policy changes can proceed. PG&E maintains five primary points of feedback regarding the policy options for real-time uplift: 

1. All of the three proposals presented as policy frameworks for addressing real-time uplift leave many questions unanswered. Understandably, none of the proposals are fully fleshed out and require additional exploration and discussion before a straw proposal so that any market design proposals have additional data/information resulting from the EDAM/DAME launches. Exploration can, and should, continue with any continuation to a policy phase, and in line with other stakeholder comments, should maintain explicitly temporary measures for uplift, BCR, and DEB considerations for storage. However, there are certain considerations related to the issue paper which we believe does not require the operation of EDAM and DAME to begin policy discussions. These considerations include:  

a. Implementing DA SOC parameter changes and additions (e.g., requiring an initial SOC into DA bids)

b. Addressing fold-back and non-linearity with storage optimization 

2. PG&E is supportive of moving forward on policy development with the caveat that any proposal must include a full understanding and facts on the impact imbalance reserves may have, given storage’s expected role in providing this product. Storage resources are expected to play a large role in providing imbalance reserves up and down. The actual market behaviors and results around imbalance reserves could affect stakeholders’ views regarding which of the three options are best. PG&E does not believe it will be able to support implementing any set of proposals until the interaction of imbalance reserves and reliability capacity with each proposal is well understood following EDAM go-live. 

3. PG&E does not have a preference between the three proposals in the Updated Proposal Paper. PG&E believes that no proposal adequately addresses the need for real-time uplift to consider the actual operational constraints of battery storage. Below outlines specific comments on each proposal: 

a. DMM’s proposal does not include a methodology to dynamically vary the DEB, nor does it have a clear definition of what the principal consideration for opportunity cost should be in a given hour. One potential direction which could be proposed is an opportunity-cost framework based on a defined time-horizon with explicit carryover within opportunity costs. However, such an approach would need to be clearly delineated. 

b. CESA’s proposal assumes the implementation of a DEB that may differ from the current default energy bid methodology. However, CESA’s conceptual framework focuses on uplift eligibility under real-time inconsistencies. Implementation of this solution would require demonstrating that it is both feasible for battery SCs to use it for its defined purpose in real-time bidding, and extensive verification of settlements calculations to avoid unforeseen side-effects.  

c. Vistra’s proposal to remove LMPM is questionable without viable alternative designs for market power mitigation of batteries (local or system) or stronger evidence that market power mitigation is unnecessary for battery storage. PG&E supports discussion of future market initiatives to address market power mitigation or the application of penalties ex-post rather than ex-ante. In concept, PG&E is amenable to exempting batteries from before-the-fact mitigation in LMPM, but believes this would have to be accompanied by a clear and reliable after-the-fact evaluation of market power and its exercise, backed up by a high likelihood of claw back in cases where batteries act as price-setters and are pivotal suppliers, either locally or at a system level. 

4. The three proposals head in different directions. The proposals have significant variations in their approaches and assumptions, noted above, and don't necessarily work together. This is especially pertinent when looking forward to modeling approaches proposed by CAISO to explicitly allow storage-dependent opportunity costs to be bid by battery operators. Additionally, this embedded operational momentum may limit fundamental changes necessary to limit negative consequences. For example, it seems that any form of LMPM applied to such SOC-based opportunity costs bids is likely to have negative consequences and hence affects the usefulness of the model due to interactions between the bids at different states of charge. If the current CAISO storage model is found to be an accurate representation of how batteries should bid their opportunity costs dynamically in real time, this further argues against using LMPM as currently designed to mitigate battery discharge bids.  

5. The three proposals are not an exhaustive list. There are other solutions to current practices that have not been formally discussed. For example, a dynamic DEB could be explicitly based on a resource-level pre-market optimization to calculate shadow prices based on dynamic system conditions and SOC; CAISO could construct dynamic DEBs based on dynamic system conditions; or a counter-factual 24-hour analysis could be developed to calculate real-time BCR based on actual lost opportunity costs. 

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

No comments.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

REV Renewables (REV) appreciates CAISO moving Uplift and Default Energy Bid (DEB) discussions forward. While additional discussions and analysis are needed, stakeholders are eager to start working towards solutions on these important issues. REV encourages CAISO to look beyond specific drivers and to pursue a holistic review of what the appropriate uplift framework should be for storage given the various state-of-charge constraints and market systems.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

REV agrees there are limited drivers of day-ahead uplift and it should happen infrequently, which is demonstrated by the small amount of day-ahead uplift received by resources in recent years. However, as discussed below, REV does not think the low occurrence of drivers and uplift payments is a reason to remove this mechanism, as it is an important protection in place for resources that may have legitimate need for day-ahead uplift.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

CAISO lists several drivers of real-time uplift. REV agrees these are the primary drivers and offers comments on each below.

• Interactions between Initial State of Charge (ISOC) and Scheduling Coordinator (SC) action
  • CAISO highlights this as a primary driver, and REV agrees that instances of SC action that appear to have uplift seeking behavior should be investigated. However, as discussed below, there are many valid reasons ISOC is not met and it should not be assumed that an ISOC deviation is meant to game uplift. REV suggests looking at whether there is something in the uplift formula that is triggering the uplift that could be adjusted, particularly if the SC actions are legitimate responses to the market or resource.
• Exceptional Dispatch
  • REV highlights Exceptional Dispatch as the biggest driver of real-time uplift because Exceptional Dispatch manually overrides SC bids and can result in uneconomic dispatch. However, as discussed in the paper, CAISO already has an uplift mechanism to address this driver specifically.
• Local Market Power Mitigation (MPM)
  • REV agrees local MPM is a significant driver of real-time uplift as well and can result in a net loss across the day or across several hours.
• Seemingly “out-of-merit” dispatch in the Binding Interval
  • REV agrees this is a driver of real-time uplift as well. While CAISO presented data on Multi-Interval Optimization (MIO) that implied a small impact to storage, REV notes that the increasing frequency is concerning. REV had several requests for additional data analysis in response to Sept. 29 meeting, and reiterates those requests here.
    • How does performance of storage in MIO compare to other resource types?
    • CAISO provided binding vs. advisory data for system marginal energy cost (SMEC), but how would this look at a nodal level when based on Locational Marginal Price (LMP)? Resources are settled based on LMP and not SMEC, so this view would be helpful.
    • What are the most common reasons for out of merit dispatch?
    • What is the net revenue impact to storage resources from MIO?
      • REV acknowledges MIO may help resources, but it is unclear if MIO helps more than hurts or vice versa.
      • While CAISO highlights RTD SMEC binding vs. advisory intervals were ±$10, this could be a deal breaker for some resources on revenue for the day given increasingly thin price spreads in the CAISO market.
    • Does this indicate need to tweak or eliminate MIO?
      • MIO was initially created to be able to position resources that needed time to ramp up to be available. However, given the market has a large and growing storage fleet that is extremely responsive, does CAISO still need MIO to position resources? Or could CAISO move to a spot market that settles every 5 minutes, as is done in several other markets including ERCOT and SPP? REV highlights that additional market products already exist, including Imbalance Reserves and Flexible Ramp, that could solve for uncertainty in the market.
  • DMM’s analysis of MIO in Fifteen Minute Market is helpful, though REV agrees with requests to expand this analysis to the Five Minute Market. Additionally, REV suggests looking at not just average impact, but also looking at outlier instances where e.g. days with high volatility can result in significant losses or that some resources may be more highly impacted than others.
• Constraints related to Ancillary Services

REV agrees this is a driver of uplift, but that it is mostly resolved by the Bid Cost Recovery changes approved last year.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

REV generally agrees with the uplift problem statement and guiding principles. REV highlights that while BCR may insulate some resources, overall the market structure does incentivize efficient bidding behavior. This is demonstrated by Figure 1 in the Issue Paper that shows average monthly BCR payments has decreased over time, despite the drastic increase in MW of storage online over the same time period.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

REV generally agrees with the storage default energy bid (DEB) problem statement and guiding principles.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

REV agrees on the need to incorporate data beyond day-ahead market outputs for resources that do not participate in those markets. REV does not have a preference on using DGAP or MIBP instead of day-ahead market prices.

