The upcoming EDAM stakeholder working groups will further review and vet the EDAM Common Design Principles and Concepts applicable to each of the groups, identifying potential modifications and/or additional principles throughout the discussions. The principles and concepts document is posted on the EDAM web page. To the extent stakeholders would like to share comments on these principles and concepts in advance of the working group discussions, please share your organizations perspective.
PPC appreciates the CAISO and members of the EDAM small group addressing our questions at the November 12 meeting. Based on the responses provided, our impression is that there are many details related to the design of a potential EDAM which will be worked out in future meetings. We offer these initial comments based on our current understanding of the principles.
In addition to comments on the specific areas noted below, in general we encourage CAISO to continue to refine the EDAM Principles and Concepts based on stakeholder feedback to ensure that they are reflective of the interests of potential participants in the EDAM and inclusive of stakeholder perspectives. The Principles and Concepts document represents a high-level agreement to concepts sourced from a small group of stakeholders. In their current form, these principles should not be used as guideposts for the working group efforts. Either as part of the working groups or prior to the commencement of the working groups, CAISO should endeavor to update and refine these principles based on feedback from EDAM stakeholders more broadly. Using the existing concepts and principles from a subset of entities without incorporating feedback from the broader stakeholder community could lead to a market design guidepost that is not representative of the potential pool of EDAM participants.
Participation Commitment, Voluntary Participation
The recent EDAMs Principles and Concepts advances a market design where all loads and all resources in participating Balancing Authority Areas (BAAs) would be optimized day-ahead by the market, effectively doing away with the concept of non-participant resources and base schedule transactions as they exist in the EIM. While entities would be allowed to self-schedule, and this may have similar results in many cases, PPC is concerned there may be some instances where that is not the case – for instance if system supply is very tight. We are also contemplating the potential implications on this new paradigm on our members’ preference access to delivered federal power and on their efforts to meet greenhouse gas emission goals that have either been established as part of their own strategies or to comply with state mandates. We look forward to additional discussions on this paradigm. We hope to see the questions below specifically addressed in working group discussions:
- Where will the “grandfathered” treatment of rights be addressed?
- What consideration, if any, has been given to deliveries of federal power under the proposed paradigm? This issue is of critical importance to PPC and our members who have preference rights to the delivery of federal power from BPA.
- What considerations have been given to how carbon reporting would work in this paradigm for entities that have to demonstrate delivery of specific resources?
Based on the discussion at the November workshop, including responses to our questions, PPC observes that there are still many details to be worked out regarding the three-bucket transmission proposal, including key details on how transmission is made available for market optimization. We appreciate the follow-up document responding to stakeholder questions. This document provided some further insight into the discussion of the small group, but in some instances provided responses that appeared to be inconsistent with the stated principles. It is possible we have misunderstood these responses and look forward to additional clarity on the starting point for these discussions in advance of the working group meetings. In particular, we are interested in learning what the planned treatment is for Bucket 2 and 3 transmission, and what level of discretion transmission providers and transmission rights holders will have in making transmission available for market optimization.
In addition to clarifying the EDAM small group’s perspective, we ask that the CAISO take additional input from those not included in the small group discussions to further refine these principles prior to the working groups beginning their efforts.
For instance, there is a stated principle to “maximize the amount of transmission (firm, or otherwise high priority) made available to EDAM, while respecting the existing OATT framework and contractual commitments.” While PPC agrees with this concept generally, whether the proposal appropriately balances these principles will be heavily contingent on the details. The current description creates potential concerns on whether the appropriate balance will be struck. We offer these additional principles that should be met in order to “respect the existing OATT framework”:
- A transmission provider must have the discretion over the amount of transmission made available to the market.
- There must be appropriate compensation to transmission providers and transmission rights holders for making transmission available to the market.
- Transmission used to facilitate EDAM transactions should be firm to provide participants relative certainty that deliverability issues will not drastically impact supply in real-time.
PPC looks forward to more discussion on these topics, specifically as we continue to have questions on how the proposed transmission paradigm would impact existing OATT transmission rights and transmission access.
Similar to our comments provided in other forums, such as the discussion on the Resource Sufficiency Evaluation, it is critical to PPC that leaning be prevented. Preventing leaning should be included under the supply commitment principles. Further, the definition of leaning should be clarified. Entities should be able to meet their own needs outside of the organized day-ahead and real-time markets. To the extent that entities rely on the resources of others to meet their needs, those resources should receive fair compensation for the services they provide. Given that EDAM would potential exist across a footprint with different resource adequacy programs (including none in some cases) application of a robust resource sufficiency test (or similar evaluation) is needed to ensure equity among participants.
While we appreciate the initial information provided by CAISO and the EDAM small group, much more information is needed on how the proposed concept would prevent leaning. For instance, PPC would like to better understand how the CAISO plans to “harmonize” the EDAM with existing and potential RA programs. PPC is not suggesting that EDAM should necessarily result in changes to RA programs existing in the footprint, but without a robust, coordinated RA program across the entire footprint, simply complying with an RA program should not be considered sufficient for ensuring that leaning does not occur. We look forward to additional details on how EDAM and regional RA programs will “harmonize” while preventing leaning.
Congestion Rent Allocation
The recent EDAM Principles and Concepts paper includes a principle to “hold customers harmless.” PPC notes that this should include maintaining an incentive for customers to purchase OATT transmission on a long-term basis through the equitable allocation of congestion rent to transmission rights holders. Not maintaining this incentive puts transmission providers at risk of not being able to recover their costs and could result in significant cost shifts for existing rights holders.
We look forward to more discussion informed by examples created by the EDAM small group. Without these examples and based on our current understanding, we are concerned that the proposal may not result in an equitable allocation of benefits. In particular, PPC would like to see more information justifying the differences in proposed congestion rent allocation between EDAM BAAs and between EDAM BAAs and CAISO.
Level of Confidence in EDAM Transfers
PPC agrees that transfers in EDAM should be firm. Under the proposal being considered to allow Bucket 2 transmission to be utilized by the market whether it is donated by the rights holder or not, it is not clear how that use of transmission would be firm since the rights holder could schedule on that right after day ahead optimization, essentially recalling the transmission. This should be addressed when discussing the treatment of Bucket 2 transmission.
PPC generally agrees with the principles laid out for GHG accounting and looks forward to discussions on how those principles could be achieved.
PPC sees price formation as a critical component of the EDAM discussion. While we understand that price formation has impacts larger than EDAM and thus will be pursued in a separate initiative, PPC will not be able to properly assess the EDAM proposal until price formation issues are resolved.