Comments on Issue paper and Nov 18 workshop

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

Our organization recommends that CAISO adopt a holistic Resource Adequacy (RA) process that balances reliability, efficiency, and adaptability to California’s evolving grid. This framework should align with Local Regulatory Authority (LRA) rules wherever possible and develop CAISO-specific accreditation methodologies in their absence to assess RA contributions effectively. It should integrate seamlessly with LRA policies, such as CPUC's Slice of Day (SOD) approach. Interdependencies among variable energy resources (VERs), energy storage, and demand-side resources must be modeled to optimize reliability and cost-effectiveness, and Planning Reserve Margins (PRMs) should be refined through stakeholder collaboration and informed by loss-of-load expectation (LOLE) standards. The RA process should also harmonize with energy, ancillary services, and flexible capacity markets to ensure a unified framework and draw on best practices from other ISOs/RTOs, aligning with regional and national reliability initiatives to enhance grid resilience and adaptability

2. Does your organization have other feedback not already captured in the questions above?

3. Would your organization like to present at a future meeting on a specific proposal?

4. Does your organization have any feedback back on the process for the RAMPD initiative?

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

 CAISO’s capacity accreditation rules and Planning Reserve Margin (PRM) framework should be designed to ensure alignment and create clear incentives for each Load Serving Entity (LSE) to meet its individual Resource Adequacy (RA) obligations. By aligning these rules, CAISO can encourage LSEs to procure resources that reflect their reliability contributions accurately, ensuring RA requirements are met efficiently and transparently. A well-structured accreditation and PRM system will promote resource procurement practices that support grid reliability, while maintaining equity and efficiency across all LSEs.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

The UCAP methodology for storage resources should be grounded in clear principles and supported by robust data to uphold market integrity. Rushed implementation poses significant risks, as highlighted by PJM's challenges with ELCC, making careful planning and stakeholder engagement essential. A phased approach should be prioritized to facilitate transparent discussions and systematically address potential challenges, ensuring a smooth transition. If CAISO and CPUC pursue separate UCAP methodologies, it is crucial to adopt an incremental implementation strategy to prevent double counting and mitigate unintended market consequences.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

CAISO should continue to evaluate these policy positions holistically, considering the trade-offs between reliability, cost allocation, and market efficiency. A mandatory substitution buffer provided by LSEs in the annual or monthly procurement horizon promotes upfront planning and reliability by integrating anticipated outages into procurement requirements. However, as noted by stakeholders like CalCCA, this approach could place an unfair financial burden on LSEs, which have limited control over generator outages. On the other hand, an outage substitution pool funded by SCs and administered by CAISO offers potential flexibility and market efficiency by incentivizing generators to minimize outages and providing a structured mechanism for substitution capacity procurement. While the pool approach could unlock underutilized capacity and lower RA costs, its effectiveness depends on careful design, including transparent pricing, equitable access rules, and prioritization mechanisms. These considerations require further stakeholder input to identify challenges and ensure the chosen framework supports system reliability, cost-effectiveness, and fairness.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

In designing availability and performance incentive reforms, the focus should be on striking the right balance between incentives and penalties, leaning more toward incentivizing availability rather than relying on harsh penalties. While scarcity pricing has proven effective in motivating resource performance during tight conditions, caution should be exercised when considering penalty-heavy approaches, such as those seen during Winter Storm Elliott in PJM. Penalties, particularly those tied to extreme events, can undermine long-term resource availability, and directly adopting models from other ISOs may not address unique regional needs. A tailored approach that incorporates incentives for availability—rather than solely penalties—will encourage resources to be present when needed without discouraging participation. It's essential to consider how such incentives should be managed, either through LRA/LSE tariffs and contracts or through a standardized CAISO mechanism. 

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

The Alliance for Retail Energy Markets (AReM) thanks the CAISO for offering stakeholders this chance to opine on resource adequacy (RA) issues in a broad, holistic way. At this time, AReM does not have such a broad proposal, though it may have further recommendations after subsequent workshops and opportunities for stakeholders to present more proposals. AReM’s main concern, as discussed in past comments in this working group, is that any new holistic RA process at the CAISO work well with the RA program run by the California Public Utilities Commission (CPUC). Currently, there are discrepancies, including the use of different resource counting rules after the CPUC’s implementation of the slice-of-day (SOD) framework. AReM is seeking alignment between the two programs to avoid duplicative requirements and uncertainty in the ability of load-serving entities (LSE) to meet both RA program requirements with the same RA portfolio.

2. Does your organization have other feedback not already captured in the questions above?

AReM has no further feedback at this time.

3. Would your organization like to present at a future meeting on a specific proposal?

AReM has no plans to present a specific proposal at this time, but will contact CAISO if this changes. 

4. Does your organization have any feedback back on the process for the RAMPD initiative?

AReM seeks greater clarity in how this working group process will interplay with Track 3 of the CPUC’s RA proceeding (R.23-10-011). In CAISO’s recent comments on the CPUC Track 2 Decision being voted on today, it stated it “stands ready to support the [CPUC] in the development of a [unforced capacity (UCAP)] framework.” However, Track 3 proposals are due January 17 with a final decision due June 2025, whereas CAISO comments on the Track 2 PD state that the stakeholder process to develop a UCAP framework will not be completed before the end of the second quarter of 2025, pushing it past the Track 3 deadline. If the CAISO UCAP stakeholder process requires many more months to complete, it seems that CAISO is not actually ready to offer a UCAP Track 3 proposal. If so, the CAISO and CPUC should confer and develop a mutually agreeable schedule for UCAP development that can be communicated to stakeholders such that stakeholders can appropriately participate as needed.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

AReM intends to provide more specific feedback on modeling in its comments on the November 19 workshop currently due December 10.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

AReM has no opinion on default RA rules because the CPUC does not use default rules and has developed its own resource counting and planning reserve margin (PRM). However, AReM notes that the CPUC has now implemented the SOD framework for RA and CAISO has not. Thus, there is more to the topic of resource counting and PRMs than just CAISO default rules. AReM recommends against the CAISO implementing RA resource counting and PRM reform for CPUC-jurisdictional LSEs in a way that conflicts with the CPUC’s SOD structure. AReM will offer further thoughts on this topic in its comments on the November 19 workshop currently due December 10.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

AReM supports the implementation of a UCAP program that assesses UCAP on a resource-specific basis. This is the best way to ensure that generation operators have the appropriate incentives to reduce preventable outages. AReM is concerned by the recent CPUC Track 2 decision that indicates that a resource-specific framework may not be possible due to data availability issues. AReM recommends the CAISO take the lead on data availability issues for UCAP development. Data availability is a threshold issue that must be established prior to the development of a more comprehensive UCAP framework. AReM seeks greater clarity on data source availability and need for any reforms to support a resource-specific framework.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

AReM has no comment on this topic at this time.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

AReM has no comment on this topic at this time.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

AReM has no comment on this topic at this time.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

AReM has no comment on this topic at this time.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

AReM’s preference is to develop the UCAP framework first, at least in broad terms. Once the UCAP framework is known, stakeholders will have a better understanding of what other reforms, including resource adequacy availability incentive mechanism (RAAIM) and PRM reform, are necessary in response.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

AReM has no comment on this topic at this time. 

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

AReM has no comment on this topic at this time. 

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

As stated in comments issued July 2 in this working group, AReM has concerns about the prospect of a backstop for energy sufficiency that uses different resource counting rules than SOD, especially now that SOD has been implemented by the CPUC. This risks an LSE being determined compliant on RA requirements by the CPUC but then held liable for backstop costs by the CAISO due to the use of different RA standards. AReM would not support this approach. AReM is open to further discussion of a CAISO backstop of energy sufficiency in place of current front-stop procurement under SOD rules, which would need to be coordinated with the CPUC.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

AReM has no comment on this topic at this time.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

AReM has no comment on this topic at this time.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

AReM offers comments on a specific issue related to a current impediment to showing contracted RA capacity to the CAISO. As acknowledged in the November 7 Issue Paper (starting on page 92), certain credits for demand response (DR) programs are counted as RA by the CPUC but not the CAISO. AReM has commented several times in this working group that it is seeking a resolution to this issue so that LSEs deemed compliant with CPUC RA requirements will not face CAISO backstop cost allocation liability.

At the November 18 workshop, there was a brief discussion of a past CPUC proposal to show the DR RA capacity on CAISO supply plans with a RAAIM exemption. AReM would support this proposal if it is still acceptable to the CPUC, but is open to alternative proposals that are mutually agreeable to the CPUC and the CAISO. The main point is that CAISO and the CPUC should be in synch on this issue and not have disparate rules.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

AReM has no comment on this topic at this time.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

AReM echoes concerns from other stakeholders expressed at the November 18 workshop about the challenges of introducing new RA products at this time. With the implementation of SOD and the need to develop a UCAP framework, attempting more reform now could cause confusion. AReM would be amenable to discuss eliminating the need for the flex RA product in response to the CPUC’s SOD reforms, but that was left to a future working group, so will not discuss the issue further at this time. 

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

AReM has no comment on this topic at this time.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

 AReM has no further feedback at this time.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) Resource Adequacy (RA) Modeling and Program Design Issue Paper (Issue Paper). CalCCA makes the following recommendations for a holistic RA process, described in more detail in the sections below:

• Develop a resource-specific unforced capacity (UCAP) counting methodology in coordination with the California Public Utilities Commission (CPUC) and other local regulatory authorities (LRA);
• Explore modifications to the RA availability incentive mechanism (RAAIM) or replace it with a pay-for-performance (PFP) mechanism to provide greater incentives for resources to be available during stressed system conditions and to allow for the minimization of planned outage substitution requirements;
• Make it easier for generators to perform planned maintenance through modifications to the planned outage substitution process that do not shift the burden of taking a planned outage onto load-serving entities (LSEs) that do not have control over the outage; and
• Revisit the Maximum Import Capability (MIC) process to support the increase in out-of-state (OOS) resources planned in LRA portfolios.

2. Does your organization have other feedback not already captured in the questions above?

CalCCA has no feedback not already captured in response to other questions.  

3. Would your organization like to present at a future meeting on a specific proposal?

CalCCA does not plan to present at a future meeting on a specific proposal at this time. 

4. Does your organization have any feedback back on the process for the RAMPD initiative?

CalCCA has no feedback on the process for the RAMPD initiative at this time.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

CalCCA will provide comments on RA modeling inputs and assumptions in its comments on the November 19, 2024, Workshop that will be submitted on December 10, 2024.   

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

The CAISO should focus its efforts on two goals. First, this effort should aim to align resource counting rules and PRMs across LRAs to the extent possible. As described in Section 7 below, CalCCA supports the development of UCAP counting rules and accompanying adjustments to the PRM. The CPUC is considering adopting UCAP in its Track 3 of the RA proceeding, R.23-10-011. Development of the UCAP methodology should include a discussion among the CAISO, the CPUC, and other LRAs to provide opportunities for all LRAs to adopt the same resource counting methodologies and availability incentives. Second, this effort should seek to count resources in a manner that puts all technology types on a level playing field and accurately reflects their capabilities in both the year-ahead and month-ahead timeframes. This should include a review of the counting methodologies for all resources (including those that would use UCAP, like thermal and storage, and those that would not, like hydro).  

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

CalCCA supports developing a UCAP design as part of the CAISO’s RA program. The CAISO should incorporate the following design elements into its UCAP proposal:

• Align the CAISO and CPUC UCAP designs. The CPUC is considering UCAP in Track 3 of its RA proceeding, R.23-10-011. The CAISO should work with the CPUC to ensure the UCAP methodology adopted by the CAISO and CPUC are aligned.
• Encourage and provide opportunities for all LRAs to adopt the same resource counting and availability incentive methodologies. Regardless of the LRA and LSE, all resources participate in the same market and should have the same incentives to be available. The CAISO should adopt a UCAP methodology collaboratively with all LRAs to align on availability incentives and resource counting to the greatest extent possible.
• Allow UCAP to dynamically capture forced outage rates rather than relying on the PRM. The transition to UCAP should be a “zero-sum game” in which the reduction in resources’ capacity values is coupled with a reduction in the PRM, so the total amount of net qualifying capacity (NQC) procured is equal with or without UCAP. Before implementing UCAP, the CAISO and the CPUC should demonstrate that the reduction in NQC values is coupled with a reduction in the PRM to remove forced outages.
• Ensure the transition to UCAP does not have unintended impacts on existing contracts. CAISO’s previous UCAP proposal in the RA Enhancements initiative defines the terms “NQC” and “Deliverable Qualifying Capacity” (DQC) in a manner that would not disrupt existing contracts while aligning the must-offer obligation and counting rules with the new UCAP method.[1] Under this proposal, the DQC would be defined as the resources’ qualifying capacity adjusted for deliverability and NQC would be defined as the DQC times the forced outage rate. In other words, the NQC would equal the UCAP value. The CAISO should retain such an approach so that the implementation of UCAP does not result in the renegotiation of existing contracts. 
• Calculate resource-specific UCAP values to maintain the incentives for individual generators to maintain their plants and limit forced outages. Unit-specific UCAP values are necessary because they provide incentives for units to be available and take actions to minimize forced outages. Technology-specific values diminish these incentives by not directly rewarding resources that are reliable with higher UCAP values and not directly penalizing resources that are not reliable with lower UCAP values.
• Differentiate UCAP values by season or capture ambient unavailability through Pmax testing. This would capture any potential patterns in forced outages due to temperature or other seasonal factors and ensure NQC values reflect their expected ability to perform during peak load conditions.
• Assess forced outages during the tightest supply cushion hours or when generation is in demand. To provide greater incentives during stressed system conditions, the CAISO should also couple UCAP with refinements to RAAIM or a pay-for-performance mechanism.
• Set the must-offer obligation at the deliverable qualifying capacity amount rather than the UCAP. This will ensure enough supply is offered into the market to account for expected forced outages without the need for complex forced outage substitution rules.
• Calculate UCAP values for all deliverable generators. The CAISO should always calculate UCAP for all RA-eligible generators regardless of whether they are being shown for RA at a given time. This will ensure all resources capable of providing RA have the same incentives to maintain their plant and have a high UCAP value for when they sell RA in the future. 
• Update and publicly provide UCAP values the June prior to the annual showings, at the latest, with updates to the PRM. This will allow LSEs to know the value of resources they are contracting for in advance of their compliance deadlines and prevent uncertainty during the RA year.

[1]             CAISO Resource Adequacy Enhancements, Draft Final Proposal – Phase 1 and Sixth Revised Straw Proposal, at 74: https://stakeholdercenter.caiso.com/InitiativeDocuments/DraftFinalProposal-SixthRevisedStrawProposal-ResourceAdequacyEnhancements.pdf. 

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

Seasonal ambient derates, which are not consistently reflected in NQC values currently, should be incorporated into resources’ NQC values either through a seasonal adjustment to Pmax values or through UCAP implementation. This will ensure that NQC values reflect their expected ability to perform during peak load conditions. The CAISO should also reflect ambient derates in its reliability modeling to accurately capture resources’ contribution to reliability.   

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

The CAISO should explore the planned outage substitution process with the goal of making it easier and more cost-effective for generators to take planned outages. Planned maintenance, coupled with the right incentives, is a critical part of ensuring resources can be relied upon to be available when needed. The CAISO proposes four options to improve the planned outage substitution process for consideration: (1) a voluntary planned outage substitution pool; (2) a planned outage buffer; (3) annual or seasonal RA showings; and (4) removing planned outage requirements and replacing them with stronger incentives and better information on risk periods.  