It is important to update the storage DEB to better reflect real-time conditions, as anything linked to the day-ahead only will inevitably be incorrect as issues such as transmission constraints, outages, and weather changes in the real-time. REV understands the complexity with calculating a time-of-day or hourly real-time DEB, though encourages further discussions on these areas such as in a working group session.

REV suggests a straight-forward solution could be to increase the multiplier in the DEB formula from 110% to some higher amount for all hours except for the hours with a day-ahead schedule, or if the resource does not have a day-ahead schedule then the DEB would be in place for all hours. CAISO could provide analysis for what a better multiplier could be that would give a more optimal dispatch schedule to mitigated resources (e.g. 200% - CAISO could provide sensitivity analysis around options). It is critical that storage sits in the appropriate place in the supply stack so as to avoid premature dispatch, and a solution such as this to increase the DEB could achieve this goal. REV also supports further consideration of the Hydro DEB with potential modifications to be used for storage.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

As commented previously, REV does not support removing DA BCR for storage at this time. While the reasons for DA BCR may be limited, CAISO should not move forward with eliminating before Day-Ahead Market Enhancements and Expanded Day-Ahead Market is implemented so as to avoid unintended consequences. Even after implementation of these enhancements, REV suggests monitoring instances of day-ahead uplift rather than eliminating it altogether.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

REV supports real-time co-optimization of Ancillary Services, which could provide several benefits to CAISO including related to this effort on reducing the driver for uplift related to AS constraints. REV understand this is likely a longer-term, but recommends starting discussions in 2026 in order to get the effort started.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

As commented previously, REV does not agree with requiring the submission of the DA ISOC parameter to be within a given range of accuracy (e.g., +/- N%) as a prerequisite for eligibility for RT BCR or any successor paradigm. This solution would imply that the objective is for day-ahead to match real-time as much as possible, however this is not the reality of the CAISO market given that changes in supply, demand, and constraints occur regularly and resources should be incentivized to respond to market changes. Additionally, there is an inherent amount of uncertainty in being able to match the DA ISOC, especially for shorter duration resources. REV suggests that CAISO focus on why resources are given uplift because of a difference in ISOC and address the root cause, rather than creating a type of penalty around DA ISOC accuracy. 

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

REV generally supports further discussion on all of the options presented in the paper. CAISO notes implementation challenges with each, though it would be helpful to understand the tradeoffs, risks, and timelines associated with each for better comparison.

• Option A – REV supports DMM’s concept for settlement provisions for local MPM that are similar to those for Exceptional Dispatches. As noted above, local MPM is a significant driver of uneconomic dispatch and can create notable losses for resources across certain hours, though maybe not for the entire day. REV supports further discussions on this option, though notes that it may not solve other drivers of uplift.
• Option B – REV supports further discussion of CESA’s real-time make whole payment conceptual framework and concepts presented at the workshop. REV agrees that if the storage operator caused the shortfall, then it should not be eligible for make whole; but if the CAISO market caused the shortfall, then it should be eligible for make whole. The scenarios for forced buy back or sell back provide a useful starting point to identify instances where a storage resource should be eligible for BCR.
• Option C – REV supports allowing storage resources to use unmitigated bids and eliminate BCR. Storage resources are fundamentally different than other resources given that their fuel costs are based on real-time prices, not day-ahead prices or other types of fuel. One key addition REV would add to Vistra’s framework is that, instead of ex ante mitigation, this option would still have mitigation in the form of ex post mitigation. DMM would still have the ability to review resource actions after the fact for potential gaming and bring investigations or penalties as appropriate consequence. REV suggests further discussion of this concept and tradeoffs associated.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

SDG&E appreciates the opportunity to comment on the Storage Design and Modeling Updated Issue Paper regarding Uplift and Default Energy bids. In summary, these comments recommend that the CAISO:

• Avoid eliminating day-ahead uplift for storage resources;
• Prioritize hourly or time-of-day default energy bid enhancements and changes to the uplift framework over AS re-optimization; and
• Continue developing details on the system state-of-charge (SOC) proposal.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

SDG&E appreciates CAISO’s continued analysis on day-ahead (DA) uplift and agrees that historical instances of DA bid cost recovery (BCR) have been minimal to-date. Considering imminent market changes and the small quantity of DA BCR payments identified, SDG&E believes it is premature to disallow all DA BCR payments at this point. CAISO should continue monitoring for uplift-seeking behavior in coordination with the Department of Market Monitoring and pursue enforcement actions in the event of inappropriate action, rather than implement blanket policy changes that could inadvertently exclude valid instances of uplift.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

SDG&E supports the summary provided in the paper outlining drivers of real-time uplift for storage resources. In particular, SDG&E supports ongoing discussions regarding SOC management and the submission of day-ahead initial SOC, which directly impacts storage uplift. SDG&E agrees that differences between the initial day-ahead and realized SOC in real-time can result in uneconomic dispatch instructions or real-time shortfalls and conditionally supports a requirement for submittal of an initial SOC value pending further details on the proposal.  

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

Support

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

Support

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

SDG&E acknowledges that proposals for both a time-of-day default energy bid and an hourly default energy bid would introduce significant complexity, with the hourly formulation presenting significant implementation challenges. However, these changes are intended to address issues of mitigation and uneconomic dispatch caused by stale opportunity cost estimations in the existing storage default energy bid, and enhancements to the calculation would result in improved management of storage resources. Incorporating real-time market price signals would better reflect evolving system conditions, reduce uplift, and avoid outsized impacts on SOC management due to mitigation. As such, SDG&E believes this effort is warranted.

While SDG&E supports consideration of both options, to the extent that there is a time-of-day DEB, it would be best to ensure that the periods are able to adjust as the peak moves over time.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

Regarding the proposal to eliminate DA uplift for storage resources, SDG&E opposes staged implementation of this proposal to the extent it is being considered. If stakeholders elect to move in this direction as part of a new storage uplift framework, it should not be phased earlier than the rest of the design changes.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

If CAISO pursues significant changes to the uplift framework—separate from bid cost recovery and tailored specifically for storage—it may be worthwhile to consider market design enhancements that reduce the need for ancillary service state of charge constraints. As proposed by PG&E and Vistra, implementing real-time ancillary service re-optimization could allow the market to dynamically adjust awards rather than relying on DA commitments and heuristic tools that hold back charge or trigger uneconomic buybacks to maintain ancillary service deliverability. Broader market changes of this nature could obviate the need for storage uplift in some cases by better aligning the market model with the unique operating characteristics of storage resources.

However, SDG&E recognizes that these modifications would be a substantial enhancement that may have interdependency with EDAM and re-optimization of ancillary services across a larger market footprint. Depending on the feasibility, it might be more efficient to prioritize DEB enhancements and other changes to the uplift framework.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

SDG&E understands the potential benefits that could come from CAISO’s proposal to require scheduling coordinators to submit an initial SOC value within a certain range of accuracy as a prerequisite for eligibility for real-time bid cost recovery. While we support the concept of requiring submittal of an initial SOC value, which would eliminate reliance on the default initial SOC value, there may be periods or system conditions where it is difficult for scheduling coordinators to estimate initial SOC within a reasonable threshold, especially without improvements to the tools used for SOC management.