As the CAISO weighs these options, it should ensure whatever solution is pursued does not shift the burden of taking a planned outage from generators to other entities that do not have control over the outage. Option 2 and Option 3 will shift the burden of taking a planned outage onto LSEs and should not be considered. Under Option 2, a generic buffer that adds additional demand to an RA capacity market that is already scarce does not provide generators the right incentive to plan their outages during times that minimize impacts on system reliability. The same problem generators face (lack of substitute capacity) would simply be shifted from the entity that can control the timing of a planned outage, the generator, to an entity that cannot, the LSE. Under Option 3, LSEs would potentially lose access to hydro and imports, two important sources of RA capacity that typically make themselves available between the year-ahead and month-ahead showings once their availability is better known.

Given this, the CAISO should move forward with both Option 1 and Option 4. The CAISO should allow resources to take planned outages without substitution if the CAISO finds that the outage would not have a reliability impact. If the CAISO must reject a planned outage due to a reliability impact, scheduling coordinators should have the option to use a voluntary planned outage substitution pool to meet their substitution needs. Strong incentives for resources to be available, like a modified RAAIM or pay-for-performance, should accompany the increased flexibility to take planned outages to maintain the incentive to plan outages during periods with low reliability risk.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

The CAISO should couple UCAP with clarifications to the definitions of outage types (forced, planned, urgent, and opportunity) so that generators are clear about how to define their outages, and which outage types UCAP applies to. The CAISO should also categorize its nature of work categories into those that do and do not count towards resources’ UCAP and ensure no one nature of work should be used for both UCAP-eligible outages and non-UCAP-eligible outages. The CAISO should also revisit its bid insertion rules to ensure that resources are incentivized to properly submit outages when they are unavailable so that UCAP values accurately reflect availability.  

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

CalCCA’s proposed approach to outages and substitution would not interact with LRA planning rules. For interactions with UCAP, see Section 10. For interactions with availability and incentive mechanisms, see Section 9.  

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

This effort, in coordination with LRAs, should seek to count resources in a manner that puts all technology types on a level playing field by accurately reflecting their capabilities in their NQC values in both the year-ahead and month-ahead timeframes. Resources’ availability should be accounted for in NQCs through UCAP for thermals and storage or through other methods that consider availability, like exceedance, for resources like wind, solar, and hydro. The CAISO should calculate UCAP values for all RA-eligible resources, regardless of whether they are shown for RA in an LRA RA program with a UCAP framework. This will ensure all resources capable of providing RA have the same incentives to maintain their plant and have a high UCAP value for when they sell RA in the future, potentially to an LSE operating under an RA program with UCAP. To provide greater incentives for resource availability during stressed system conditions, the CAISO should manage these incentives through a modified RAAIM or pay-for-performance.  

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

The CAISO, in close coordination with the CPUC and other LRAs, should propose a UCAP counting methodology to incent availability. Tying availability to future NQC values and, therefore, future revenues in the bilateral market, provides a better availability incentive than the current RAAIM. To provide greater incentives for resource availability, the CAISO should manage these incentives through a modified RAAIM or pay-for-performance, with a narrower focus on stressed system conditions, increased penalties for non-performance, and incentives for performance funded through the penalties for non-performance.     

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

See the response in Section 13.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

LRAs have their own resource counting rules and planning standards for their RA programs. While one goal of this effort should be to align counting rules and availability incentives across LRAs through the UCAP design to the greatest extent possible, differences are likely to remain across LRA RA programs. The CPUC’s RA program addresses energy sufficiency through the slice-of-day program. Other LRAs likely have different ways of addressing energy sufficiency. Before developing a methodology to assess energy sufficiency and/or net peak needs to inform CPM, the CAISO should consider differences in how LRAs address energy sufficiency in their RA programs and how those differences may impact CPM and CPM cost allocation.  

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

Declining capacity offers into the CSP do not indicate a need for policy change in the soft-offer cap (SOC) methodology or other aspects of the CPM program. Declining capacity offers are not a function of the way the CAISO’s current backstop processes are designed but rather a function of the current lack of capacity that has RA market prices unprecedentedly high. It is likely that generators can sell their capacity to LSEs at much higher prices than the CPM SOC because LSEs are competing for scarce supply to meet their compliance obligations. This does not signal a need to change the current CPM process as it relates to the SOC. The process for defining the SOC works as intended, covering going-forward fixed costs of the marginal resources on the system and mitigating market power. It is not intended to be, and should not be modified to be, competitive with bilateral market prices, which currently reflect market scarcity rather than resources’ costs. The CPM was designed, in part, as a market power mitigation tool.  Since the LRAs and LSEs do not have FERC jurisdictional tariffs for capacity, they do not have the same ability to mitigate market power as the CAISO does. Rather, LSEs face penalties in some cases over 3.5 times the CPM soft offer cap, and some LSEs may face prohibitions on expanding their service areas for failing to meet RA. It seems apparent that market prices are not reflecting competitive outcomes. There is no reason to add more competition to the market in the form of inflated CPM prices from the CAISO to exacerbate the problem further. 

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

The SOC should not be changed from the current cost-based approach for the reasons described in Section 16.   

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

CalCCA agrees with the CAISO’s list of impediments to showing all contracted capacity as RA or offering into the CSP (i.e., sold outside of the CAISO BAA, held for substitution, held for anticipated outages, not contracted, contracted but not needed to meet RA requirements). As described in Section 16, declining capacity offers into the CSP do not indicate a need for policy change in the SOC methodology or other aspects of the CPM program. It could be valuable, however, for the CAISO to have increased visibility into why RA resources were not shown to indicate how much capacity could be available should the need for CPM arise. In particular, the CAISO and RA market participants would benefit from an understanding of where RA supply is dedicated both internally and externally. As a starting point, the CAISO could coordinate with the WRAP to determine what data can be shared regarding the availability of California RA supply, the availability of RA supply in the broader west, and where such supply is dedicated.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

CalCCA supports causation-based approaches to allocating costs when it is feasible to do so accurately. A causation-based cost allocation methodology must consider all factors that contribute to RSE failures to accurately capture cost causation. The two-tier methodology identified in the Issue Paper does not recognize any factors beyond an LSE’s control that may contribute to an RSE failure. Any evaluation of whether costs can be allocated consistent with cost causation must recognize that LSE RA positions are not the only cause of RSE shortfalls. Many factors can contribute to an RSE failure, some of which may not be related to RA positions. For example, if an RA resource goes on outage and does not provide substitution, it is a resource availability problem rather than an LSE RA position problem. In addition, if an RSE failure is caused by short RA positions, the CAISO would need to first evaluate each LRA program before allocating costs to individual LSEs since the types of capacity and their ability to meet hourly needs can differ. If cost causation cannot be accurately determined given the many factors that contribute to an RSE failure, the CAISO should retain the pro-rata allocation methodology currently adopted.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

CalCCA has no comments on this topic at this time.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

CalCCA has no comments on this topic at this time.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

The Issue Paper states that the CAISO plans to have additional working groups in early 2025 to discuss the evolution of the CAISO’s deliverability methodology, among other topics.[1] When discussing the CAISO’s deliverability methodology, the CAISO should consider enhancements to the assignment of deliverability to resources external to the CAISO via the MIC process. As explained in the Joint LSE stakeholder catalog submission, LSEs depend on OOS resources to meet RA requirements. Given the significant amount of OOS resources planned for in LRA IRPs, challenges with MIC availability and uncertainty are growing concerns.[2]

[1]           Issue Paper at 5.

[2]           Joint LSE MIC Enhancements Catalog Submission (May 15, 2024):  https://stakeholdercenter.caiso.com/InitiativeDocuments/CalCCA-Joint-LSE-MIC-Catalog-Submission-May15-2024.pdf.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

No comment.

2. Does your organization have other feedback not already captured in the questions above?

No comment.

3. Would your organization like to present at a future meeting on a specific proposal?

No specific proposal at this time; in future, CDWR could present after arriving at a specific proposal.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

CDWR appreciates the detailed and the well-organized process.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

CDWR appreciates CAISO’s respect for LRA’s jurisdictional rights on PRM and counting rules. We understand that CAISO wishes to discuss revisions to the default PRM and counting criteria and would like to have discussion about whether there are rules that the non-jurisdictional LRAs could also adopt that would assist the CAISO in meeting some of the goals of this initiative. CDWR is willing to engage in such discussions.

Items that would be of particular concern to CDWR in such a proposal would be:
a) Modeling:
As indicated by the CAISO presentation on 11/19, modeling assumption of hydro availability based on particular water year type (high, average, low) impacts the outcome of Loss of Load Expectation (LOLE) study. An option to reflect realistic availability of hydro resources (for monthly RA showing and RA must offer) and the water pumping demand would be to update the availability of hydro resources within a RA compliance year based on the California water year hydrologic forecast updates. CDWR will develop this topic more fully in its comments on the 11/19th workshop.

b) Default counting rules: consideration should be given to following options,
i) Hydro: Ability to update hydro capacity within a RA compliance year based on updated water year hydrologic forecast should be considered.
ii) Participating Load (PL): Based on the Participating Load Agreement (PLA) criteria which identifies capacity limited to CAISO certified non-spin ancillary service capacity, inclusion of such capacity should be considered.
c) Accreditation: consideration should be given to following options,
i) Hydro: Ability to update hydro capacity within a RA compliance year based on updated water year hydrologic forecast and testing based on such updated forecast should be considered.
ii) Participating Load: Based on the Participating Load agreement criteria which identifies capacity limited to CAISO certified non-spin ancillary service capacity; current testing method of the non-spin capability by CAISO would be the accreditation.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

On the topic of counting rules, please refer to 5(b) above. In addition, CAISO’s default planning rules should be easy to implement. Load- Serving Entities need certainty and stability in PRMs and counting rules to do effective long-term planning. CAISO’s goal should be durable rules that do not require frequent revisitation.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

There are many varieties of UCAP. CDWR would be particularly concerned with understanding how UCAP would be applied to demand side resources. These resource may not have defined outages similar to a generating resource. CDWR could not adopt a UCAP as part of its own RA program without an understanding of how such a mechanism would work. Does CAISO have any analysis from other RTOs that shows data on actual resource reliability compared to the UCAP percentages that were in effect?

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

With regard to a hydro resource please refer to 5c above.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

Whether a PL resource should have specific defined outages should be explored. Outage definitions that are specific to generating resources may not be compatible with how a PL resource operates.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

Please refer to 9 above.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

CDWR notes that it regards the ability to make monthly RA showings adjusted to the most recent hydrological information as a necessary component of the RA program, and that it objects to any move to a format of only annual or seasonal showings.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

CDWR maintains its position regarding LRA jurisdiction over counting rules. However, CDWR is open to discussing a standardized mechanism that CDWR’s LRA might adopt. How UCAP would apply to a PL resource would be of interest to CDWR in any such consideration.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

No comment at this time.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

No specific comment at this time.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

No comment at this time.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

CAISO’s need for backstop could be made more visible for promoting competitive solicitation process (CSP).

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

No comment at this time.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

No comment at this time.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

No comment at this time.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

No comment at this time.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

CDWR does not see it as an issue of concern.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

No further comments.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

The Council’s comments focus solely on demand response-related issues.

2. Does your organization have other feedback not already captured in the questions above?

N/A

3. Would your organization like to present at a future meeting on a specific proposal?

N/A

4. Does your organization have any feedback back on the process for the RAMPD initiative?

N/A

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

N/A

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

N/A

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

N/A

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

N/A

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

N/A

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

N/A

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

N/A

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

N/A

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

Any changes to the Resource Adequacy Availability Incentive Mechanism (RAAIM) as it applies to demand response should be consistent with the requirements of the Local Regulatory Authority (LRA).  For example, the CPUC will be considering a new incentive-based demand response counting methodology in Track 3 of the Resource Adequacy proceeding (Rulemaking 23-10-011).  This proposed methodology would allow for the demand response resource bid quantities to be based on their capability, which can vary with weather sensitivity or other factors.  In addition, the RAAIM should continue to respect the demand response availability requirements adopted by the LRA and which are reflected in program tariffs and contract provisions.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

In addition to changes recommended in the Council’s response to Question 13, the RAAIM should be modified to eliminate the practice of crediting investor-owned utility (IOU) demand response programs against all load-serving entities’ (LSE) Resource Adequacy Requirement. This practice reduces the CAISO’s visibility to IOU demand response programs because they are not included on supply plans.  Consequently, they are not subject to a must-offer obligation (MOO) and have no mechanism to ensure that they are available during the hours in which they are providing capacity.  This is in contrast to bilateral demand response Resource Adequacy contracts executed between a demand response provider and an LSE which are required to be shown on supply plans and are subject to a MOO that is consistent with their supply plan capacity value.  Requiring IOU demand response resources to be included on supply plans would not only harmonize requirements across program types, but it would also make them visible to the CAISO and subject to the same obligations and benefits as other demand response Resource Adequacy resources.

The CAISO should also exempt demand response resources from its own penalty mechanism if the CPUC adopts the new incentive-based demand response counting methodology which features its own capacity-based penalty mechanism.  Joint CEC and Energy Division staff will be submitting their final proposal in the upcoming Track 3 of the CPUC Resource Adequacy proceeding (R.23-10-011) which will include a penalty mechanism that would be equally applied to IOUs and demand response providers for failure to deliver their Resource Adequacy values.  If adopted by the CPUC, this penalty mechanism would be redundant with the penalty mechanism of RAAIM or its successor.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

N/A

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

N/A

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

N/A

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

During the November 18 stakeholder call, the CAISO correctly noted that CPUC Decision 21-06-029 established the following conditions for the CPUC to direct the IOUs to move their DR programs onto CAISO supply plans: 1) DR resources to be allowed to bid variably in the CAISO market, and 2) a FERC-approved RAAIM penalty exemption for DR resources.  By adopting the Council’s recommendation in response to Question 14 to exempt demand response resources from any CAISO penalty mechanism if the CPUC approves the incentive-based demand response counting methodology in the Resource Adequacy proceeding, this would satisfy both of the CPUC’s criteria because 1) the joint Staff’s proposal allows for variable demand response bidding, and 2) it would obviate the need for a RAAIM penalty.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

N/A

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

N/A

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

N/A

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

N/A

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

2. Does your organization have other feedback not already captured in the questions above?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

3. Would your organization like to present at a future meeting on a specific proposal?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

Please see the Comments from the Department of Market Monitoring in PDF attached at bottom of this template.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the independent ratepayer advocate at the California Public Utilities Commission (CPUC).  Our goal is to ensure that California ratepayers have affordable, safe, and reliable utility services while advancing the state’s environmental goals.  Cal Advocates offers the following recommendations on the California Independent System Operator Corporation’s (CAISO) draft inputs and assumptions for the Resource Adequacy Modeling and Program Design Initiative:

• Prioritize the planning reserve margin (PRM) approach that will minimize friction between CAISO and its Local Regulatory Authorities (LRAs);
• Revisit the default PRM every two years, in concert with the CPUC’s cadence for establishment of the PRM;
• CAISO should only backstop to the capacity level of the aggregated resource adequacy (RA) requirements of all its constituent LRAs;
• For unforced capacity (UCAP) counting: identify resource-specific values with a temporal granularity that corresponds to variation in wind and solar resource counting;
• Explore the voluntary planned outage substitution pool option;
• Prioritize UCAP development, but retain and reform the RA Availability Incentive Mechanism (RAAIM) in response to the final UCAP methodology;
• Align outage definitions with Reliability Coordinator (RC) West;
• Increase the RAAIM price, apply RAAIM on a more granular timeframe, eliminate the sub-1 megawatt (MW) exemption, and eliminate the deadband;
• Evaluate net peak RA needs in the CAISO RA process, but do not pursue an energy sufficiency check at this time;
• Consider evidence that shows that the decline of capacity offers is unrelated to the soft offer cap methodology and aspects of the Capacity Procurement Mechanism (CPM) program;
• Do not move away from the current cost-based CPM approach to the soft offer cap because eliminating the cost-based CPM approach would almost certainly harm ratepayers;
• Do not consider a monthly shaped CPM price because it would not be just and reasonable, and the CAISO Tariff precludes this approach;
• Consider that resource owners are likely not offering in capacity at prices above the CPM soft offer cap because they could not meet the just and reasonable standard defined in the CAISO Tariff;
• Explore the implications of providing flexibility to suppliers to submit withheld substitute capacity into the CAISO’s competitive solicitation process (CSP), and add new informational categories to report the status of non-shown capacity;
• Continue development of a causation-based approach to the allocation of Extended Day-Ahead Market (EDAM) resource sufficiency evaluation failure surcharges;
• Do not consider new capacity products to support the CAISO’s approach to the EDAM resource sufficiency evaluation; and
• Do not consider expansion of the CAISO’s backstop procurement authority to achieve a 0.1 Losse of Load Expectation (LOLE).