Regarding the concept of a system-wide SOC constraint, SDG&E believes this topic requires significantly more discussion and analysis. Additional information is needed to understand how such a constraint would function in practice and whether it would effectively reduce the need for exceptional dispatch of storage resources without introducing undue complexity or limiting operational flexibility.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

No comment.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

No comment.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

The Six Cities appreciate the opportunity to participate in and comment on the ongoing Storage Design and Modeling stakeholder initiative.  As detailed below, the Six Cities generally support the CAISO’s proposal to eliminate uplift except for instances where negative revenue is attributed to market algorithms or CAISO action and not to bidder behavior.  In addition, while the Six Cities appreciate the ongoing stakeholder engagement on storage issues, this initiative has been ongoing for more than a year.  The Six Cities encourage the CAISO, consistent with the initiative schedule, to continue to move toward a policy decision, even where there is not complete alignment among the stakeholders.  The Six Cities further suggest that the CAISO continue to move forward with developing policy under this initiative while the Expanded Day-Ahead Market (“EDAM”) and Day Ahead Market Enhancements (“DAME”) become operational.  If the EDAM/DAME implementation results in data that challenges the understanding or effectiveness of policy developed in this initiative, that data can be incorporated into the process and policy revised accordingly.  However, this initiative should not be further delayed pending EDAM/DAME implementation.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

Consistent with their previous comments on this issue, including those submitted on September 5^th and October 13^th, the Six Cities agree that, in most instances, Bid Cost Recovery (“BCR”) for storage resources is unwarranted and should be reserved for instances where negative revenue is attributed to market algorithms or CAISO action. 

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

Please see the Six Cities’ response to Question 2.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

Consistent with the Six Cities response to Question 2, the Six Cities are in agreement with the uplift problem statement and guiding principles.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

The Six Cities are in agreement with the storage default energy bid’s problem statement and guiding principles.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

The Six Cities have no comments at this time.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

Please see the Six Cities’ response to Question 2.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

The Six Cities have no comments at this time.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

Consistent with the Six Cities’ previous comments regarding initial state-of-charge, including those made on October 13^th, the Six Cities supports requiring the initial state of charge value for storage resources to be within a certain range of accuracy if appropriate rules can be developed to ensure that the range is achievable for resources, including those providing regulation.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

The Six Cities are open to exploring possible uplift paradigms if such paradigms can be developed and implemented in a manner that allows for uplift when needed and avoids strategic behavior.  At this time, the Six Cities support “Option A” where no eligibility for uplift is assumed but specific circumstances allow for eligibility for uplift.  Additionally, the Six Cities support the creation of a process to seek uplift if warranted and not otherwise accounted for.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

The Six Cities have no further comments at this time.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

Southern California Edison (SCE) appreciates the opportunity to provide comments on the Updated Discussion and Issue Paper and the December 4 stakeholder meeting regarding storage design, modeling, uplift, and Default Energy Bid (DEB) policies. SCE’s comments are summarized as follows: 

Drivers of Day-Ahead Uplift: 
SCE supports CAISO’s proposal to eliminate Bid Cost Recovery (BCR) payments for storage resources in the day-ahead market, with limited exceptions. SCE believes scheduling coordinator actions, such as self-schedules, outages, and operating limit changes, which result in uneconomic schedules should not be eligible for BCR. 

Drivers of Real-Time Uplift: 
SCE agrees with CAISO and the Department of Market Monitoring (DMM) that real-time uplift is primarily driven by the interaction between the initial state of charge and scheduling coordinator actions. SCE supports limiting real-time uplift eligibility to market errors and out-of-market actions, such as exceptional dispatch, local market power mitigation for charging, and out-of-merit dispatches resulting from multi-interval optimization (MIO).  

Uplift Problem Statement & Guiding Principles: 
SCE generally supports CAISO’s uplift problem statement and guiding principles, which aim to simplify and clarify the uplift mechanism by focusing eligibility on true out-of-market actions and eliminating uplift for outcomes driven by bidding behavior or self-scheduling. SCE recommends improved documentation and transparency, particularly regarding market optimization and advisory price impacts, to enable more informed bidding decisions. SCE agrees that uplift should not be indefinite and should be limited to cases where market participants cannot reasonably avoid uneconomic outcomes through improved bidding sophistication or strategy. 

Storage Default Energy Bid (DEB) Problem Statement & Guiding Principles: 
SCE disagrees with the first problem statement which identifies the reliance on day-ahead outputs as a challenge for WEIM-only participants and the second guiding principle regarding having a DEBs that can be utilized by all storage resource regardless of location.  SCE believes day-ahead DEBs can serve as a foundational standard for all storage resources, including those participating only in the Western Energy Imbalance Market (WEIM).  

Concepts Related to Storage DEB Enhancements: 
SCE supports further discussions about providing WEIM resources with additional options such as MIBP or DGAP to reflect their opportunity cost. SCE cautions against delaying improvements for resources facing significant DEB challenges by seeking a “perfect” solution for all resource types at once. SCE does not believe hourly DEBs could easily be determined or feasibly implemented due to the short look-ahead of four hours performed by the Short-Term Unit Commitment (STUC), but supports exploring “time-of-day” methodologies for real-time adjustments. 

Concepts Related to Day-Ahead Uplift for Storage Resources: 
SCE supports CAISO’s proposal to eliminate day-ahead BCR for storage resources, with an exception for exceptional dispatch. SCE agrees that eliminating day-ahead uplift will improve incentives for accurate bidding and state-of-charge management, reduce gaming potential, enhance market efficiency, and promote greater accountability in storage bidding practices.  

Concepts Related to Ancillary Service Constraints: 
SCE opposes the removal of the Ancillary Service State-of-Charge (ASSOC) constraint, which is a fundamental tool for ensuring the physical deliverability of the capacity procured by CAISO. SCE warns that replacing it with real-time re-optimization or settlement penalties could introduce operational risks, trigger scarcity pricing, and increase costs to load. SCE is concerned that the assumed liquidity in the real-time market may not exist during periods of extreme system stress.  

Concepts Related to Day-Ahead Initial State-of-Charge: 
SCE strongly favors maintaining the status quo, where submissions of a day-ahead state-of-charge value remain voluntary for scheduling coordinators. SCE’s support for the status quo is directly tied to support for DMM’s real-time uplift proposal (Option A), which effectively eliminates most real-time uplift payments, with only narrow exceptions for specific circumstances. SCE recommends CAISO host a technical workshop to clarify the initial state-of-charge parameter and its market interactions.  

Concepts Related to Real-Time Uplift: 
SCE strongly supports Option A (DMM Proposal), which limits uplift payments to specific, justified reasons and holds battery operators accountable for energy management. SCE opposes Option B (which could inflate uplift payments) and Option C (which removes essential market protections).

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

SCE supports CAISO’s proposal to eliminate Bid Cost Recovery (BCR) payments for storage resources in the day-ahead market, with limited exceptions. The issue paper and CAISO analysis confirmed that the primary drivers of day-ahead uplift are caused by bidding behaviors and scheduling coordinator actions, such as those associated with operating limits, outages, and self-schedules, which can result in uneconomic schedules. SCE agrees that these behaviors should not be eligible for BCR, as they do not reflect system-driven reliability needs and may incentivize strategies that undermine market efficiency. The only exception SCE supports retaining is for exceptional dispatch, recognizing that such events are rare in the day-ahead timeframe. 

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

Regarding real-time uplift, SCE concurs with CAISO and DMM’s assessment that the main driver is the interaction between the initial state of charge and scheduling coordinator actions, including self-schedules and changes to operating limits. SCE supports limiting real-time uplift eligibility to market errors and out-of-market actions such as exceptional dispatch, local market power mitigation for charging, and out-of-merit dispatches resulting from the multi-interval optimization (MIO).     

SCE acknowledges DMM’s analysis that MIO errors generally benefit resources over the course of the day. However, SCE recommends that CAISO increase transparency and reporting on MIO impacts to allow market participants to better understand and manage their bidding strategies.  CAISO should develop an automated report that displays advisory prices so that market participants can observe whether the prices caused the out-of-merit dispatch.

SCE recognizes local market power mitigation (LMPM) as a valid but infrequent edge case for uplift eligibility. However, before supporting the retention of uplift payments in these situations, SCE requests that CAISO or DMM provide additional data to determine whether LMPM occurs across a broad set of resources or is concentrated among consistent subset of resources. If LMPM is consistently triggered for only a subset of resources, there should be concern that these resources are intentionally structuring their bids—such as submitting excessively high discharge bids and low charge bids—to induce mitigation and receive uplift payments. SCE believes it is important for CAISO and DMM to further investigate this possible behavior. Over time, resources located at uncompetitive nodes should develop the expertise to manage their state of charge through appropriate bidding strategies, and uplift payments should not be provided indefinitely in these cases. 

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

SCE generally supports CAISO’s uplift problem statement and guiding principles, which aim to simplify and clarify the uplift mechanism by focusing eligibility on true out-of-market actions and eliminating uplift for outcomes driven by bidding behavior or self-scheduling. SCE recommends that CAISO improve documentation and transparency, particularly regarding market optimization and advisory price impacts.  This will enhance the ability for market participants to make more informed bidding decisions. SCE agrees that uplift should not be indefinite and should be limited to cases where market participants cannot reasonably avoid uneconomic outcomes through improved bidding sophistication or strategy.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

SCE would like to bring up several issues relevant to the first problem statement which identifies the reliance on day-ahead outputs as a challenge for WEIM-only participants and the second guiding principle regarding having DEBs that are applied to all storage resource regardless of location.¹ 

SCE believes the day-ahead DEBs can serve as the foundational standard proxy for all resources, including those participating only in the WEIM. With the expansion of the West through EDAM, results from this market will become more representative of the entire region and suitable as a common reference point.   

SCE does not believe it is necessary to create new DEBs to accommodate WEIM-only entities because these entities do not face the same challenges as those experienced by CAISO or EDAM resources. The issues that have been discussed in the working groups are connected to two specific characteristics unique to CAISO & EDAM resources that don’t apply to WEIM resources:

• CAISO and EDAM resources are subject to financially binding day-ahead schedules.  If SOC telemetry shows that the battery is unable to meet its day-head schedule, the market will force a “buy-back” of the discharge schedule.  WEIM resources don’t have a day-ahead schedule, so it would not be subject to any buy-back and it would be difficult to estimate what their real-time opportunity cost would be later in the day. 

• CAISO resources have either a must-offer obligation (for RA resources) or a requirement (from IR or RUC) to bid in the real-time market.  WEIM-only resources have no such requirements. If they wish to retain their resources to use later in the day, they can simply refrain from bidding those resources until they feel it would be beneficial. 

Overall, these two issues indicate that DEB is less significant for WEIM resources, particularly regarding the risk of premature dispatch, than it is for CAISO and EDAM resources.  While it would be preferable to find a broader DEB measure for all storage resources, it may be reasonable — at least in the near term — to offer WEIM-only resources the option to use day-ahead market generated DEBs; especially if this allows for the quicker improvement of the DEBs without delaying progress.

¹ California ISO (CAISO), Storage Design and Modeling – Updated Discussion and Issue Paper on Uplift and Default Energy Bid, Dec. 12, 2025, p. 21: “The storage default energy bid’s dependence on outputs from the day-ahead market processes creates challenges with an expanding footprint because resources that are not part of the day-ahead market cannot readily leverage the storage default energy bid option.”; and p. 22: “The storage default energy bid should be calculated in a way that all storage resources, regardless of location, should be able to readily leverage as a default energy bid option.” 

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

As discussed in the previous answer, it may be reasonable for storage DEBs to be based on DAM market data, even though WEIM resources do not participate in these markets. This is especially true if the potential DEBs are the only options available to the WEIM resources. In addition, SCE also supports further discussions about providing those resources with additional options such as MIBP or DGAP to reflect their opportunity cost.  However, SCE cautions against delaying improvements for resources facing significant DEB challenges by seeking a “perfect” solution for all resource types at once.  A more practical approach is to move forward with the solution that provides clear benefits today while continuing to explore refinements over time.

SCE does not believe that hourly DEBs could easily be determined or feasibly implemented due to the short look-ahead of four hours performed by the Short-Term Unit Commitment (STUC). However, SCE does believe that the values may need to change throughout the day. As an example, after the peak period of the day it is likely that the opportunity costs have diminished. Additionally, there can be changes materializing in real time that would raise the DEB calculated based on the day-ahead results. A change in the weather leading to a significant increase in expected load, or the loss of a major transmission intertie would likely raise prices across the entire day during the real-time market. In such a situation, it would make sense to increase the real time opportunity cost in the DEB from what was determined based on the day-ahead market.  

SCE supports further discussions on the best approach to incorporate these real-time adjustments.  SCE would be interested in exploring the “time-of-day" methodology but emphasizes that it doesn’t need to be overly complex.  A straightforward calculation that accounts for changing conditions
developed after the day-ahead market may be sufficient.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

SCE supports the CAISO’s proposal to eliminate day-ahead bid cost recovery (BCR) for storage resources, with an exception for exceptional dispatch. As the issue paper highlights, the day-ahead market’s 24-hour optimization already schedules storage efficiently, resulting in very few legitimate instances where day-ahead uplift is needed. Importantly, the CAISO and DMM have shown that every non-negligible case of day-ahead BCR since 2022 has been driven entirely by scheduling-coordinator actions—such as self-schedules, outages, or operating-limit changes—that created uneconomic dispatch outcomes. Because these outcomes stem from bidder behavior rather than ISO actions or market limitations, retaining day-ahead uplift for storage undermines the intent of bid cost recovery and creates opportunities for uplift-seeking behavior. 

SCE agrees that eliminating day-ahead uplift will improve incentives for accurate bidding and state-of-charge management. The current framework effectively insulates storage from the consequences of submitting parameters that lead to infeasible or unproductive schedules. This reduces exposure to real-time prices and weakens the incentive to align bids with actual operational capabilities. Removing day-ahead uplift addresses this misalignment and aligns with stakeholder guiding principles that uplift should not compensate for bidder-driven negative revenues. 

SCE also supports retaining uplift eligibility for exceptional dispatch in the day-ahead timeframe, as these instructions arise from ISO reliability needs outside the scheduling coordinator’s control. Maintaining this limited exception ensures that resources are made whole when dispatched manually for reliability while avoiding broader incentives for inappropriate uplift claims. 

Overall, SCE believes eliminating day-ahead uplift for storage will reduce gaming potential, enhance market efficiency, and promote greater accountability in storage bidding practices.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

SCE opposes the removal of the Ancillary Service State-of-Charge (ASSOC) constraint, which is a fundamental tool for ensuring the physical deliverability of the capacity procured by the CAISO. 

The primary objective of the ASSOC constraint is to ensure grid reliability through physical delivery. Proposals to replace or remove the constraints with a real-time AS re-optimization or a settlement penalty framework—while potentially improving “market efficiency" for storage operators—introduce unacceptable operational risks.  It shifts from a model that prevents energy shortfalls through forward procurement in the day-ahead market to one that is unpredictable and can easily be altered in the real-time market, potentially triggering and exacerbating scarcity pricing.  Under the proposed frameworks, a resource that fails to manage its "fuel" can buy back its obligation at real-time prices. If this occurs during tight condition, it will trigger the Scarcity Reserve Demand Curve (SRDC) more frequently, leading to artificial price inflation and significantly higher costs to load. 