2. Does your organization have other feedback not already captured in the questions above?

Cal Advocates has no comments at this time.

3. Would your organization like to present at a future meeting on a specific proposal?

Cal Advocates has no comments at this time.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

Cal Advocates has no comments at this time.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

Cal Advocates has no comments at this time.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

In the interest of simplicity and clarity, Cal Advocates prefers whichever approach will minimize friction between the CAISO and its LRAs while acknowledging that LRAs are responsible for setting RA requirements.  This may mean pursuit of the option for the CAISO to utilize one default PRM and resource counting with effective load carrying contributions (ELCCs).[1]  However, the CAISO’s use of the two default PRM approach, one for ELCC counting and another for exceedance counting, may prove more useful. 

The CAISO should revisit the default PRM in concert with the CPUC’s cadence for establishment of the PRM.  The CPUC authorized its Energy Division “to update the Resource Adequacy (RA) Loss of Load Expectation study at least every two years for consideration in the RA proceeding.”[2]  Coordination with the CPUC will reduce regulatory complexity and increase certainty for load-serving entities (LSEs) in their RA procurement.  The CAISO should look to the existing, routine annual coordination between the CPUC and the CAISO for the establishment and adoption of the Local and Flexible RA capacity requirements as a template for revisiting the default PRM.  The Local and Flexible capacity process has proven to be a successful and transparent model for the establishment and application of RA requirements.

However, Cal Advocates emphasizes that the CAISO should utilize the simpler approach only to set the default PRM.  The default PRM may not necessarily be identical to the PRM that the CAISO uses to enforce backstop procurement.  The LRAs should continue to set the RA and PRM requirements and the CAISO should only backstop to the capacity level of the aggregated RA requirements of all its constituent LRAs.  Indeed, sometimes the CAISO’s LRAs may adopt PRMs that are lower than what appear necessary to achieve a 0.1 LOLE.  However, the PRMs of California LRAs are currently supplemented with extra-programmatic policies in an effort to balance affordability with reliability.  For example, the CPUC’s “effective” PRM and the Department of Water Resource’s Electric Strategic Reliability Reserve both procure additional RA capacity outside of the showing process.  The CAISO must continue to respect LRAs’ autonomy to take their own steps to protect ratepayers from elevated costs.[3]  The CAISO should not unilaterally decide to enforce backstop on a default PRM that exceeds those selected by its member LRAs. 

As Cal Advocates noted in its comments from a previous working group:[4]

Any [CPM] designation based on RA showings[5] should not result in CAISO backstop to a capacity level beyond the aggregated RA requirements of the LRAs.  A backstop that meets an additional reliability level determined by the CAISO would effectively override and invalidate the RA programs of LRAs.  Thus, LRAs in compliance with their own established RA requirements would be faced with additional procurement charges based on CAISO-determined reliability needs.  Additionally, the Federal Energy Regulatory Commission (FERC) recognizes states’ role to develop and maintain RA programs and acknowledges the CAISO’s “deference to the RA programs of [LRAs]” in the development of CAISO’s Tariff.[6] 

Ultimately, the CPUC and other LRAs must be able to establish, implement, and enforce their own RA requirements.[7]

[1] CAISO, Resource Adequacy Issue Paper, November 7, 2024 (Issue Paper) at 6.

[2] Proposed Decision on Track 2 Issues (Rev. 1), December 3, 2025, Ordering Paragraph 2 at 77; issued in Rulemaking (R.) 23-10-011, Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Refinements, and Establish Forward Resource Adequacy Procurement Obligations.  Available at: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M548/K256/548256742.PDF.  The Commission voted out the PD at its December 5, 2024 meeting.

[3] Californian LRAs are not unique in the west in facing difficult choices when balancing reliability and affordability.  The Western Resource Adequacy Program (WRAP) has taken steps to accommodate affordability concerns by repeatedly delaying its binding year until its member balancing area authorities (BAAs) have procured adequate capacity to comply with their self-imposed minimum requirements.  See RTO Insider, WPP Board Approves WRAP Transition Plan Changes, September 24, 2024.  Available at: https://www.rtoinsider.com/88005-wpp-approves-later-start-wrap-binding-phase/.

[4] Cal Advocates, Comments on the April 29-30, 2024, RA Modeling and Program Design (RAMPD) Working Groups and April 29, 2024 Discussion Paper, May 17, 2024 at #2.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/4726dcff-0976-4bbe-a424-6382c3a38012#org-154a4233-2a8c-43a6-b0d7-d74dc5f944ff.

[5] The CAISO Tariff enables CPM designations based on deficient LRA showings, but also for unexpected and significant events.  CAISO, Resource Adequacy Modeling and Program Design Working Group, April 29-30, 2024 at 15.  Available at: https://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyModeling-ProgramDesign-Apr29-30-2024.pdf.

[6] 116 FERC ¶ 61,274, Order Conditionally Accepting the California Independent System Operator’s Electric Tariff Filing to Reflect Market Redesign and Technology Upgrade, September 21, 2006 (FERC MRTU Order) at paragraphs 1117, 1118, and 1153.  Available at: http://www.caiso.com/Documents/September21_2006OrderConditionallyAccepting2_9_06MRTUfilinginDocketNos_ER06-615-000andER02-1656-027_etal_.pdf.

[7] Public Utilities Code Sections 380(a) and 380(e).

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

Cal Advocates prefers resource-specific UCAP resource counting where feasible.  New resources that lack performance history should utilize a class average UCAP until individual performance data is available.  The CAISO should utilize UCAP counting for any resource that does not have an ELCC or exceedance value.  The temporal granularity of the UCAP values should correspond to granularity used for wind and solar resources.  For example, if the CAISO utilizes monthly ELCC values for wind and solar resources then monthly UCAP values should apply to the relevant resources. 

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

Cal Advocates has no comments at this time.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

Cal Advocates acknowledges and appreciates the CAISO’s response to our suggestion to roll back the 2021 planned outage substitution obligation (POSO) rules.[1]  Looking ahead, among the possible outage process options, Cal Advocates recommends that the CAISO explore the voluntary planned outage substitution pool option.[2]  The outage pool approach would likely have benefits that include reduced staff hours spent on negotiation in the bilateral market to procure substitution capacity, which would flow to ratepayers.  Likewise, the outage pool approach could provide positive externalities for the CSP as well.

Conversely, Cal Advocates opposes a planned outage substitution buffer, which is unlikely to gain the support of all LRAs.  Additionally, Cal Advocates opposes an annual or seasonal RA showing requirement unless the requirement would reduce costs to ratepayers.

[1] Issue Paper at 49.

[2] Issue paper at 45-47.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

Cal Advocates supports the CAISO’s suggestion to align outage definitions with RC West as a means to reduce complexity.[1]

[1] Issue Paper at 44.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

Cal Advocates has no comments at this time.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

At a high level, the CAISO’s unique situation requires it to maintain a reliable electric grid for a mosaic of LRA RA programs. This means that a single availability or incentive mechanism will likely be inadequate.  The RA Availability Incentive Mechanism (RAAIM) will still be an important check given that all LRAs may not adopt UCAP counting.  Even the adoption of UCAP does not entirely eliminate the need for RAAIM.  As the CAISO notes, “FERC recognized that having both a capacity performance/availability derate and an availability incentive mechanism does not necessarily constitute a double penalty for capacity resources,”[1] and, “[o]ther [Independent System Operators/Regional Transmission Organizations] also combine up front availability in resource accreditation while also instituting performance penalties if it does not materialize.”[2]  The CAISO should prioritize the establishment of a final UCAP methodology, and then consider RAAIM.  However, RAAIM should not go away, because it represents a near-term penalty whereas the impact of UCAP is lagged.  The impacts of UCAP will likely be softened by differentiated weights by year/season, depending on the final design.  It will be important to retain RAAIM to shape incentives in the operational time frame as well.

Additionally, if the final UCAP methodology utilizes technology class-specific UCAP values, RAAIM will become an even more important means to incentivize performance by individual resources.  Cal Advocates prioritizes establishment of the UCAP methodology first, and then adaption of the RAAIM to responsively fit UCAP. 

[1] Issue Paper at 51.

[2] Issue Paper at 69.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

Cal Advocates prefers the option to reform RAAIM but would also consider the option for lower reliance on RAAIM relative to UCAP.[1]  As noted in Cal Advocates’ response to the previous question, Cal Advocates prioritizes establishment of the UCAP methodology and then development of the details for RAAIM in response to the UCAP design.  To some degree Cal Advocates’ position comports with the CAISO’s option for lower reliance on RAAIM relative to UCAP.[2]  Cal Advocates requests that future workshops explore a pay-for-performance mechanism and describe how its application would impact ratepayers.[3]  Cal Advocates opposes removal of RAAIM and reliance on scarcity pricing to incent real-time availability.  If the CAISO pursued scarcity pricing, then load would assume all the risk and such a scheme would undermine the purpose of capacity payments to generating resources.[4]

[1] Issue Paper at 73.

[2] Issue Paper at 72.

[3] Issue Paper at 73.

[4] Issue Paper at 72-73.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

First, the CAISO should rationalize the RAAIM penalty price and increase it.[1]  It is unclear why RAAIM is set at 60% of the CPM price.  The CPM price could be characterized as the opportunity cost of what CAISO would have paid to another, more reliable resource to be available if it had the opportunity to do so.  A resource contracted via the CPM process is paid $7.34/kiloWatt-month (kW-mo) and if the resource were never available, would only be penalized at $4.40/kW-mo.  Zombie resources should not be allowed to arbitrage between the backstop price and penalty prices. 

Second, the CAISO should apply RAAIM to a more granular time frame.[2]  In other words, RAAIM would evaluate availability on a daily basis, or on critical days.  Likewise, the CAISO should remove the RAAIM exemption for resources under 1 MW.[3]  Finally, the CAISO should eliminate the deadband.  It is unclear what benefit the deadband provides and Cal Advocates supports its elimination.  The benefit of the deadband is not clear, and elimination of the deadband would sharpen the incentives for generation owners to invest in maintenance.

[1] Issue Paper at 71.

[2] Issue Paper at 72.

[3] Issue Paper at 72.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

The CAISO should evaluate net peak needs in its RA process.  However, Cal Advocates generally recommends that the CAISO not explore an energy sufficiency check at this time. 

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

Cal Advocates again urges the CAISO to consider evidence that shows that the decline of capacity offers is unrelated to the soft offer cap methodology and aspects of the CPM program.  Cal Advocates would appreciate the opportunity to present its perspective on the RA market dynamics and their impact on the CSP at a future workshop.

As Cal Advocates noted in previous RA Modeling and Program Design (RAMPD) comments, the drop in CSP offers may not imply a reliability risk.[1]  This is due to the confounding interactions of CSP bidding with the CPUC’s “effective” PRM, which may act as a “sponge” on erstwhile CSP bidders.  The CPUC set uncapped capacity procurement targets for the investor-owned utilities (IOU) for the summer of 2021[2] and established targets of 2,000-3,000 MWs for the summers of 2022 and 2023.[3]  Effective PRM procurement is intended to take place after the month-ahead RA showings by LSEs.  Figure 1 reproduces a CAISO figure that illustrates the CSP timeline.  Effective PRM procurement as intended would occur after the “30 days before the start of the RA month” point.  This post-showing timing implies that effective PRM procurement is a source of residual demand for the resources that might otherwise bid into the CSP. 

Figure 1: Timeline for monthly Competitive Solicitation Process

Figure 2 reproduces the CAISO’s timeline of CSP offers, overlaid with the effective PRM procurement targets (in red) and excess procurement reported by the IOUs for 2022-2023 (black dashed lines).[4]  The capacity procured to serve the effective PRM targets shown in Figure 2 could have counterfactually bid into the CSPs.  Cal Advocates does not disagree that the CAISO may lack insight into the contracting status of the seemingly absent CSP capacity.  However, Cal Advocates notes that the CSP bid absence does not necessarily imply elevated reliability risk.

Figure 2: CSP Offers by MW, Overlaid with Effective PRM Targets (Red) and Realized Procurement (Black Dashed Lines)

CAISO notes that it “is interested in feedback on what short term approaches the ISO could take to increase reliability in a tight supply market where many LSEs have challenges meeting their LRA-mandated requirements.”[5]  However, the CAISO only cites a single example in August 2021 where it needed to take active steps to increase reliability via a CPM but was unable to.[6]  Yet Figure 2 demonstrates that the CPUC-jurisdictional IOUs procured upwards of 750 MW of capacity outside of (and after) their normal RA showing process.  In other words, this capacity was contracted to CAISO LSEs but was not necessarily shown to the CAISO itself.  The CAISO is confounding a lack of participation in the CSP with reliability risk. 

[1] Cal Advocates, Comments on 6/18 RAMPD Call, RA Modeling and Program Design, July 2, 2024 at #3.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/10d5fec5-8032-43e4-aa30-067535d504e8#org-e5161b92-e315-4f92-9f66-62375153528a

[2] Decision (D.) 21-02-028, Decision Directing Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company to Seek Contracts for Additional Power Capacity for Summer 2021 Reliability, February 11, 2021; issued in R.20-11-003, Order Instituting Rulemaking to Establish Policies, Processes, and Rules to Ensure Reliable Electric Service in California in the Event of an Extreme Weather Event in 2021.  Available at: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M366/K441/366441341.PDF.

[3] D.21-12-015, Phase 2 Decision Directing Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company to Take Actions to Prepare for Potential Extreme Weather in the Summers of 2022 and 2023, December 2, 2021; issued in R.20-11-003.  Available at: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M428/K821/428821475.PDF.

[4] The black dashed lines are approximate representations of the sum of monthly effective PRM procurement reported by the IOUs in their Excess Resources Reports as of May 24, 2024.  Available at: https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-power-procurement/resource-adequacy-homepage/resource-adequacy-compliance-materials.

[5] Issue Paper at 81.