Furthermore, SCE is concerned that the concepts presented assume a depth of liquidity in the real-time market for replacing the undeliverable AS capacity, which may not physically exist during periods of extreme system stress.  SCE stresses that the trade-offs of the assumed “market efficiency” should not outweigh the current reliability guarantees.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

SCE strongly favors maintaining the status quo, where the submissions of a day-ahead state-of-charge value remain voluntary for scheduling coordinators. The CAISO does not currently require an initial state-of-charge submission and instead applies a default value—using the last hour of the previous day’s state of charge—when none is provided.

SCE’s support for the status quo is directly tied to support for the Department of Market Monitoring’s real-time uplift proposal also known as Option A.  This framework effectively eliminates most real-time uplift payments, with only narrow exceptions for specific circumstances such as those driven by the market optimization or CAISO operator actions.  SCE adopts this approach because SCE believes that making the initial state-of-charge mandatory with an accuracy threshold is simply not needed.  When uplift payments are strictly limited to justified cases, the risk of ratepayers subsidizing inaccurate data or poor energy management is removed at the source. This makes bidding requirements and accuracy test an unnecessary administrative burden that does not add value to the new uplift paradigm that SCE currently would support. 

Although the CAISO states in the issue paper that “[t]o date, most real-time shortfalls associated with these interactions occur when no day-ahead initial state-of-charge value was submitted, and a default value was used”, SCE believes the reason for this trend is clear, which is that market participants never had an incentive to provide accurate values because they were protected by the current uplift rules.  Under the existing design, resources are often made whole even when they fail to proactively manage their energy levels or submit precise data. By adopting Option A and limiting uplift, the ISO will naturally fix this behavior by ensuring that resource owners—rather than load—bear the consequences of their management decisions. SCE urges the CAISO to focus its efforts on the fundamental uplift reforms in Option A rather than creating new bidding requirements for the initial state-of-charge.

Lastly, SCE recommends that the CAISO host a technical workshop or meeting to provide a detailed overview of how the initial state-of-charge parameter functions within the market.  This session should clarify how the initial SOC bid parameter interacts with actual telemetered SOC and market bids.   In addition, CAISO can provide clear examples illustrating how dispatches are affected when the telemetered SOC at the start of the operating day is not aligned with the initial SOC value submitted in the day-ahead market.  Furthermore, it is important to understand what tools can be used to align the actual SOC with the initial SOC if the two values appear to not be in sync prior to the first hour of the trading day and after, and  what corrective actions are needed to improve the alignment.  Many market participants currently find these interactions and their resulting impacts on dispatch feasibility and BCR difficult to follow, and a thorough walk-through is much needed.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

SCE strongly supports Option A (The DMM Proposal) as the most effective path forward for real-time uplifts.  SCE has consistently advocated for a structured approach that ensures uplift payments are only issued for specific and justified reasons. Further, SCE favors Option A because it establishes a clear and limited set of circumstances under which storage resources can receive uplifts.  Currently, storage resources are eligible for BCR by default, even when they fail to properly manage their SOC. Option A fixes this by transitioning to a model where uplifts are limited to a few specific cases, such as losses caused directly by ISO actions or the market optimization. Option A eliminates behaviors that have consistently increased uplift costs for ratepayers.  By excluding uplift payments resulting from bidding inaccuracies such as those caused by inaccurate initial SOC, parameter submissions, or strategic bidding, this option ensures that battery operators are held accountable for their own energy management.  This approach removes any safety net that currently protects storage resources from losses in the real-time when deviating from schedules.

SCE opposes Option B because it would likely inflate uplift payments and place an unfair financial burden on load.  Under the Option B framework, a resource becomes eligible for uplifts simply by bidding “consistent” with real-time conditions.  CESA defines “consistent” as submitting a discharge bid that is equal to or above its DEB. Resources that submit a discharge bid below its DEB will not be eligible for uplifts.  SCE sees that this could inappropriately increase uplift payments.  If a battery operator submits a very high bid that still passes this consistency test, the actual bid price becomes the basis for the final payment. This design will provide incentives for resource owners to bid strategically to set the dollar amount of uplifts they hope to receive rather than the resource’s actual costs.

SCE strongly opposes Option C, as it appears to remove essential market protections.  The concept suggests eliminating local market power mitigation (MPM) and ancillary service constraints. Removing MPM would expose load to high energy prices in constraint areas where competition is limited.  Furthermore, getting rid of ancillary service constraint would put significant risk to grid stability by allowing resources to obtain capacity payments with the flexibility to deviate from day-ahead schedules, contributing to more uncertainty in the real-time.

In summary, Option A is the only proposal that provides a clear and limited framework for uplift while protecting the market from costly and inefficient bidding behavior.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

SCE does not have any additional comments.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

Vistra acknowledges the efforts undertaken by CAISO staff to update the Discussion and Issue Paper based on stakeholder discussions spanning December 2024 through December 2025. The Storage Design and Modeling (SDM) initiative is a continuation of prior stakeholder efforts launched in response to growing operational experience with storage modeling, mitigation, and uplift challenges.

Several of the concepts currently under discussion—such as the need to model foldback impacts—have been raised repeatedly in prior stakeholder efforts dating back nearly a decade, including during Energy Storage and Distributed Energy Resources (ESDER) Phase 1. CAISO and stakeholders increased urgency calling for improvements after gaining real-world operational experience with storage resources beginning informally in 2020. Formal policy development of the specific issues within scope of SDM such as mitigation and modeling needs commenced on April 28, 2021, when CAISO launched the Energy Storage Enhancements initiative (approximately 27 months). This work was further advanced through the Price Formation Enhancements effort addressing bidding above the soft offer cap to better enable state of charge management through bids on tight days (approximately one month), and most recently through the adoption of an interim uplift settlement change under the Storage Bid Cost Recovery and Default Energy Bid Enhancements initiative (approximately four months). At the time of these comments, stakeholders will have been actively engaged in addressing these challenges for approximately five years.

This regulatory history provides important context for why Vistra believes the SDM initiative should be positioned to advance robust solutions to holistic storage challenges, rather than remaining at a scoping or issue-identification stage. During 2025, Vistra has expressed concern regarding both the pace of progress under the SDM initiative and the reluctance to engage in these holistic policy discussions that connect state-of-charge management, mitigation, price formation, and uplift. The pace of progress appears driven by limited resources to address storage issues while CAISO focuses its efforts on the Extended Day-Ahead Market (EDAM) and Day-Ahead Market Enhancements (DAME). We urge the CAISO to refocus technical resources where possible to assist the team to progress expeditiously to holding holistic discussions on policy issues and exploring possible solutions to address challenges. Given the extensive record to date, it is time to move forward to more robust discussions.

Based on Vistra’s review of the Updated Discussion and Issue Paper it only partially incorporates Vistra’s feedback as several substantive areas raised by Vistra in 2025 comments were omitted. Vistra requests that CAISO provide a stakeholder comment matrix summarizing stakeholder input and CAISO responses going forward. Such a matrix would help ensure clarity regarding which comments were considered, how they were evaluated, and the rationale for not incorporating certain scope elements or solution concepts.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

Vistra agrees that by virtue of the day-ahead market horizon’s length more than spanning a Limited Energy Storage Resources’ (LESR) full cycling capabilities that in most market runs that the optimal use of the storage to cycle is much more likely in day-ahead than in the real-time market.