[6] Issue Paper, footnote 69 at 86.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

The CAISO should not move away from the current cost-based approach to the soft offer cap because it would almost certainly harm ratepayers.  As the CAISO notes, “The soft offer cap is designed to mitigate market power but generally be higher that the going forward costs of most generators in the CAISO footprint which the CAISO is likely to procure.”[1]  The CAISO should ensure that any changes to the CPM program do not undermine its fundamental market power mitigation function.  The cost-based approach is a vital ratepayer protection that cannot be compromised.

The CAISO should not consider a monthly shaped CPM price because the CAISO’s Tariff precludes this approach.  The role of backstop is to offer a reasonable, rational, cost-based price to generators that provides a viable alternative to retirement for generators.  The CPM explicitly provides cost-based remuneration to resource owners but, crucially, the CPM Soft Offer Cap (SOC) is “soft.”  Resource owners are entirely free to offer a resource at a higher price.  As the CAISO Tariff notes:

A Scheduling Coordinator for a resource may offer a price in excess of the CPM Soft Offer Cap.  The resource owner whose capacity is offered in excess of the CPM Soft Offer Cap must justify in a filing to FERC a price above the CPM Soft Offer Cap, which shall be determined in accordance with the following formula: fixed operation & maintenance costs, plus ad valorem taxes, plus insurance, provided such costs will be converted to a fixed $/kW-year amount.  For a resource whose sales are under FERC jurisdiction that is providing CPM Capacity to be compensated at a rate higher than the CPM Soft Offer Cap, the resource owner must make a limited resource-specific filing before FERC to determine the just and reasonable capacity price for the resource as calculated under this formula.[2]

The CAISO Tariff establishes that the standard for the just and reasonable capacity price is calculated based on “fixed operation & maintenance costs, plus ad valorem taxes, plus insurance.”  Notably, the formula does not include opportunity cost.  In other words, the fact that a resource owner could plausibly receive a higher price elsewhere is not justification to receive a higher price from the CAISO.  The inclusion of opportunity cost in the formula would violate the just and reasonable price standard. 

Indeed, it is reasonable to infer that resource owners are not offering in capacity priced above the CPM SOC because the resource owners would be unable to meet the just and reasonable standard defined in the CAISO Tariff (which requires cost justification).  Instead, the monthly variation in bilateral RA market prices is a function of supply and demand that is exacerbated by the monthly nature of the CPUC’s RA program.  Months with excess supply relative to demand see lower prices, while months with lower supply (mostly July through September) feature higher prices.  Figure 3 compares prices reported in the CPUC’s most recent RA Report with the (current) CPM SOC.[3]  Note that the 85^th percentile price for RA is above the CPM SOC in all months.  If the 100^th percentile (maximum) price represents the willingness to pay by CPUC-jurisdictional LSEs for RA, no rational generator would view waiting for the CPM price as an optimal outcome.  However, this does not imply that the CAISO faces reliability risk.  Rather, the CAISO should conclude that the bilateral RA market itself will ensure reliability without a default to the CPM process. 

Figure 3: Bilateral Market RA Prices Reported in the 2022 CPUC RA Report

Beyond the market fundamentals, the market power mitigation aspect of the cost-based CPM SOC remains important.  Inter-monthly changes in RA prices are not demonstrably driven by changes in the underlying costs to operate a resource.  If resource owners would prefer to open their finances and demonstrate how costs consistently change month-to-month, then Cal Advocates would encourage resource owners to do so.  The CAISO should not weaken a crucial ratepayer protection in the market power mitigation component of the CPM price without clear evidence that cost changes are driving monthly changes in bilateral RA market prices.

[1] Issue Paper at 80.

[2] CAISO Tariff at 43A.4.1.1.1, emphasis added.

[3] CPUC Energy Division, 2022 Resource Adequacy Report, May 2024, Table 2 using the “Total” values at 28-29. 

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

The CAISO notes that “[s]uppliers wishing to use capacity for other purposes such as RA substitution or reliability capacity in a market outside the CAISO BAA may not offer that capacity into the CSP.”[1]  It is unclear what benefit the exclusion of RA substitute capacity provides to the CAISO.  The CAISO should explore the implications of providing flexibility to suppliers to submit withheld substitute capacity into the CSP. 

The CAISO describes a policy option which would add several new informational categories to report the status of non-shown capacity, such as “Sold outside the CAISO BAA” and “Held for substitution.”[2]  Cal Advocates agrees that this option is reasonable, would provide more reassurances and information to the CAISO, and would not undermine the vital market power mitigation role of the CPM program.  Likewise, Cal Advocates agrees that a voluntary planned outage substitution pool could have application for backstop purposes as well.[3]

[1] Issue Paper at 82-83.

[2] Issue Paper at 89-90.

[3] Issue Paper at 91.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

Cal Advocates continues to support the development of a causation-based approach to the allocation of EDAM RSE failure surcharges. 

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

The CAISO should not adopt new capacity products to support the CAISO’s approach to the EDAM RSE.  The CAISO’s implementation of EDAM will already see the introduction of new and novel RA capacity-adjacent products (Imbalance Reserves and Reliability Capacity).  The CAISO should wait to gain experience with EDAM prior to consideration of yet another novel capacity product. 

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

Cal Advocates has no comments at this time.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

Cal Advocates opposes further consideration of expanding CAISO’s backstop procurement authority to achieve a 0.1 LOLE, as a proposed by Middle River Power.[1]  This proposal would undermine the LRAs’ role in the establishment of and enforcement of RA requirements.

[1] Issue Paper at 94.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

See attached.

2. Does your organization have other feedback not already captured in the questions above?

See attached.

3. Would your organization like to present at a future meeting on a specific proposal?

See attached.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

See attached.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

See attached.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

See attached.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

See attached.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

See attached.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

See attached.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

See attached.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

See attached.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

See attached.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

See attached.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

See attached.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

See attached.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

See attached.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

See attached.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

See attached.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

See attached.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

See attached.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

See attached.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

See attached.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

The CAISO has a reliability imperative. The CAISO must focus on aligning its RA compliance evaluation and backstop processes with its actual reliability needs as a balancing authority area. Going into an operating year or month, CAISO’s primary objective should be to determine if load-serving entities and suppliers have committed enough capacity to the CAISO balancing authority area to reliably serve CAISO balancing authority area load. To the extent that there is insufficient capacity commitment, CAISO must have a strong procurement mechanism it can use to procure backstop capacity to meet its reliability needs as a balancing authority area.

As the independent system operator with the ultimate reliability responsibility, CAISO must maintain autonomy to independently evaluate its reliability situation going into an operating year or month following a standard and transparent reliability evaluation process. To the extent that local regulatory authority program rules do not deliver sufficient capacity for CAISO to meet its reliability imperative, CAISO must maintain autonomy to procure more capacity and allocate those backstop costs to load-serving entities.

An RA process that limits CAISO’s ability to meet its reliability imperative is unacceptable. CAISO should prioritize its efforts in this initiative around its reliability imperative and alleviating any constraints the current policy places on CAISO to achieve this objective.

To accomplish its reliability objectives, a few priority focus areas become clear:

1. The RA program design must have a transparent resource commitment target that accomplishes a reasonable level of reliability.
2. The RA program design must incentivize load-serving entities and suppliers to commit the maximum amount of contracted RA capacity to providing bids into the CAISO market.
3. To the extent that the committed RA capacity is insufficient to meet reliability needs, the CAISO should have a strong procurement mechanism it can use to procure backstop capacity to meet its reliability needs as a balancing authority area.

Through Track 1 of this initiative, CAISO has invested modeling/processes that can be used in setting a transparent resource commitment target, and it is now beginning discussions on establishing appropriate resource accreditation rules and corresponding considerations in establishing a planning reserve margin. Through Track 2 of this initiative, CAISO is revisiting its outage substitution and availability incentive rules. Through Track 3 of this initiative, CAISO is examining its backstop procurement mechanisms.

In summary,

• CESA supports development of a resource-specific UCAP methodology based on a single outage data source, such as the CAISO’s outage management system,
• CESA recommends CAISO first ensure the quality of its underlying outage data for purposes of calculating a forced outage rate to ensure accurate and comparable accreditation values across resource classes,
• Given the importance of outage coordination and maintaining a reliability fleet of resources CESA is not yet ready to eliminate a planned outage substitution buffer as an option. It may also help CAISO achieve its objective to maximize the amount of committed RA capacity. CESA offers several thoughts for stakeholder consideration,
• Given the CAISO’s demonstration of overall excellent bidding performance, CESA recommends the CAISO analyze instances where bidding performance is not satisfactory at times of greatest reliability need, determine the root causes of the underperformance, and develop proposals to address these root causes,
• CESA recommends that additional bidding performance analyses should encompass all resources, including those currently not subject to RAAIM,
• CESA strongly cautions against pursuing a pay-for-performance model and recommends any lingering performance issues be addressed through scarcity pricing reform as a more efficient mechanism,
• CESA recommends CAISO focus its efforts in Track 3 on making its backstop procurement mechanism useful and relevant towards meeting its reliability responsibilities,
• CESA opposes a new system-wide energy sufficiency CPM, because CAISO studies have shown that a system-wide energy sufficiency CPM is not needed now or in the foreseeable future.

2. Does your organization have other feedback not already captured in the questions above?

3. Would your organization like to present at a future meeting on a specific proposal?

4. Does your organization have any feedback back on the process for the RAMPD initiative?

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

CESA supports development of resource-specific UCAP methodology based on a single outage data source, such as the CAISO’s outage management system, but regardless of the ultimate accreditation methodology CAISO will pursue, it is important to first ensure the quality of its underlying outage data. While the general methodology to calculate a resource forced outage rate and UCAP are standard, much more attention must first be paid to the treatment of outage types (and natures-of-work) used in those calculations for energy storage resources. With over 13 GW of energy storage now on the CAISO system, it is important that the accreditation of this resource class is as accurate as possible and is comparable with the accreditation of other resource classes.

Prior to fully developing a new accreditation methodology for energy storage resources, CAISO must first ensure the quality of its underlying outage data for purposes of calculating a forced outage rate by:

1. Clarifying the appropriate use of the various outage types (and natures-of-work) for energy storage resources, and
2. Establishing new natures-of-work to capture outages being used to manage CAISO market design and resource modeling issues to ensure comparable treatment to other resources in the accreditation calculation

Once these clarifications are in place, CAISO must engage energy storage resource operators to identify any historical outages that were being used to manage CAISO market design flaws to allow an appropriate evaluation for purposes of establishing an initial resource-specific UCAP value.

Forced outage rates for storage resources should reflect plant failures but not state-of-charge, as CAISO’s reliability modeling (See Track 1) already accounts for state-of-charge when dispatching energy storage resources. A battery resource’s state-of-charge is somewhat analogous to onsite fuel storage and somewhat analogous to resources with long start-up times or multi-stage generator limitations, none of which are incorporated into UCAP for conventional resources. While a grid resource’s interactions with other resources (including a storage resource’s ability to be charged and ready when needed) are important to overall reliability, these interactions are modeled separately from the forced outage events outside the control of resource operators, which UCAP is intended to address. The UCAP methodology for battery storage should therefore incorporate forced outages due to equipment failures, but not state-of-charge.

CAISO must ensure its UCAP calculations are comparable across resource types by appropriately defining the types of outages that will impact UCAP value.  As more energy storage resources have come online both the CAISO and energy storage resource operators have gained valuable operating experience. Resource operators have discovered issues in the CAISO market resource modeling necessitating the use of outages (often forced) to convey valuable operating criteria to CAISO operators. Similar operating criteria are explicitly built into the CAISO market resource model for other mature resource types, negating their need to similarly use outages to convey this information. This means that there exists a subset of forced outages on energy storage resources that should not be considered as forced outages for the purpose of calculating a UCAP value.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

Given the importance of outage coordination and maintaining a reliability fleet of resources CESA is not yet ready to eliminate a planned outage substitution buffer as an option. It may also help CAISO achieve its objective to maximize the amount of committed RA capacity. CESA offers the following thoughts for stakeholder consideration.

A planned outage buffer within the planning reserve margin provides reliability, efficiency, and equitability benefits to the CAISO system and its participants. It would also improve CAISO’s visibility into the RA fleet, a stated issue CAISO discusses in Track 3.

Managing a reliable fleet of resources requires reasonable investment in scheduled maintenance outages. However, the CAISO has placed increasing burdens on suppliers trying to plan needed maintenance outages over the past ten years. From replacement requirement rules for scheduled generator outages to just-in-time substitution rules for planned outages, the current RA policies have led to a noticeable decrease in the capacity on planned outage each year. During the same period, generators have increasingly taken forced outages to fix critical plant issues. High forced outage rates jeopardize system reliability because there is not an opportunity for CAISO to coordinate outages aligned with its reliability imperative. The chart below shows the annual average MW on planned outage versus forced outage for each year from 2012 through 2022 based on data from the Department of Market Monitoring’s annual reports.

A planned outage buffer provides reliability benefits.  CAISO must correct its RA policy to incentivize outages being planned well in advance to allow CAISO operations engineers maximum flexibility to coordinate outages to be in times with less system-wide reliability concerns. It can do this by allowing a certain amount/type of planned outages to occur without substitution. By establishing a planned outage buffer within the planning reserve margin, CAISO will have the means to incentivize advanced outage planning and can coordinate outages according to its system-wide reliability imperative, rather than leaving the outage coordination mostly to the whims of the load-serving entities and suppliers. For example, the CAISO could establish a long-range opportunity outage or a last-in first-out outage approval process (or both), allowing approved outages without substitution capacity.

A planned outage buffer provides market efficiency benefits. Ultimately, load-serving entities bear the substitution costs of any rules the CAISO employs through the underlying cost of RA capacity. The current rules lead to each individual supplier carrying excess capacity to cover their planned outages, leading to issues with CAISO’s visibility into the RA fleet, capacity tightness, and higher RA prices. If instead, the CAISO had the tools to allow a reasonable number of planned outages to occur in a coordinated manner every year, it could incentivize appropriate advanced outage planning to improve the reliability of the fleet, and the costs would more directly be covered by load-serving entities, providing better market efficiency. 

A planned outage buffer provides equitability benefits. Under the current rules, outage coordination is mostly a dance between those with substitution capacity and the particulars of the contract, neither of which have anything to do with ensuring overall system reliability. For instance, a load-serving entity may continually deny a contracted resource from reducing their RA quantity in a given month to accommodate planned maintenance activity, in favor of allowing its own resources to take a planned outage. In this example, a conflicted market participant decides which generator outage should be taken. This is not transparent and depending on the circumstances could be discriminatory. Instead, most outage coordination decisions should be made primarily by the independent system operator in accordance with a transparent outage coordination process that is applicable to all scheduling coordinators. By establishing a planned outage buffer and associated policy, the load-serving entity and the supplier would both be incentivized to plan their outages far in advance and the load-serving entity could receive full RA credit for their resource capacity as well as the capacity of the counterparty supplier seeking to take a planned outage.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

See response in Question 7.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

In accordance with its reliability imperative, CAISO should develop a UCAP methodology to be used in its backstop procurement evaluation, regardless of whether other local regulatory authorities adopt a UCAP methodology. 

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

CAISO analyses show overall excellent bidding performance at the times of greatest reliability need. Therefore, there does not appear to be an issue requiring a move to pay-for-performance. CAISO may still wish to reform RAAIM to address other issues after performing a more granular analysis of specific instances where actual bidding performance is unsatisfactory. Further analysis should also evaluate resources that are currently not subject to RAAIM, so CAISO can better understand if there are further bidding performance issues that it must resolve.

While the data presented in Issue Paper Figures 10-16 are interesting, the relevant information for RA purposes is whether the bid-in capacity meets or exceeds the committed RA capacity (black vs. dotted red) at the times of greatest reliability need. Market awards are based on unit economics meaning only the lowest cost resources necessary to meet demand be awarded (blue). The interplay between metered value (dotted green) and market awards (yellow) is also subject to real-time market economics, and it appears that the CAISO typically uses RA resources for multiple RA services: energy and AS. The data suggests excellent bidding performance towards CAISO’s needs.

There appears to be an issue with the way that the operational RA (gray bars) are presented that complicates the usefulness of the aggregate analysis: it should be impossible for individual resources to receive energy and AS awards (blue) in quantities greater than their operational RA and it should be impossible for bid-in capacity to be greater than operational RA. The data suggests that there must be some bidding underperformance from a few resources while there is remarkable bidding over-performance from most resources.

To understand if RAAIM reforms are needed, CESA recommends the CAISO analyze instances where bidding performance is not satisfactory at times of greatest reliability need, determine the root causes of the underperformance, and develop proposals to address these root causes. This analysis should encompass all resources, including those not currently subject to RAAIM, to ascertain whether there are further availability issues CAISO must address.

CESA strongly cautions against pursuing a pay-for-performance model and recommends any lingering performance issues be addressed through scarcity pricing reform as a more efficient mechanism. Given the overall excellent performance for RA resources, there appears to be no reason to pursue a complicated pay-for-performance model.  There have been myriad issues with pay-for-performance rules in the eastern ISO/RTOs. It is extremely complicated to develop a model that yields equitable treatment across all resource classes. It may also compromise operators’ flexibility in issuing exceptional instructions during system emergencies. Pay-for-performance rules are also another deterrent from suppliers committing as much RA capacity to CAISO as possible. Finally, suppliers in CAISO have not incorporated the risk of extreme pay-for-performance penalties into their RA pricing because it has not existed to date beyond RAAIM; whereas in ISO/RTOs that have penalty structures, the suppliers have been able to include this risk into prices, a practice that has been well-documented and deemed acceptable by market monitors. CAISO can more efficiently solve any lingering performance issues and sidestep design complications through comprehensive scarcity pricing reform.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

As discussed in Question 13, to understand if RAAIM reforms are needed, CESA recommends the CAISO analyze instances where bidding performance is not satisfactory at times of greatest reliability need, determine the root causes of the underperformance, and develop proposals to address these root causes. This analysis should encompass all resources, including those currently not subject to RAAIM, to ascertain whether there are further availability issues CAISO must address. CAISO has listed “RAAIM does not apply to all resources” as a current design challenge (See Figure 21), but only notes potential issues with the de minimis threshold and demand response resources. CESA encourages CAISO to widen its evaluation to all resources that are currently exempt from RAAIM incentives and penalties.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

CAISO must focus its efforts in Track 3 on making its backstop procurement mechanism useful and relevant towards meeting its reliability responsibilities. CAISO’s evaluations that trigger backstop procurement must be updated to ensure that CAISO can meet its reliability requirements, regardless of the myriad local regulatory authority counting paradigms that exist now or in the future. It’s studies have so far shown that the myriad local regulatory authority RA programs are not delivering sufficient capacity to CAISO to meet industry standard loss of load expectation, putting the balancing authority area at risk (See Draft Short-Term LOLE Study Results, Scenarios 1 and 2). To the extent that local regulatory authority program frameworks do not deliver sufficient capacity for CAISO to meet its reliability imperative, CAISO must maintain autonomy to procure more capacity and allocate those backstop costs to load-serving entities.

Furthermore, CAISO has already developed an effective framework for backstop procurement cost allocation that follows cost-causation among the myriad local regulatory authorities. If CAISO chooses to align its CPM evaluations more directly with its reliability responsibilities, it should also consider modeling its current system-wide/local CPM cost allocation after the Flexible RA Capacity CPM cost allocation which first evaluates each local regulatory authority’s procurement versus their share of the overall reliability need. The methodology also allows local regulatory authorities to define their own sub-allocations methodologies to constituent load-serving entities that differ from CAISO’s default methodology.

CAISO studies have shown that a system-wide energy sufficiency CPM is not needed now or in the foreseeable future.  It was clear from the working group discussions on 11/19 that there is not currently and will not be an energy sufficiency issue on the CAISO system.  In describing the comprehensive loss of load expectation analyses, covering from 2026 through 2034, presenters stated that the cause of the expected unserved energy was due to a lack of capacity, not a lack of energy to supply energy limited resources. CESA recommends that CAISO verifies and includes this conclusion in its final report on the mid- and long-term loss of load expectation study.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

Please see comments attached.

2. Does your organization have other feedback not already captured in the questions above?

3. Would your organization like to present at a future meeting on a specific proposal?

4. Does your organization have any feedback back on the process for the RAMPD initiative?

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

The Independent Energy Producers Association (IEP) is California’s oldest and leading nonprofit trade association, representing the interest of developers and operators of independent energy facilities and independent power marketers. IEP’s members collectively own and operate approximately one-third of California’s installed generating capacity, which includes thermal, storage, and renewable resources.

IEP finds that a holistic RA approach is captured most accurately within “Package 2,” with some exceptions. IEP requests the CAISO consider how changes to the RA modeling in Package 2 could cause redundancies and inefficiencies. In the following comments, IEP will illustrate how developing a UCAP methodology will reduce the need for a RAAIM penalty and how increased resource visibility will reduce the need for substitution.  

2. Does your organization have other feedback not already captured in the questions above?

3. Would your organization like to present at a future meeting on a specific proposal?

4. Does your organization have any feedback back on the process for the RAMPD initiative?

The process has been responsive to stakeholders so far. IEP appreciates the opportunity to participate in workshops and comment on the white papers developed for the RAMPD initiative. As stated in our response to question 1, we support a holistic approach to RAMPD development that considers duplication of counting, penalties, and reporting.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

IEP would like to see the industry standard of 1-in-ten-year loss of load expectation (LOLE), as outlined in AB 2368 (Petrie-Norris, 2024), utilized for the RAMPD development.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

IEP supports updating the planning reserve margin on the same cadence as the CPUC and the inclusion of the 1-in-ten year LOLE planning standard.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

IEP would be supportive of the UCAP proposal listed under Package 2 “Accreditation Requirements” only if adjustments are made.  Note that IEP’s support is not for Package 2 in its entirety, as IEP believes that implementation of a UCAP program eliminates the need for RAAIM penalties and incentives

Defining Availability

IEP agrees that CAISO’s Outage Management System (OMS) has the capability to produce the forced outage derate data needed for inputs for the UCAP calculation and supports an additional buildout of this system to properly store forced outage history. If adjusting OMS for UCAP utilization, it should include generators of all capacities and be resource specific.

IEP does not support relying on a class average UCAP for new resources coming online. A class average would misrepresent the UCAP value because as technologies evolve, they become more efficient and would be penalized if data from the class is used rather than that specific technology. In addition, newer units, especially battery energy storage, likely have better reliability than existing units which have been through many charge/discharge cycles.  New units should have class average UCAPs tied to specific technology types and data from units with the shortest operational time.

The resources to which the UCAP mechanism should apply should be for thermal and storage resources and only during critical peak months. NQCs for wind and solar units should continue to be based on ELCC or exceedance, as the real-world data sets used to calculate wind and solar ELCCs already take into account unit availability.  

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

Testing should only be done during the peak load months.  CAISO Tariff currently allows the CAISO to test a resource’s capabilities.  Associating a unit testing program to reflect capacity accreditation would be contradictory to the application of UCAP mechanism which should already account for such events.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

The con of the requirement for any outage substitution is that it does not take into account the critical periods of need. If the mandatory substitution requirement is maintained, it should only be for the predetermined peak months and not throughout the entire year. It is contractually too difficult and unnecessary to procure for substitutions during all months of the year when substitution for reliability purposes is only most important during critical reliability periods. If neither a substitution buffer nor an outage pool is adopted, CAISO should consider reforming the substitution requirement to only months deemed critical for reliability. This change could be adopted with better insight into resource availability in Track 3, as this will help CAISO determine the peak reliability time periods.

IEP is supportive of an LSE provided substitution buffer.  Having this buffer would greatly simplify and improve the outage process and it would eliminate any withholding of available RA capacity as a substitution.  By eliminating the substitution requirement, LSEs would have access to a greater supply of RA for meeting procurement needs, potentially lowering RA prices.  To prevent undue cost burden on LSEs responsible for procuring this buffer, CAISO should attempt to determine how much capacity may enter the market if the substitution requirement was removed and set a buffer level that does not exceed this new available capacity.     

Removing substitution requirements for all months except critical reliability periods or an LSE substitution buffer are IEP’s top preferences for outage substitution reform.  

While IEP also supports consideration of a substitution pool that looks at UCAP holistically, there could be challenges with creating an effective substitution pool that makes it the least preferable outcome:

1. If the pool is voluntary, it is unclear how useful the pool over today’s bilateral construct unless there are sufficient incentives created to participate.  For example, having an administratively set cost cap such as the CPM soft offer cap may be too low during months of scarcity for generators to participate.  If the price from the pool is bilaterally developed, this would not be substantially different than today’s substitution construct, making it unclear why a generator would participate.   
2. If generators have excess capacity for the peak months, generators should voluntarily be able to make that available in a substitution pool. This makes it more efficient and cost-effective.  

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

IEP requests further explanation on the need for an “urgent outage” definition and what issue establishing this definition will solve. Is there a new treatment to the “urgent outage” type that will assist in determining if substitution is needed? 

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

IEP supports a CAISO developed incentive for future RAAIM structures.  If an LRA adopts UCAP, IEP supports eliminating RAAIM penalties for resources shown by an LSE in that LRA, as UCAP incentives, along with scarcity pricing in real time, are sufficient to incentivize resource availability.  LRAs that do not adopt UCAP should have their resources face RAAIM penalties. If CAISO further considers a pay-for-performance mechanism, then it needs to more clearly define the problem in order to consider solutions. For example, is it that resources are not submitting offers in day ahead, or not showing their RA potential resources annually, or some other issue.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

IEP does not see a need to continue RAAIM for LRAs that adopt UCAP when coupled with the changes being proposed for scarcity pricing in the Price Formation Enhancements initiative. Changing a resource’s NQC based on historic outage performance (UCAP) and providing greater incentives to be available in real time (scarcity pricing) gives generators significant incentive to operate and maintain their units to maximize their availability.  There should not be a need to continue RAAIM with the changes, let alone raise the RAAIM penalty price as was considered as an option in the workshop.  It is unclear why RAAIM should be continued if these changes occur; IEP would want to see a more robust development of the rationale for why RAAIM should be continued if UCAP and scarcity pricing reform is adopted.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

See answer to Question 13 above.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

IEP does not have any issues with the annual soft off cap being based on a 550 MW natural gas unit with duct fire.  Thermal generation are the resources that are likely to be procured by the CPM program in the near future because most other types of resources are generally under long term contract with LSEs.  However, given the limited CPM backstop that occurs during non-summer months, the flat monthly rate of the soft offer cap is not reflective of the varying monthly construct of the current RA framework.  IEP suggests the CAISO to consider shaping the monthly soft offer cap to align more with the monthly needs.  Resources not under contract have fixed costs, as is assumed by the CEC analysis, but if such costs cannot be offset properly if the CAISO’s backstop program only procures for one month out of a year and the resource is unable to recover its costs during the rest of the year because monthly obligations are lower as well.  A monthly shaped soft offer cap that’s more reflective of the market dynamics can help incentivize additional offers to the CSP.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

The CAISO has identified several potential causes of why limited visibility for non-RA capacity. 

First, capacity that is being exported to other BAAs do not have to notify the CAISO during the month ahead showing process.  The CAISO may wish to consider allowing suppliers to submit month ahead supply plans for exports.

Second, there is correlation between contracted capacity and outage substitution need for both planned and forced outages.  Due to the CAISO’s requirement to substitute capacity for any and all planned outages, LSEs and suppliers may not show capacity so as to have reserves available for substitution.

Finally, the chances of a CAISO CPM designation during non-summer months is basically zero and therefore there is no incentive to submit into the CSP.  During summer months, capacity may be saved for outage substitutions to mitigate RAAIM penalties rather than the potential of CPM backstop.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

IEP agrees with page 41 of the issue paper that “The RASC timeline does not account for either long lead-times or give flexibility for approving the CAISO’s acceptance of a planned outage”.  As it can be a challenge to show substitute capacity within 24 hours of the first RASC run due to holidays and lack of access to staff to respond timely. IEP would support an option to submit substitute capacity before the T-29 RASC run for outages submitted before T-29, or a longer outage showing window.

Thank you for the opportunity to submit comments.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

MRP appreciates the CAISO’s continued efforts to consider changes to the CAISO’s Resource Adequacy (“RA”) program.  MRP would like to begin its comments by framing the discussion in a broader context of the CAISO’s role in maintaining reliability.

First, MRP recognizes that the CAISO’s default RA program is only used if an Local Regulatory Authority (“LRA”) does not have its own RA program.  Based on information shared at the workshop, MRP understands that every LRA has some form of an RA program.  LRAs determine their own capacity accreditation methodologies and the associated PRMs for their RA programs.  As such, the CAISO’s default Planning Reserve Margin (“PRM”) and default capacity accreditation rules apply to no one.  Further, the CAISO does not currently validate, or plan to validate, that each individual’s LRA’s RA program meets the 1-in-10 year LOLE standard.  This raises the question of the purpose of the CAISO’s default RA program. 

The CAISO’s default RA rules (PRM and capacity counting) should enable the CAISO to fulfill its reliability role by verifying that the RA portfolio shown to the CAISO can achieve a 0.1 LOLE across an entire year.  The CPUC is moving forward with its SoD framework, which is designed to meet monthly RA “stack” requirements, but which has not yet developed a reliable set of rules (again, PRM and capacity counting) that reliably demonstrate that program can achieve 0.1 LOLE across an entire year.  While other LRAs continue with peak-based RA programs and requirements, it is unclear what information is available regarding the reliability of those programs.  Given where the LRAs are, and given where the CAISO is, MRP believes it will be difficult to combine LRAs’ programs and shown RA capacity and effectively measure the reliability of the system since each LRA’s program is unique.  MRP believes, therefore, that it will be essential to build a “translation” that can ensure that the LSEs’ shown RA portfolios can achieve 0.1 LOLE in aggregate.  It will also be essential to develop a mechanism to ensure that, in the case that the shown portfolio does not achieve 0.1 LOLE across an entire year, that the CAISO can procure additional capacity to ensure that all the RA resources procured – including the CAISO’s backstop procurement – meet the annual 0.1 LOLE target, and, ideally, that the CAISO can allocate the costs of its backstop procurement to LSEs who do not show resources sufficient to meet their allocated or proportional requirements. 