The accusation that CAISO’s paper raises implies that the only “non-negligible” day-ahead uplift is the result of a coordinated scheme. It is paramount that CAISO’s Department of Market Monitoring pursue investigations into strategic bidding behavior and if their investigation indicates sufficient cause to refer that behavior to the Federal Energy Regulatory Commission. We also believe CAISO and DMM should be transparent about suspected strategic bidding behavior to affirmatively place Scheduling Coordinators (SCs) on notice.

Vistra previously emphasized that real-time market outcomes are not primarily the result of strategic bidding behavior but instead stem from market design limitations that do not adequately represent storages’ opportunity costs or through applying operational constraints that may lead to uneconomic results. While today the risks of the Ancillary Service State Of Charge (AS SOC) constraint driving energy awards that are uneconomic are limited in day-ahead market, under DAME’s introduction of Imbalance Reserves and Reliability Capacity products solved across the EDAM footprint subject to envelope equations it is unknown whether the likelihood of uneconomic day-ahead results driven by the interaction of the envelope equation with other SOC constraints will increase the need for day-ahead uplift or not. In the future, the ISO must provide a pathway for storage SCs to receive make-whole payments for uneconomic results across the day-ahead market due to its management of the storage.

Vistra requests the CAISO shift this discussion from day-ahead uplift drivers to exploring holistic uplift framework changes better aligned to storage operations considering these future day-ahead market changes. The holistic uplift package may revisit the separation of day-ahead net revenues from real-time market net revenues, which would change the nature of this conversation. See below for more examples of how a new framework discussion could begin to look at new storage make-whole framework for in-market dispatches.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

Vistra has provided feedback over the past year on the major drivers of real-time uplift. We specifically point the CAISO to our comments in response to June 30^th discussion and November 12^th discussion. Vistra reiterates the feedback we provided during the December 4^th call below.

CAISO has not yet facilitated a high-level policy discussion on what the uplift framework for in-market dispatches should be given storages’ unique operating reality where its prime mover costs are a function of the market and its dispatch costs are largely driven by risk of lost opportunity costs of misusing its use-limitation.

On the December 4^th call, the CAISO requested input on what type of questions should be asked to meet stakeholder expectations around a holistic discussion to which Vistra provided the following:[1]

• Is it appropriate for Non-Generator Resources to have separate bid cost recovery payments by markets – day-ahead versus real-time – or is separating the bid cost recovery calculation sending the wrong incentives to storage resources?
• Whether making select intervals ineligible and others not may be carving out pieces of the total daily operation that may result in net shortfalls across the day that does not make sense given that storage is operating cycling across an entire operating day?
• What is the bid for willingness to provide cycling that should be reflected in the NGR bids to which the resource needs to be made whole across the day not just in each interval? How do we calculate the willingness to cycle such that a resource is made whole across the day to its Operations & Maintenance (O&M) costs due to cycling and for its opportunity costs to preserve its use limitation to be dispatched at the highest discharge intervals?
• Can we better allow storage to reflect the costs of operating at different SOC levels when its SOC has changed from its expectation after the real-time market closes so that we ensure the best bids given the SOC are in the market and then assessed under an uplift framework?
• Can we better allow storage to update its bids in response to changing system conditions that may alter opportunity cost expectations intra-day?

In addition to these questions, it is also critical to recognize that the real-time bid cost recovery (BCR) calculation settles daily net shortfalls from the combination of Residual Unit Commitment (RUC) results, and the real-time market runs - Fifteen Minute Market (FMM) and Five Minute Market (5MM) - results. With the new DAME Reliability Capacity Up and Down products subject to envelope equations storage RUC results may change meaningfully to alter real-time market BCR results where there is likely a need to ensure real-time make-whole payments are provided when uneconomic results occur through the combination of RUC, FMM, and 5MM. No incremental changes should be adopted to real-time market uplift until the impact of the new DAME/EDAM products can be observed.

Vistra respectfully requests CAISO cease these discussions on incremental changes to current BCR framework that we have collectively come to believe is ill suited for storage. The CAISO should hold holistic discussions around the pressing questions flagged above. These discussions should consider how DAME and EDAM implementation may inform a robust uplift framework.

[1] CAISO Storage Design & Modeling December 4^th Meeting Recording at 4:56:36-5:00:05, available at https://www.youtube.com/watch?v=XZmvoYn9BTg.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

Please see our prior comments and responses above.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

The CAISO included some of Vistra’s feedback on the problem statement and guiding principles regarding the real-time market Default Energy Bid (DEB). The Updated Discussion and Issue Paper acknowledges some of the structural limitations with the DEB but frames the problem primarily as one of a calculation refinement rather than a need for a holistic review of the storage DEB.

This issue is a high priority item for Vistra. We have sought relief from having to rely on the storage DEB option that poorly estimates the opportunity cost of storage by seeking a Negotiated DEB. The NDEB request was dismissed in part based on feedback that the storage DEB limitations with the storage DEB impacts all storage resources not a specific asset uniquely therefore we should wait for the on-going stakeholder effort pursuing refinements to the storage DEB. Given that the CAISO is applying a high hurdle for seeking the NDEB in preference that entities wait for the SDM effort to conclude, it is paramount that the CAISO fast track this scope item to adopt changes in 2026. The improved storage DEB should be deployed in parallel with EDAM to mitigate risks of similarly situated use limited resources across the EDAM footprint being differently dispatched when mitigated.

In reviewing the Updated Discussion & Issue Paper Vistra found the problem statement omitted some of its feedback and as such falls short of being sufficiently developed. Further, Vistra is not aligned with the guiding principles.

CAISO should include additional feedback on problem statement

In our comments on the November 12^th discussion, Vistra requested as an urgent issue to be prioritized: “Real-Time Market Default Energy Bid changes to allow storage to reasonably reflect opportunity costs in real-time including the ability to seek reference level change requests as well as ensure placement is accurate under mitigation when the offer cap is raised above the soft offer cap”.[1] The CAISO omitted in its problem statement summary the need to allow Reference Level Change Requests (RLCR) to the DEB to reflect contemporaneous opportunity costs similar to other opportunity cost based resources such as hydro. In its Price Formation Enhancements Bidding Above the Soft Offer Cap effort the CAISO committed to evaluating RLCR enhancements to allow hydro and storage resources to seek RLCR.[2]

The CAISO also omitted in its problem statement summary the clarifications Vistra provided during the past year with one of our core concerns with the mitigation framework. We are concerned that the mitigation is mitigating charge bids down to levels that reduce the ability to economically charge up to a market participant’s willingness to do so. Previously, CAISO has stated that this functionality is necessary due to monotonicity during its November 12^th meeting. However, this is not fully accurate. If the mitigation design is refined to first identify the minimum charge bid price and then apply an adder to the charge segments to find the discharge bids mitigated values above the mitigated charge bid segments this would respect monotonicity. The problem statement should include a need to avoid over-mitigating charge bids, and the guiding principle should state a need to avoid over-mitigation of charge bids.

Finally, as previously requested, it is important the problem statement acknowledge that under mitigation storage may not be situated in the supply stack at a place that is representative of its relative value compared to other opportunity-cost based resources. Storage may be mitigated at lower levels than similarly situated opportunity-cost based resources with intra-day use limitations such as hydro resources or demand response resources. Deploying similarly situated use limited resources earlier than other use limited resources could unfairly preference one set of use limited assets over another.

CAISO should acknowledge different views on the guiding principles

Below we provide feedback on the two guiding principles CAISO stated there has been collective agreement on with clarifications on why Vistra does not agree there is alignment. Further, we have drafted the guiding principles that we have asked the CAISO to include in this scope item that were omitted in #3-5. See below.