MRP believes the “Perfect Capacity” (“PCAP”) framework presented by Astrape at the November 18 workshop is interesting and may be the foundation to the CAISO’s default RA program.  The PCAP framework best captures each resource’s contribution towards achieving the 0.1 LOLE standard.  The CAISO also notes that, under the CPUC’s Slice-of-Day (“SoD”) framework (which considers a resource’s ability to meet RA requirements defined for each hour), the CAISO will continue to publish one Net Qualifying Capacity (“NQC”) value per resource, and that this value, for wind and solar resources, will be based on the exceedance value at the coincident gross peak hour.[1]  But as was discussed on November 19, a sound RA framework should consider capacity values at critical hours, which are increasingly not the coincident gross peak hour.  Awash in solar generation, California’s ability to serve load at the coincident gross peak hour may not provide a reliable indicator of its ability to achieve 0.1 LOLE across an entire year.  If the CAISO adopts a PCAP framework on which to measure the reliability contribution of all resources at critical hours, as MRP recommends, the CAISO should change its default capacity accreditation to ELCC for all resources.  

Translating the shown RA fleet to a PCAP framework will allow the CAISO to reliably assess the fleet’s ability to meet 0.1 LOLE.  Moreover, the translation should give the CAISO some basis assessing each LSE’s individual reliability, and, as result, provide a basis for allocating backstop procurement costs in keeping more with cost causation principles. 

With regards to the CAISO’s Resource Adequacy Availability Incentive Mechanism (“RAAIM”), MRP believes removing RAAIM penalties and incentives makes sense under the PCAP and ELCC framework.  Removing RAAIM penalties and incentives may also increase LSE showings, but there’s likely no direct correlation between RAAIM and LSE showings because a sizeable set of resources are currently exempt from RAAIM penalties and incentives.  Alternatively, if the CAISO chooses to keep RAAIM, which would be incompatible with a PCAP/ELCC methodology, it should consider expanding RAAIM applicability to more resources and remove the RAAIM exemptions. 

With regards to the CAISO’s planned outage process, MRP supports the CAISO working towards implementing an outage buffer or creating a market for replacement capacity.  MRP believes the outage substitution process has the most impact on showing additional capacity.  As the CAISO notes, the planned outage problems are a direct result of the monthly design of the RA program and setting relatively low monthly procurement targets to preserve the fiction that monthly targets will somehow result in savings when applied to resources with annual costs.  Preserving this fiction creates huge inefficiencies and challenges that do not align with the reality that a significant portion of the fleet must take regular outages to be properly maintained.  MRP has previously outlined several reasons for why the outage substitution process is poorly designed.  Given the issues surrounding the illiquid market, MRP advocates the CAISO to develop the outage pool concept further.

Finally, while various components of a framework are interrelated, they are not so dependent on each other to cause paralysis by analysis.  For example, outage substitutions, forced outages and RAAIM only modify numeric aspects of inputs into the LOLE study.  While it is important to ensure such assumptions are accurate, e.g. using more updated forced outage rates based on recent years, it is not as important to decide whether the LOLE study is dependent on outcomes of the CAISO’s default counting methodologies.

[1] CAISO November 7, 2024 Resource Adequacy Issue Paper (“Issue Paper”) at page 38.

2. Does your organization have other feedback not already captured in the questions above?

No.

3. Would your organization like to present at a future meeting on a specific proposal?

MRP would be most willing to present in a discussion about adopting a PCAP framework as the CAISO’s default RA framework.   MRP would consider presenting on other topics to workshop ideas to move this concept forward.  

4. Does your organization have any feedback back on the process for the RAMPD initiative?

MRP requests the CAISO to reschedule the December 13^th workshop due to scheduling conflicts of several parties, including MRP.  Additionally, it’s unclear which topics should be discussed and whether the workshop will focus on a particular solution.  MRP suggests the CAISO reflect on the comments submitted and identify issues in which additional workshops can help move the ball forward.  Given this, it would be MRP’s preference that the CAISO postpone the December 13 workshop and schedule longer workshops for January. 

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

MRP requests the CAISO explore:

1. Differing hydrological scenarios (low, mid, high)
2. Stress testing the LOLE scenario so that the annualized PCAP PRM appropriately accounts for monthly RA framework
3. Updated outage assumptions based on more recent history with breakouts by nature of work and technology type

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

As noted above, MRP supports ELCC-based counting rules, a PCAP reliability assessment framework, and a PCAP-based PRM.  On November 19, some stakeholders expressed a desire for a stable PRM.  MRP believes a PCAP-based PRM would provide that stability.

Under a PCAP framework, MRP proposes the CAISO determine reliability in the following manner:

1. The simplest method might be to determine if the PCAP portfolio = the PCAP PRM + peak load. 
2. Alternatively, the CAISO can run a monthly LOLE analysis based on the shown capacity and see if there are any LOLE or LOLH events.  Considering monthly LOLE by itself, however, can make it difficult to understand the risk for a 1-in-10 for a year.

If the results of the PCAP analysis shows the system is not reliable to the desired target, CAISO should issue CPM designations to make the system reliable.  Again, a PCAP framework might help the CAISO most equitably determine how to allocate the costs of the CPM designation.   

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

Under a PCAP framework, all resources will use ELCC (average or, more likely, marginal).  The ELCC values can be updated annually to realign the capacity counting to the PCAP PRM.  Given the current monthly program structure, monthly ELCCs would need to be calculated.  A flat monthly ELCC value based on annual ELCCs would make the program simpler, but given the current monthly program structure, stakeholders may prefer monthly ELCCs.  These ELCC values could and should incorporate individual resource forced outage performance.

Because the CAISO default QC methodology would be ELCC based for all resources, it would be unnecessary to develop UCAP for the CAISO’s needs.  However, CAISO could develop UCAP or other capacity counting methods with stakeholders and LRAs for LRA specific programs.  MRP encourages the CAISO to hold public workshops with stakeholders and CPUC for additional UCAP development for CPUC in a separate initiative that’s not associated with the CAISO’s default mechanism.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

This should no longer be necessary under a ELCC QC methodology, as that methodology would incorporate historic unit performance.   

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

If the monthly RA structure is retained, MRP proposes this process for consideration:

After the monthly showings, the CAISO runs a LOLE study for that month with planned outages for the month.  (MRP acknowledges the challenges of parsing out an annual LOLE metric to individual months, but such is the nature of the current RA program). 

If planned outages do not impact LOLE for the month, then no planned outages require replacement. 

If planned outages do impact LOLE significantly, then CAISO will CPM substitute capacity.

1. Costs of sub-RA to be allocated to all resources on outage.
2. What happens if there are new forced outages during the month?  CAISO always has ED CPM capability.  Resource ELCCs will be impacted.  Are resources double penalized if the ELCC accounts for forced outages and resources are charged for sub-RA?
3. Incentivizes LSEs to show all resources to build a natural buffer.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

MRP is intrigued by the CAISO’s proposal to create an “urgent forced outage”, and supports the concept of an outage that can be permitted without the need to provide substitution if conditions permit, but remains uncertain how such an outage would be implemented and how it would fit within the CAISO’s current time-based “forced” and “planned” outage paradigm.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

For purposes of the CAISO’s default RA program, MRP suggests that outages would be substituted for from a surplus capacity pool and future ELCC values would account for such outage unavailability.  Further, MRP’s preferred approach would be for the CAISO to adopt an annual RA program and annual procurement targets.

As noted elsewhere, MRP does not support keeping RAAIM penalties and incentives in its current form (or in some modestly “reformed” form) because of RAAIM’s limited applicability and because MRP does not support the simultaneous application of both a financial penalty and an adjustment to capacity values due to outages. 

Finally, MRP is open to discussing some kind of “pay for performance” mechanism, but its experience with PJM’s pay for performance mechanism and the havoc it caused in PJM during Winter Storm Elliot (including because resources could not secure gas because they were not committed with sufficient notice) prompts MRP to caution the CAISO to thoroughly consider how such a mechanism would apply under all conditions, including the most extreme conditions.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

When the CAISO began the Standard Capacity Product (“SCP”) initiative, SCP penalties and incentives were introduced to ensure that capacity sold to LSEs then also performed in operation.  This concept was introduced because capacity-only contracts became more prevalent while power purchase agreements decreased.  However, since many resources were still under their existing power purchase agreements with LSEs, primarily the investor-owned utilities, those PPAs also had availability metrics which would reduce the monthly capacity payments to suppliers.  Therefore, the CAISO agreed to grandfather such resources to be exempt from such SCP penalties and incentives.  This practice continued when the CAISO developed RAAIM by referring to grandfathered resources as “acquired resources”.

To the extent that such availability penalties and incentives remain in PPAs between generators and LSEs, if the CAISO were to continue this practice, generators could be double penalized for the same unavailability, once by the LSE and once by the CAISO.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

Please see MRP's response to question 11. 

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

RAAIM established and enforced the must-offer obligations for all RA resources to which it applied.  This design element should remain regardless of RAAIM elimination or reform.

The other aspects of RAAIM, primarily the penalties and incentives, should be eliminated so as not to duplicate the punitive effects of the resulting capacity adjustment.

If the CAISO intends to reform RAAIM, then every aspect of its design (including evaluation periods, applicability, penalty price, dead band, etc.) should be re-examined. The value and acceptability of RAAIM reform depends heavily on other components of the final RA framework design.  Given RAAIM’s complexity and its interaction with other aspects of an RA framework (such as capacity accreditation), the CAISO should lay out a framework to provide additional feedback on RAAIM reform.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

Yes, given the increasing reliance on battery energy storage.   

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

MRP does not believe sufficient analysis has been performed to understand the reasons of the decline of capacity offers.   The analysis presented in the issue paper only denotes the decrease in offers since 2019 but does not provide any context to the issues.  For instance, what were the supply and demand balance of the months in those years?  Was there an increase in high priority exports or exports overall?  Did RMRs increase? 

As the issue paper notes, the restrictions that attach to capacity offered into the CSP are one disincentive to offer that capacity into the CSP.  The soft-offer cap may be one factor that influences a capacity holder’s willingness to offer the capacity into the CSP, but not showing capacity to keep it available to mitigate RAAIM charges or to take planned outages also factor into that decision.  All these things should be considered when looking at how to increase the pool of capacity offered into the CSP.  

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

As MRP understands, the current CPM soft-offer cap is cost-based to mitigate the potential for capacity sellers to exercise market power.   While the current cost-based soft offer cap may not reflect prevailing RA market prices, moving to a market-based soft offer cap would likely trigger the need for a more difficult and complicated assessment of a price that would suggest the exercise of market power.  The current soft-offer cap, which is the same in each month, does not adequately capture the increased value of capacity in the peak months relative to the off-peak months, however.  Given this, MRP recommends the CAISO retain the current cost-based soft-offer cap of $88.09/kW-year but shape that annual price across the year.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

MRP believes that the CAISO should first gather information as to (1) whether LSEs procured excess capacity that is not shown and (2) why it’s not shown.

MRP believes the combination of the current monthly RA construct, the CAISO’s lack of CPM designations, and the flat monthly CPM soft-offer cap contribute to the lack of CSP offerings.  Because the monthly RA framework yields lower capacity obligations during non-summer months, the possibility of CAISO CPM designation is extremely low during these months and provide little incentive to submit offers into the CSP during these months.

During summer months, the flat monthly soft-offer cap also creates a disincentive to submit CSP offers, as the bilateral capacity market reflects shaped monthly pricing that correlates value to demand.  Because the CPM is a lightly-used backstop mechanism that generally does not yield any significant designations as compared to the bilateral market, MRP – and, MRP believes, other suppliers – puts little emphasis on participating in the CSP.

Finally, buyers in other BAAs are seeking high-priority exports from California, including from the CAISO BAA, to provide for their own reliability needs.  If CAISO wishes to better understand the overall capacity picture, including capacity within the CAISO BAA that is being exported to other BAAs, it could implement a mechanism for suppliers to submit supply plans in the month-ahead time frame to identify export capacity that will be unavailable to the CAISO rather than waiting for high priority exports to show up during day ahead bidding time frame.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

Yes, the CAISO should develop a cost causation-based approach to allocating the costs associated with EDAM RSE failures. 

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

At this time, MRP does not have strong feelings either way about moving the DA bidding deadline from 10 AM to 9 AM.  MRP has considered whether the CAISO should provide an opportunity for market participants to submit non-binding capacity availability estimates before DA energy bids are due, but is not sure even that would be preferable to moving the DA bidding timeline, as it would create more work for Scheduling Coordinators and the non-binding estimates may not give the CAISO a reliable picture of capacity sufficiency.   MRP encourages the CAISO to continue a dialog about the pros and cons of moving the DA bidding timeline to 9 AM and consider all relevant factors, such as the accuracy of the information provided and the workload on Scheduling Coordinators, before proposing to make a change to this timeline.    

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

No.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

NCPA believes that the current CAISO RA process is holistic. System, Flex, and Local requirements ensure reliability. RAAIM, MOO, and bid insertion help ensure resources meet obligations. NCPA suggests adding Medium Notice Opportunity RA Outage types between 30 and 8 days in advance. These will function similar to existing Short Notice Opportunity RA Outages except offer an expanded horizon in which to plan outages during off-peak, non-stressed conditions when supply cushions do not require substitute capacity. CAISO would have full discretion to cancel such outages when conditions change. NCPA believes current CAISO and NCPA counting rules have served the grid well and have resulted in minimal loss of load over the past twenty years generally, and during recent stressed events specifically.

2. Does your organization have other feedback not already captured in the questions above?

No comment at this time.

3. Would your organization like to present at a future meeting on a specific proposal?

No comment at this time, but NCPA is open to engaging with stakeholders further.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

No comment at this time.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

NCPA appreciates CAISO’s demonstrated respect for the jurisdictional boundaries of the non-CPUC jurisdictional LRAs, which include NCPA’s members. NCPA continues to evaluate the proposal to revise the default PRM, planning criteria, and default resource counting rules. While NCPA must defend its rights to set its own criteria, NCPA also recognizes that CAISO has requested discussion of whether a set of modifications to the default PRM and default resource counting rules can be identified that would help to meet CAISO’s goals in this initiative that LRAs could also adopt in order to address the special planning and resource considerations that LRAs such as the NCPA members currently reflect in their own LRA resource adequacy criteria. NCPA believes such a discussion could be worthwhile. NCPA based its current PRM and resource counting criteria on the CAISO default criteria with minimal change, except where the tariff criteria did not adequately capture the capabilities of NCPA’s resources. NCPA is willing to participate in such a discussion and believes it could be helpful to better understand the goals of different methodologies.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

No comment at this time.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

NCPA LRAs continue to evaluate the concept of UCAP. A key concern with certain UCAP design concepts that use historical forced outage data to predict a resource’s prospective availability, is that any UCAP design must also consider what upgrades or repairs have been implemented at a facility that will greatly improve a resource’s availability once such repair or upgrade has been implemented.  While generation owners may implement strong maintenance practices and goals to ensure the reliability of their equipment, many generation facilities are extremely complex machines, and it is inevitable that resources will experience forced outage due to unexpected events that will occur.  For example, if a resource experiences a forced outage due to an unexpected turbine failure, the likely repair involved would be replacement or refurbishment of that turbine; resulting, in that unit’s availability likely being improved looking forward.  NCPA recommends that any UCAP concept that considers a historical “lookback” at forced outage rates, also include a process for the resource owner to provide evidence as to the improvements that have been implemented as a result of the forced outage, that will further mitigate the same type of forced outage happening again in the future. NCPA believes RAAIM and price formation sufficiently incentivize resource performance and availability.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

NCPA believes resource performance monitoring is already in place. The CAISO Tariff requires resources to follow CAISO operating instructions at all times, so CAISO has the ability to identify resources that are persistently operating in a way that is not consistent with any CAISO operating instructions.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

NCPA believes that CAISO should focus its efforts on enhancing outage coordination with TOPs and GOPs in order to allow more flexibility with shorter duration outages (e.g. two weeks or less). CAISO should expand opportunity outage designations, starting with adding Medium Notice Opportunity RA Outage types. Such outages could last up to 14 days and be approved by CAISO without substitution on first come first served basis dependent on sufficient notice and system conditions. For example, if temperatures are forecasted to be abnormally low for a week or so in August when most of the fleet is committed for RA, then CAISO should allow some generators to take medium or short notice outages to help prep equipment for the next round of stressed conditions. Also, in off-peak months when RA obligations are lower, LSEs may only show a generator’s partial capacity in RA filings yet all available capacity will still be bid in. CAISO much enhance its outage coordination studies in order to ensure generators can keep facilities maintained at reasonable costs to rate payers. The all or nothing approach to substitution is not efficient.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

While NCPA is still evaluating UCAP proposal as presented to date (and a such does not support any design at this time), if CAISO does adopt a UCAP methodology that is based on historical performance, such design must exclude outages that are outside of a generator’s control, including but not limited to Transmission Induced Generator Outages, natural gas pipeline induced generator outages, and force majeure induced outages such as those caused by wildfires.