1. Vistra does not agree that the storage DEB should be designed in a way that the DEB functionality must allow for the reflection of changing real-time constraints and opportunity costs. Vistra has requested that the scope of this effort include reference level change requests where storage has equal rights to submit an energy reference level change request subject to ex ante review whether automated or manual. A storage asset should be able to request an RLCR if real-time conditions change significantly intra-day when the default DEB is no longer a valid reflection of expected opportunity costs. This does not require the DEB itself to change intra-day.
2. Vistra does not agree that an expectation should be that a single default storage approach must work for all storage resources regardless of location. The guiding principle should be amended such that it reads: “The storage default energy bid should be calculated in a way that all most storage resources, regardless of location across the Western Energy Imbalance Market, should be able to readily leverage as a default energy bid option”.[3]
3. The storage DEB methodology that applies to both the charge and discharge sides of the bid range should avoid over-mitigation of the charge bid where over-mitigation occurs if the charge bid is mitigated down such that a day-ahead charging award is no longer economic and increases the risk that the RTM would issue an incremental Instructed Imbalance Energy award (i.e., charge less or not at all). As stated in our comments in response to Nov. 12^th meeting: “Storage’s charging bids should not be over-mitigated, and of course to respect increasing monotonicity the discharge bids should be increased by at least the registered Variable Operations & Maintenance values or a de minimis value to approximate some indifference between modes.”
4. The storage RTM DEB should allow storage when mitigated to be able to submit bids that allow the market to weigh its relative value based on its opportunity cost relative to other resources’ opportunity costs or operating costs. The market must be able to evaluate the trade-off in valuing a storage asset’s opportunity cost relative to other daily use-limited resources such that it evaluates the storage as either higher priced (e.g., needing to be reserved at the same price as hydro, or to avoid supporting an export) or as a neutral trade-off (e.g., indifferent to discharging storage or hydro, or supporting export) at the appropriate point in the supply stack. As stated in our comments in response to Nov. 12^th meeting the following guiding principles should be adopted:
   • Storage should not be deployed sooner than similarly situated daily use-limited hydro or participating demand response resources that are also valued based on real-time opportunity costs due to a mitigated price that approximates a lower opportunity cost than other daily use-limited opportunity cost resources.
   • Storage should not be deployed to support off-system sales (i.e., exports) due to a mitigated price making it appear as if it is willing to sell off its SOC prematurely.
5. The storage RTM DEB should lead to triggering charges and discharges across the operating day that would have been optimally identified if a counterfactual 24-hour operating horizon could have been utilized, or alternatively a make-whole framework that accounts for market producing sub-optimal awards under mitigation due to shortened horizon.

[1] Vistra Comments on CAISO’s Nov 12 Hybrid Meeting, Working Group Session 10: Uplift and Default Energy Bids (DEB), State-of-Charge Management, and Mixed-Fuel and Distribution-Level Resources.

[2] CAISO’s Final Proposal on Rules for Biddings Above the Soft Offer Cap, May 17, 2024, Page 8, https://stakeholdercenter.caiso.com/InitiativeDocuments/Final-Proposal-Price-Formation-Enhancements-May17-2024.pdf.

[3] CAISO’s Updated Discussion and Issue Paper at Page #20.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

Vistra noted the absence of Vistra’s mitigation proposal if mitigation is maintained. In our last comments submitted on November 26^th, Vistra proposed that an appropriate starting place for the DEB enhancement is to modify the Hydro DEB. We reiterate those comments omitted from the stakeholder comment summaries in the Updated Discussion & Issue Paper.

“It is possible modifying the Hydro DEB methodology to only include the short-term opportunity cost and gas bid floor appropriately valuing an intra-day use limitation may offer improvements over the current storage DEB methodology. The Hydro DEB multiplier was established based on analyzing next day hub prices, which have changed since its establishment so a narrow improvement helping both hydro and storage if these approaches are aligned would be to make the multiplier be a value updated on a periodic basis to ensure it continues to achieve its goal when designed.”[1]

On the ideas the CAISO did include in the updated paper,

• Vistra does not find compelling idea #1 to modify the inputs used in the existing formulation to be based on maximum import bid price or the respective Default Generation Aggregation Point (DGAP). Modifying the hydro DEB is a better starting place.
• Vistra does not support updating the real-time DEB intra-day under certain circumstances or implementing a “time-of-day” DEB because there is not sufficient benefit to merit its complexity. As previously stated, RLCR is the preferred solution to allow adjusting the DEB for a given hour based on certain conditions deviating from the default DEB methodology.
• Vistra does not support an hourly DEB as this appears to be trying to achieve a false level of precision that may only exacerbate risks of over-mitigation.

Vistra acknowledges CAISO alludes to Vistra’s suggestion that if the CAISO cannot arrive on a new storage DEB method that is sufficiently robust that it should consider eliminating market power mitigation. This suggestion does not invalidate our proposal if mitigation is maintained to modify the hydro DEB.

[1] Vistra Comments on CAISO’s Nov 12 Hybrid Meeting, Working Group Session 10: Uplift and Default Energy Bids (DEB), State-of-Charge Management, and Mixed-Fuel and Distribution-Level Resources to Question #9.

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

Vistra believes that we need to focus on a holistic discussion for a new storage-specific uplift framework for in-market dispatches.

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

None currently. 

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

None currently. 

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

None of the conceptual frameworks summarized in the concepts related to real-time uplift are a holistic review of uplift except for Vistra’s proposal to eliminate uplift in exchange for allowing SCs to control the SOC.

Option A: Vistra does not agree that DMM’s proposal is well aligned with the guiding principles for uplift because it would not meet #3 where “negative revenues attributed to market algorithms or ISO action” would be excluded.

Option B: Vistra sees this as an incremental change to the most recently approved bid cost recovery changes.

Option C: If the CAISO continues its practices of (1) mitigation at inaccurate estimates of opportunity costs, (2) enforcing the AS SOC management constraint such that it can issue uneconomic energy awards, and (3) issuing energy schedules when a derate or rerate occurs after the day-ahead market in real-time then it must provide make-whole payments. If there is not the willingness to afford a more meaningful pathway for SCs to self-manage their SOC in exchange for foregoing uplift then the markets will need to continue to bear uplift costs for any net shortfalls experienced due to the policy decision to continue to have CAISO manage storages’ SOC at any cost.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

Vistra disagrees with elements of CAISO’s representation of Vistra’s proposal and presentation in November 2025.  Vistra did not state that the CAISO’s implementation is inconsistent with FERC Order 841 nor did we state that the ISO’s framework “de facto disallows for the self-management option”. We strove to facilitate a discussion around the SOC management options available, including end-of-hour SOC parameter, and where there may be areas of improvement that could be considered under this effort. Finally, the CAISO referenced a FERC Order in footnote 16 that is taken out of context because this rejection in Docket No. ER23-1533 was of a request by Vistra to have the SOC constraints detailed in the Tariff as opposed to afford CAISO the flexibility to adjust its constraints via Business Practice Manual changes.[1] Vistra respectfully requests the CAISO strive to more fairly summarize our feedback and proposals going forward.

[1] Vistra Motion to Intervene and Limited Protest of Vistra Corp. and Dynegy Marketing and Trade, LLC at Page 12, available at https://elibrary.ferc.gov/eLibrary/filedownload?fileid=15C67284-34E8-C11C-9C71-87A59CC00000.

1. Please provide a summary of your organization’s comments on the materials shared during the December 4 meeting, the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) , and the Issue Paper.

WPTF appreciates the opportunity to provide comments on the materials shared during the December 4 meeting and the Updated Discussion and Issue Paper regarding Uplift and Default Energy Bid (DEB) that was posted Dec 12. These comments are intentionally brief, as the stakeholder meeting to discuss the Updated Discussion and Issue Paper is not scheduled until January 22. Following that meeting, WPTF intends to provide more detailed feedback.