NCPA shares Vistra’s concerns that planned to forced outage limitations imposed by CAISO do not adequately address scenarios involving urgent outages required to address vital maintenance needs that would help keep a plant online in future critical periods. NCPA supports the concept of an advanced notice forced outage, where a generator knows in advance of the forced outage window that vital repairs must be made to ensure the unit stays operational for future critical periods. It makes more sense to notify CAISO of such necessary outages in advance, rather than to implement planned-to-forced outages and risk FERC referrals for outages that are demonstrably necessary.

NCPA also suggests creating “Planned Medium Notice Opportunity RA Outages” whereby SCs could submit requests between T-30 and T-7 days for discretionary outages limited to five days or less in duration without a substitution obligation. CAISO would have discretion to approve or deny such outages based on system conditions similar to the Forced Short Notice Opportunity RA Outages. This would open up additional opportunities for generators to perform short-term maintenance when it is prudent to do so.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

No comments at this time.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

NCPA believes CAISO’s RAAIM program is sufficient. If certain generators are deliberately using RAAIM penalties as a way to avoid making capacity available to support reliability, or for the purpose of “arbitraging” the difference between bilateral resource adequacy prices and RAAIM penalty rates, then CAISO should identify which generators are conducting business in that manner and further investigate such behaviors and consider what appropriate actions may be required.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

NCPA strongly opposes aligning the RAAIM penalty rate with bilateral market based resource adequacy prices.  NCPA believe RAAIM and the CPM Soft Offer Cap are key elements to mitigate any market power that may be exercised in the bilateral market regarding resource adequacy transaction pricing.  Please also refer to comment 12.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

Please refer to comment 12 and comment 13.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

No, CAISO should be ensuring that generators are following operating instructions when issued, and to investigate resources that persistently deviate from such operating instruction.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

NCPA believes the decline of offers into the CPM is a positive development and an indication available resource adequacy capacity is being transacted outside of the CPM process. However, when CAISO has designated resources for CPM during significant event exceptional dispatch, NCPA has observed that some generator owners are not as familiar with the process so perhaps CAISO could do more to educate generators of this option.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

NCPA does not support changing the soft offer cap from its current cost-based approach. Any other method would be too subjective and costly to rate payers. Currently, the only material form of Market Power Mitigation in resource adequacy markets is the soft offer cap. Resources are free to register costs above the offer cap with FERC when justified. The soft offer cap should not be tied to any sort of request for information of resource adequacy prices or LRA penalty prices.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

Loss of resource operational control through MOO and bid insertion are impediments that exist today to showing all contracted capacity as RA or offering it into the CSP. CAISO can see RA resources and they can see what resources are being used to support PT exports. They can also see derates in OMS. CAISO should be able to determine what capacity is effectively uncommitted and available/excess. CAISO can probably perform more outreach with SCs to help better determine what residual capacity is available.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

No comment at this time.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

No comment at this time.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

NCPA does not support moving the day ahead bidding deadline to 9AM. NCPA believes CAISO can look at historical bidding patterns to help determine if the volume of capacity submitted by 9AM will be sufficient for RSE requirements. NCPA typically bids in loads and resources well in advance of 10 AM but does not support a hard deadline at 9AM.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

None at this time.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

PG&E appreciates CAISO attempts to present policy options through packages considering timing and entity responsible for implementation.

PG&E suggests the following additional attributes to assess the design changes proposed in each package:  

1. easy to implement: options that are easy to implement and/or could be implemented fast to address design changes for items that are currently not working as intended (outage substitution and RAAIM) and/or that have direct reliability impacts. 
2. cost of the solution and time to implement: options for consideration should be assessed based on a cost/benefit analysis and include timeframes for implementation. 
3. consistency between CAISO and LRAs programs.  

2. Does your organization have other feedback not already captured in the questions above?

Not at this time.  

3. Would your organization like to present at a future meeting on a specific proposal?

Not at this time. 

4. Does your organization have any feedback back on the process for the RAMPD initiative?

Not at this time. 

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

PG&E supports the main principles the CAISO has put forward: 

1. Default counting rules (QC values) included in the CAISO tariff should reflect the relative contribution of different resource types and individual resources to maintain BAA-wide and local reliability.  

2. The default PRM in the CAISO tariff should be designed alongside counting rules to create a coherent set of RA standards.  It also makes sense for the CAISO to develop two default PRMs depending on the counting rules used by the LRA (see response to question 6). 

At the modeling workshop, experts presented alternative counting rules. At this stage, it is unclear what the impact of the alternative counting rules will be in terms of RA requirements. PG&E encourages CAISO to continue the discussion and provide examples on the implications of the different counting rules, for instance, marginal ELCC versus exceedance, and how these counting rules should work with a UCAP framework. 

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

The package 2 option, a default PRM for LRAs using ELCC and a default PRM for LRAs using exceedance, makes the most sense at this time given the significant differences between the CPUC’s slice-of-day approach and the ELCC approach used by some other LRAs.  The Issue Paper outlines a risk that LRAs that aren’t using the CPUC’s slice-of-day framework could still use the solar and wind values from the CPUC-published Master Resource Database, which is based on slice-of-day rules.  Peak Master Resource Database values are also used in the CAISO’s NQC list, which increases this risk.  In some instances, the solar and wind values are higher in the NQC list than previously observed under ELCC counting rules, creating a risk that fewer resources are shown to the CAISO by other LRAs.  The CPUC framework mitigates this risk in a couple of ways:  

1. The development of a new PRM using slice-of-day counting rules, and  

2. The slice-of-day framework requires sufficient resources to meet load in all hours, meaning that some resources may not be shown at peak, but are shown later in the evening.  Under CPUC rules, these resources are still available to the CAISO.   

However, an LRA using the slice-of-day-based NQC list values without the full slice-of-day framework functionality would not mitigate this risk, underscoring the need for the CAISO to develop multiple PRMs. 

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

The Issue Paper presents a helpful overview of UCAP, including: problem statements, objectives, definitions, approaches, key considerations, availability definitions, and LRA coordination. PG&E supports the problem statements and objectives outlined in the paper. PG&E further supports policy that ties resource performance to resource counting by embedding the forced outage rate in the counting rules instead of socializing these deficiencies by capturing them in the PRM. A well-designed UCAP would reduce costs; better reward performance; improve reliability by creating incentives for a resource to be available, lead to better maintenance practices, and lead to the retention of better performing units; and better match planning and operations. 

The Issue Paper summarizes key elements of the CAISO previous UCAP work in RA Enhancements. Several of the elements are worthy of further consideration, particularly as discussions proceed with efforts the CPUC is undertaking on UCAP; these include: assessment timeframe (seasonal v. monthly), hours of assessment (the CAISO’s supply cushion approach v. a broader set of assessment hours or a narrower window like the availability assessment hours), type of assessment (supply cushion v. EFORd and other approaches), weighting of historical data (a greater emphasis on recent years v. averages), and level of assessment (individual unit v. aggregations). PG&E recommends clearly identifying key framework features like the ones outlined above and further development of the options for each feature, particularly as discussions develop with the CPUC. The work done to date by Energy Division is worthy of noting in this features list, although choices Energy Division has made in their early work should not preclude consideration of alternative approaches at this point in the development process.   

Regarding UCAP, PG&E would like to emphasize the following design principles: clarity, transparency, and incentives to perform. 

1) Clarity - Forced outage definitions and exemptions: 

• CAISO presented possible updates of its current outage definitions to align with Reliability Coordinator Procedure RC0630, introducing opportunity and urgent outages in addition to planned and forced outages. CAISO’s current outage definition considers maintenance outages submitted 7 or fewer days prior to the start date for the Outage to be Forced Outages. PG&E generally supports further exploring the opportunity and urgent outage categories but recommends presenting additional details on how definitions will be revised and aligned with RC definitions. 

• The Issue Paper notes that additional work is needed on “nature of work” classifications. PG&E supports additional work in this area and supports a final framework that eliminates events outside management control, as including transmission outages, labor strikes, environmental limitations and the like would be unfair to a resource owner that doesn’t have control over such events. CAISO indicated that forced and urgent outages could both be considered in a resource’s forced outage rate calculation. PG&E requests additional clarifications on what forced and urgent outage “outside management control” (OMC) would impact UCAP accreditation. 

• A key consideration with the UCAP framework is the data source, which merits additional investigation. For instance, the paper makes it clear that the CAISO’s OMS would require further development should it be used.  But limitations with GADS associated with generator size and the non-resource specific nature of the data makes CAISO’s OMS a more attractive candidate. However, stakeholders should understand the timeline associated with building out OMS, particularly given that UCAP relies on historical data; it’s unclear if historical data would be available if OMS is pursued. Lastly, PG&E recommends additional clarification of forced outage data and what outages are categorized as forced in CAISO OMS and GADS.  

2) Transparency - Assessment hours:  

• CAISO presents the supply cushion approach based on the 20% tightest hours as the basis for assessing resource performance and defining the UCAP value. In this approach, resource owners have little visibility into which hours will be used in the supply cushion. Furthermore, resource owners would experience resource counting derates even if their resource wasn’t likely to be called upon if it were available.   

• With these limitations in mind, CAISO should further explore an equivalent forced outage rate (EFORd) methodology and weigh the trade-off of the greater specificity of the EFORd method with the additional computational effort required of an EFORd approach.   

3) Incentive to Perform, i.e., Penalty-reward -- Revised RAAIM: 

• With UCAP in place, RAAIM should be revisited, particularly the forced outage substitution rules requirement.   

• An assessment of UCAP and must-offer ICAP should be in place: CAISO should monitor and/or penalize resources which perform under their ICAP values in critical hours (CAISO could use the supply cushion approach to determine the critical hours). 

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

The Issue Paper discusses a few options for establishing NQC values that are more reflective of generator performance during periods of extreme ambient temperatures. CAISO presents two options for consideration: 1) CAISO NQC operational testing performed by the CAISO, with the main drawback being the potential cost to implement; 2) resource owners submit their own test results (similar to MISO annual testing or every five years in WRAP). The Issue Paper also notes that high performance penalties could provide an incentive for resource owners to self-regulate their claimed resource capability.  

PG&E supports adoption and use of ambient derates due to temperature as a mechanism that will improve reliability and reduce costs. PG&E supports exploring the option that involves resource owners submitting their own test results, but suggests the CAISO perform an assessment of the effectiveness of this approach after implementation and sufficient time has passed to determine whether resource owners are submitting fair assessments of their resource capabilities. PG&E further supports including this issue in broader performance penalty discussions.   

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

The Issue Paper provides a useful summary on the planned outage substitution process.  PG&E agrees with the problems identified in the problem statement. PG&E also agrees with the objectives detailed in the paper, but offers the following revisions: 

1. Clear and efficient: the planned outage mechanism should provide clarity on the substitution rule: i.e., clarity if substitution should be provided and who should provide the substitution based on clear criteria. The planned outage mechanism should be transparent, easy to implement and balance generator/LSEs costs and responsibilities. 

2. Promote advance planning: the planned outage mechanism should provide generators with opportunities to submit planned outage requests well in advance.  

3. Be flexible: the planned outage mechanism should provide the flexibility to have planned outage requests on short notice (2 months to 8 days out).  

PG&E provides the following preliminary feedback on each approach.  

1. Remove planned outage substitution requirements and replace with strong incentives 

PG&E supports approaches that provide incentives for good performance and disincentives for poor performance.  However, solely addressing planned outage substitution with performance penalties may require penalty levels that are higher than the CAISO or stakeholders have the appetite for and should be part of a broader conversation on performance penalties.  PG&E recommends including this as an option but recognizes that it is unlikely to be feasible in the near term. 

2. Substitution pool 

The pool option provides clarity on the substitution status and could provide the flexibility needed for planned outage requests depending on the granularity (daily, weekly, monthly).  

This option should be further explored; it is unclear how the pool will prevent leaning and provide the necessary substitution for all planned outages. CAISO should further explain the voluntary approach and the first-come, first-served rules to access capacity substitution. 

3. Planned outage buffer 

PG&E does not support this option as it involves a likely complicated and contentious process of determining how much buffer needs to be embedded in the PRM to account for planned outages.  The result is unlikely to be accurate, which either results in excess costs or risks to reliability.  It also doesn’t meet the clear and efficient principle, as there’s unlikely to be clarity in the substitution rules. For instance, there’s a lack of clarity on which planned outages without substitution would go into the buffer and which outages would still require substitution (would it be up to CAISO discretion or follow established rules?). 

4. Annual or seasonal showings 

PG&E opposes an annual or seasonal showing that removes monthly granularity in the requirements (i.e. an approach that uses a single value for all months).  It’s unclear if the suggestion in the Issue Paper and in MRP’s presentation is in reference to such a framework or something else.  Regardless, any annual or seasonal process would conflict with current LRA requirements, like the CPUC’s monthly program, and would therefore introduce a lot of complications. Furthermore, the “annual or seasonal showings” option does not present any concrete proposal to the planned outage substitution process. 

5. Roll back RASC in favor of POSO 

PG&E agrees with the CAISO that a long-term solution is needed. POSO was challenging from a planning perspective as it was lacking clarity on which outage should provide substitution in advance.   

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

See PG&E’s response to question 7. 

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

PG&E prefers rules and mechanisms that create an incentive for resources to perform when needed. Well-designed rules and mechanisms lead to a more reliable system that operates at lower costs and minimizes leaning between resources and resource owners. 

All of these elements must work together to create an optimal set of rules and mechanisms. The Issue Paper outlines shortfalls across all of these areas, but in particular outage replacement, UCAP, and availability and incentive mechanism. PG&E has opined on UCAP and outage substitution in earlier questions.  Availability and incentive mechanism is an additional tool that is not performing as intended and should be revised to create a greater incentive for resources to be available when needed. With this said, some of these topics interact with each other, particularly UCAP and availability incentive mechanism, and any final framework should be balanced to account for the interactive effects between these two mechanisms.  

Lastly, PG&E supports as much consistency as possible across LRAs. At this stage, it is unclear if UCAP will be implemented across all LSEs or only by CPUC-jurisdiction LSEs. Lack of consistency on UCAP introduces the potential for LRA planning arbitrage, which would be detrimental to reliability and would be a clear case of LRA leaning. It also introduces uncertainty for the relevant availability and incentive mechanism, as the mechanism would differ under a UCAP v. non-UCAP framework. These outcomes should be avoided. 