Overall, our comments remain consistent with those previously expressed both verbally during stakeholder meetings and in prior written comments. In summary:

• Eliminating day-ahead (DA) BCR should not be a near-term focus given the upcoming changes to the day-ahead market, the relatively limited DA BCR concerns to date, and the need for a broader, holistic discussion.
• CAISO should follow through on its commitment to conduct a holistic discussion regarding an appropriate uplift framework for storage resources. While we appreciate the analysis of current BCR drivers, the focus on existing drivers within the current framework has constrained the discussion and limited consideration of alternative approaches.
• WPTF strongly supports improvements to the DEB for storage resources and encourages CAISO and stakeholders to ensure that any enhancements can be fairly and equitably applied to all storage resources, including CAISO, EDAM, and EIM (non-EDAM) resources.
• WPTF is open to discussions of ancillary service (AS) re-optimization, while recognizing that it represents a significant policy and implementation effort. As such, CAISO should ensure that these discussions do not unintentionally delay progress on other elements of this initiative.
• While we understand the desire to align DA initial state-of-charge (SOC) more closely with real-time SOC, WPTF reiterates that a holistic discussion of BCR should occur first. Developing additional market rules to address current RT BCR drivers under the existing framework may result in unintended consequences and/or prove unnecessary if a different uplift framework is ultimately adopted.

2. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of day-ahead uplift.

Please refer to WPTF’s previously submitted comments on this topic.

3. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding drivers of real-time uplift.

During the most recent stakeholder meeting, CAISO staff indicated uncertainty as to why stakeholders believe a holistic discussion of BCR has not occurred, given the extensive analysis CAISO has conducted on the current drivers of BCR. While WPTF greatly appreciates this analysis and finds it valuable, it is important to distinguish between analyzing the drivers of uplift within the existing framework and facilitating a holistic discussion of whether that framework itself is appropriate for storage resources.

To date, CAISO’s efforts have been rooted in identifying and explaining the drivers of BCR as they arise under the current uplift methodology. As a result, stakeholder discussions have remained constrained to the existing mechanism, namely, comparing bids to market revenues on an hourly basis, netting across the day, and treating day-ahead and real-time uplift separately. This approach inherently frames the conversation around how to adjust or refine the current methodology, rather than first asking the more fundamental question of whether the current methodology is the right one for storage resources.

A truly holistic discussion would step back from the existing framework and evaluate whether there are alternative uplift constructs that more effectively determine whether market revenues sufficiently cover the costs of storage participation. By anchoring the discussion in the current framework, the analysis, while informative, has effectively limited consideration of other potentially more appropriate uplift mechanisms. WPTF remains concerned that without first engaging in this broader discussion, stakeholders are being asked to optimize a framework that may not ultimately be well-suited for storage resources. The holistic discussion could start by first asking (1) what are the costs of storage resources participating in the market that should be recovered through the market, (2) are those costs associate with day-ahead participation, real-time participation, or a combination of both, and (3) what are the revenue streams that the resource recieves to cover the associated costs.

4. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the uplift problem statement and guiding principles.

WPTF reiterates that discussions regarding changes to DA BCR should not proceed until the following have occurred:

• A holistic discussion on an appropriate uplift framework for storage resources has been conducted to guide final uplift design and methodology.
• EDAM/DAME has been implemented and stakeholders have gained experience with how the new DA market structure and products affect storage resources from an uplift perspective.

WPTF would be open to discussing potential changes to the DA BCR framework once the stakeholder community has determined, after robust and meaningful discussion, that the current uplift framework is the most appropriate approach for determining whether uplift payments to storage resources are necessary.

In this context, WPTF appreciates CAISO’s inclusion of “the need to develop a separate and distinct uplift mechanism specifically designed for storage” as the first guiding principle. We are hopeful this principle reflects recognition of the need for a holistic discussion regarding what an appropriate uplift mechanism for storage should entail. WPTF respectfully requests confirmation that this is the intent of the guiding principle, as well as clarity on when CAISO anticipates initiating this discussion. We further presume that discussions on other uplift-related topics, such as eliminating DA BCR, modifying RT BCR, and implementing an initial SOC bidding requirement, will be paused until this discussion has occurred and concluded in a meaningful way.

5. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding the storage default energy bid’s problem statement and guiding principles.

WPTF is supportive of the proposed problem statement and guiding principles for the storage DEB.

6. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to storage DEB enhancements.

WPTF appreciates the three concepts presented to date for improving the current DEB formulation for storage resources. As previously noted, WPTF supports ensuring that storage DEBs are accurately calculated to reflect all relevant costs, including opportunity costs, for the applicable market run (DA or RT) and can be applied equitably to all storage resources, regardless of whether they participate as CAISO, EDAM, or EIM-only resources.

Each of the proposed options has associated advantages and disadvantages and varies in terms of accuracy and complexity. In addition, WPTF believes CAISO and stakeholders should also consider a fourth option based on the existing Hydro DEB framework. The Hydro DEB is an opportunity cost based formulation that may be a viable alternative to evaluate alongside the other concepts presented. One potential modification would likely be necessary, specifically, removing the long-term opportunity cost component.

WPTF would also like to confirm with the CAISO that allowing NGRs to leverage the Reference Level Change Request functionality is still within scope of this effort. The CAISO has previously committed to revising this topic within the DEB discussions of this policy effort and we want to confirm it has not been dropped. 

7. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead uplift for storage resources.

Please refer to WPTF’s previously submitted comments and our response to Question 4 above. 

8. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to ancillary service constraints.

WPTF is open to continued discussions of AS re-optimization, while recognizing that it represents a highly complex and resource-intensive effort from both a market design and implementation standpoint. As such, WPTF requests that CAISO ensure progress on other elements of this initiative is not delayed and that consideration be given to advancing items such as DEB improvements while AS re-optimization discussions continue.

9. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to day-ahead initial state-of-charge.

While WPTF understands the desire for the initial DA SOC to reasonably reflect real-time SOC, we are concerned that this proposed bidding requirement has not been fully vetted with respect to potential implications or whether it is the most appropriate means of addressing the underlying concern.

Additionally, because the initial DA SOC bidding requirement appears to be driven by concerns related to real-time BCR, WPTF believes this proposal should be paused until the stakeholder community has engaged in a holistic discussion regarding the appropriate uplift mechanism. At that point, it can be determined whether concerns related to initial DA SOC remain. WPTF also notes that, given the Department of Market Monitoring’s authority to monitor bidding behavior, concerns regarding bidding SOC to maximize BCR should already be mitigated by existing oversight.

10. Relative to the Updated Discussion and Issue Paper on Uplift and DEB, please provide your organization’s comments regarding concepts related to real-time uplift.

Please refer to WPTF’s previously submitted comments. WPTF reiterates that discussions regarding changes to RT BCR should not proceed until a holistic discussion has occurred on what an appropriate uplift mechanism for storage resources should consider.

11. Please provide any additional comments, feedback, or examples relative to the Updated Discussion and Issue Paper on Uplift and DEB. You can upload examples or data using the Attachments field below.

WPTF believes that the CAISO should prioritize the discussions of topics within the Updated Discussion and Issue Paper in the following order:

1. Storage DEB
2. Holistic Uplift Mechanism
3. Changes to DA and RT BCR (potentially including Initial DA SOC bidding rules) only if the discussion after #2 above leaves us in agreement that the existing uplift framework is the best methodology for storage

Discussions regarding AS re-optimization should take place in parallel such that it does not delay progress on #1 or #2 but also can be incorporated into the uplift mechanism discussion if determined there is a direct connection that needs to be considered.