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

PG&E supports a CAISO-wide framework for UCAP (see the response to question 11). In the scenario in which UCAP is LRA dependent, several suboptimal outcomes could be observed: 

• Different accreditation methodology for resources: one NQC framework and a UCAP-NQC one; 

• Different forced outages substitution rules;  

• Different incentives and penalties: a UCAP framework with revised RAAIM and a group without UCAP but RAAIM.  

UCAP implementation by all LRAs is essential to avoid such outcomes. 

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

At this stage, PG&E supports further exploring the options proposed in the issue paper. RAAIM reforms that would be appropriate with the adoption of UCAP should be considered first. The straw proposal should include the following alternatives associated with UCAP: 

1. Full UCAP: all LRAs support UCAP accreditation, CAISO should develop a comprehensive UCAP proposal and RAAIM revision as developed in question 7. 

2. Hybrid UCAP: not all LRAs support UCAP accreditation, this option should consider the impact of RAAIM across different LRA counting frameworks.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

No comments at this time. 

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

As the Issue Paper points out, net peak hours are increasingly a concern for reliability events and energy sufficiency will increasingly be an area of concern as more and more storage is added to the system. The CPUC undertook RA reform and adopted the slice-of-day approach in part due to concerns with the increasing penetration of intermittent and energy-limited resources. The CAISO should further explore options for addressing net peak and energy sufficiency needs. CAISO could analyze challenges to adopting a slice of day framework consistent with the CPUC and present those challenges to stakeholders before attempting to pursue a different method for addressing net peak or energy sufficiency needs. 

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

No comments at this time. 

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

No comments at this time. 

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

As discussed in the Issue Paper, showing all contracted capacity as RA is impractical for LSEs that are also SCs, as they have outage substitution requirements to meet. RAAIM exposure is another reason contracted capacity is not included in RA filings when the capacity is not needed for compliance. 

For CSP participation, PG&E suggests revising rules for participation in the intra-monthly process. With today's rules, a resource should be available for two months to participate in the intra-monthly process. To increase participation, the granularity of the intra-monthly CPM-designation could be revised and limited to days within the month and not extend the designation to the following month. This change could also provide more flexibility for CPM-designation for EDAM-RSE shortfalls purpose. 

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

PG&E supports developing a causation-based approach to allocating EDAM RSE failures. In the CISO BAA Participation initiative, PG&E suggested a framework that would both (i) help all of the LSEs provide sufficient supply in the day-ahead; and (ii) provide a metric to allocate revenues/surcharges associated with the EDAM RSE. At the center of this framework is an LSE-specific minimum/target quantity of bids that they need to provide for the CISO BAA to collectively meet the EDAM BAA. The target can then be used for allocation of revenues/penalties. 

At the time, CAISO indicated it cannot provide such a target at the SC level as CAISO cannot map the LSE’s obligation to the SC’s bids. This is a high priority issue that should be addressed.  

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

PG&E does not necessarily support developing new products to meet the EDAM RSE or to incent resources to be shown. But if we were to explore a new product, it should be outside the CPM/CSP process and be equivalent to a must-offer obligation for specific hours.  

As noted above, the CISO BAA portion of CAISO needs to act like a conductor, ensuring all the LSEs act in concert to collectively, and consistently, meet the EDAM RSE. If the CAISO can provide entity-specific minimum bid targets, it would go a long way towards ensuring consistent reactions to advisory RSE information.  

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

From discussion in the day-ahead sufficiency initiative, PG&E understood the bidding deadline change was not fully necessary. 

As noted above, CAISO needs to provide entity-specific bid quantity targets to ensure that the CAISO-BAA RSE is met collectively and consistently. 

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

Not at this time. 

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

Renew Home’s comments focus on demand response and do not offer a specific holistic approach to the RA process at the ISO at this time.

2. Does your organization have other feedback not already captured in the questions above?

No.

3. Would your organization like to present at a future meeting on a specific proposal?

Renew Home is available to present on demand response related topics at the ISO’s request.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

Renew Home appreciates the significant work that CAISO has undertaken in providing background information to help inform stakeholders participating in the RAMPD initiative.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

No comment at this time.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

No comment at this time.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

No comment at this time.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

No comment at this time.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

No comment at this time.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

No comment at this time.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

No comment at this time.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

The availability and incentive reforms for demand response should be managed at the LRA level. CPUC jurisdictional demand response provider penalties should be assessed by the CPUC’s Utilities Enforcement Branch (UEB) similar to RA citations and penalties.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

For demand response, Renew Home would like to see in the future straw proposal an approach that permits the LRA to assess availability and performance. The CPUC and CEC have jointly been working on an incentive-based qualifying capacity methodology for demand response that incentivizes bidding according to capabilities and performance according to bids. This methodology will be contemplated by the CPUC in R.23-10-011 in Track 3. As noted above, the assessment of performance and imposition of penalties would be managed at the LRA level under this framework.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

RAAIM should not apply to demand response resources that are subject to an alternate availability and performance paradigm at the LRA level as this would result in a duplicative penalty framework. CAISO proposed a similar approach in a previous proposal titled “CAISO Market & Infrastructure Policy Resource Adequacy Availability Assessment Mechanism (RAAIM) Exemption Option For Variable-Output Demand Response Valued Under an Effective Load Carrying Capability (ELCC) or Similar Methodology dated July 6, 2021.”

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

No comment at this time.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

No comment at this time.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

No comment at this time.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

No comment at this time.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

No comment at this time.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

No comment at this time.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

Renew Home does not oppose moving the day ahead bidding deadline to 9am.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

No.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

No comment.

2. Does your organization have other feedback not already captured in the questions above?

Not at this time.

3. Would your organization like to present at a future meeting on a specific proposal?

Not at this time.

4. Does your organization have any feedback back on the process for the RAMPD initiative?

Not at this time.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

SDG&E recommends that CAISO consider running high/low renewable generation sensitivities as part of the overall LOLE process. CAISO could also consider sensitivities regarding extreme heat/weather, as well as the CPUC’s recent Decision Determining Need For Centralized Procurement Of Long Lead-Time Resources (D.24-08-064).

Additionally, given the difference between the CPUC and CAISO RA LOLE modeling methodologies, SDG&E recommends that CAISO show the difference between what CAISO considers an LOLE event (insufficient reserves and leading to Energy Emergency Alert (EEA) 1 and 2 events) and a true EEA 3 firm load shed event.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

SDG&E continues to recommend that CAISO and the CPUC work together to minimize discrepancies between RA programs. CAISO should actively provide feedback on the CPUC’s analysis, and vice versa, to ensure that the underlying inputs and assumptions are as accurate and consistent as possible. CAISO’s methodology should align with the CPUC’s to the extent possible, but the same portfolio should be able to comply with both entities’ RA requirements. In other words, the PRM should be a product of resource counting rules and modeling studies, and given the connection between these metrics, they should reflect a reliable portfolio regardless of the counting method used. For example, an ICAP valuation without outage or derate reductions would likely result in a higher PRM than a UCAP valuation, but the physical resources needed to achieve that PRM should not materially change. In general, however, the PRM will need to be adjusted to reflect whatever accreditation method is eventually adopted. Both CAISO and the CPUC should understand and discuss any potential discrepancies between their programs, and careful consideration should be given to how each entity calculates/modifies counting methods in the event they differ.

Regarding the timing of updates to these metrics, similarly, SDG&E recommends that CAISO align with the CPUC to the extent possible. Both Track 2 and 3 of the CPUC’s RA program provide clarity on the CPUC’s process and timing.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

SDG&E does not propose a specific UCAP design at this time, but recommends that CAISO reconsider the need for substitution requirements and incentive mechanism penalties depending on the ultimate UCAP design. Combining UCAP with substitution requirements and incentive mechanism penalties may lead to unintentional price spikes in the near term for capacity.  

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

No comment.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

As mentioned above, should CAISO adopt a UCAP methodology, it should reconsider the need for substitution requirements and associated penalties. A mandatory substitution buffer would likely only serve to increase costs. However, should substitution requirements be deemed necessary, among the options presented, the pool may be able to provide the transparency and operational expediency SCs need to meet a substitution obligation. That said, it is unclear whether SCs may hold back capacity from the pool, and if so, at what level. Additional detail on how each of the proposals discussed in the Issue Paper might be structured would be helpful in assessing the pros and cons (e.g., would the resources offered into the pool be subject to penalties?).

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

At the November 18 workshop it was mentioned that the topic of “urgent” outages will be discussed in more detail on December 13. SDG&E looks forward to learning more about this proposal.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

As mentioned above, should CAISO adopt a UCAP methodology, it should reconsider the need for substitution requirements and associated penalties.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

No. comment.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

As discussed above, SDG&E recommends that RAAIM be adjusted in relation to how UCAP is designed.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

Please see the response to Question 13.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

No comment

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

No Comment.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

No comment.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

No comment.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

SDG&E is supportive of its proposal as discussed in its comments on the Track A1 draft final proposal under the EDAM ISO BAA participation rules initiative.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

SDG&E supports comments made at the November 18 workshop that the introduction of new products should not be considered until after EDAM has been implemented.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

SDG&E would not support a binding 9am deadline but would be open to an advisory 9am deadline. A 9am binding deadline would impact gas trading, outage management deadlines, and pricing models provided by 3rd party vendors, as well as further strain an already compressed window for schedulers.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

Not at this time.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

Six Cities’ Response:  As this initiative moves forward, the Six Cities support continuing coordination among the CAISO and all Local Regulatory Authorities (“LRAs”) regarding Resource Adequacy (“RA”) objectives and requirements.  The Six Cities appreciate the CAISO’s ongoing respect for resource procurement policies and authority of all LRAs within the CAISO Balancing Authority Area (“BAA”) as the CAISO reviews and considers potential modifications to multiple tariff provisions, including default RA requirements.  At this time, the LRAs for the Six Cities have not developed a comprehensive formulation of updated RA policies, but the Six Cities expect to participate actively in the development of the CAISO’s default RA provisions and to receive valuable input through this initiative.  The Six Cities’ responses to questions on specific topics below identify elements of RA policy that are of particular interest to the Cities or raise specific concerns.

2. Does your organization have other feedback not already captured in the questions above?

Six Cities’ Response:  See the response to Question No. 22 below.

3. Would your organization like to present at a future meeting on a specific proposal?

Six Cities’ Response:  At this time, the Six Cities have not identified any topics on which they wish to present.  As noted below, the Six Cities continue to support and urge prompt consideration of conceptual proposals they presented on at the February 13, 2024 working group regarding approaches for expanding capacity available to support reliable operation of the CAISO BAA.  

4. Does your organization have any feedback back on the process for the RAMPD initiative?

Six Cities’ Response:  The interdependencies between different elements of RA policies create significant challenges to achieving a holistic RA framework that consistently supports reliability objectives.  The Six Cities recommend that the next step of the process focus on two tasks.  The first task should be to identify potential tariff or policy revisions that represent “low-hanging fruit” (i.e., revisions that could be implemented relatively quickly and would have limited risk of unintended consequences) and to move forward promptly with policy development for such revisions.  In general, the Six Cities recommend immediate focus on measures that can be expected to expand the pool of resources eligible to provide RA capacity and the actual availability of such capacity to the CAISO, especially during stressed conditions. 

The second task, which should proceed in parallel, should be to determine a sequencing approach to address the elements of RA design that are highly interdependent.  The objective for the sequencing approach should be to allow the initiative to move forward to develop policy proposals while remaining open to reevaluation of individual proposals in light of interdependencies both within the RA scope and in relation to other initiatives.  Both of the tasks described above should include consideration of the topics slated for further working group discussion at an appropriate point (e.g., consideration of allowing more granular RA showings and substitution options). 

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

Six Cities’ Response:  The Six Cities recommend further evaluation of demand response transparency and performance in the assessment of CAISO BAA reliability.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

Six Cities’ Response:  At this time, the Six Cities have not identified a specific package of counting rules and planning reserve margin they prefer.  However, the counting rules and planning reserve margin constitute elements of the overall RA framework that are highly interdependent.  The counting rules and planning reserve margin should not duplicate planning features in a way that unreasonably inflates costs for maintaining reliability.  For example, to the extent resource capacity is discounted to reflect anticipated forced outages, the planning reserve margin should not also include an overlapping or duplicative allowance for forced outages.  The Six Cities remain opposed to establishing a “mandatory minimum” planning reserve margin level, and reiterate the importance of preserving the authority of local regulatory authorities to establish RA policy for the LSEs that they regulate.

While reserving their position on both a planning reserve margin and specific planning rules, there are some high-level principles that the Six Cities support:

• The Six Cities support an approach to variable energy resource (“VER”) counting that produces a single value; whether that value is based on an exceedance, ELCC, or other approach.  The CAISO should publish a list of qualifying capacity values based on this default methodology, and local regulatory authorities should then have the ability to review the published values and direct the CAISO to reflect an updated value for individual resources based on the LRA’s approved counting methodology. 
• For entities that choose to rely on the values determined by the CAISO through its default rules, the CAISO should publish or make available data and information that enables LSEs to verify how the CAISO applied its default methodology to establish the default value.  These methodologies may include factors that result in variances among technology types and potentially based on region. 
• For VERs that are imports, all Maximum Import Capability (“MIC”) requirements for such resources should be based on CAISO default counting values, rather than values determined by individual local regulatory authorities.  This will result in uniform use of MIC for RA imports that are VERs.  The Six Cities are open to discussions about the interaction of MIC with default and LRA-established counting rules, with the objective of maximizing the MIC available for use while preserving LRA authority over resource qualification and counting requirements.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

Six Cities’ Response:  At this time, the Six Cities have not identified a preferred method for UCAP design and implementation.  In view of the significant and continuing changes in the composition of the resource fleet available to the CAISO BAA, the Six Cities are concerned that focusing primarily on forced outage data for thermal resources may overlook more critical impacts on resource availability at times when system conditions are stressed.  With respect to any UCAP methodology that may be proposed, the Six Cities urge adoption of a transition period for implementation in order to minimize disruption of previously adopted resource plans and related commitments.

Any UCAP design should not introduce excessive complexity into the RA program.  LSEs and resources need to be able to verify the UCAP values, and there should be data and information available to enable them to do so.  Additionally, there should be an established process for updating the UCAP values as necessary, and this process should allow LSEs and/or resources to understand the basis for any updates to the UCAP for individual resources. 

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

Six Cities’ Response:  The Six Cities do not have recommendations for modifications to the CAISO’s unit testing program at this time.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

Six Cities’ Response:  A mandatory substitution buffer applied to individual LSE resource procurement appears potentially duplicative and unnecessarily expensive.  The Six Cities support further consideration of a voluntary substitution pool facilitated by the CAISO.  Design of the framework for such a pool should include consideration of more granular opportunities for substitution of resources and supply offers (e.g, daily substitution ability and supply offers) as well as compensation for the Scheduling Coordinators (“SCs”) that make capacity available to the pool.

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

Six Cities’ Response:  The Six Cities support further evaluation of revised definitions of outages, including potential adoption of an urgent outage definition and consideration of revisions to facilitate opportunity outages.  In general, outage definitions should be based on reasons for outages, not the date of submission of an outage request.  With respect to penalties and substitution, resource unavailability that is due to outages or restricted operations on the gas system should be treated in the same manner as transmission induced outages. 

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

Six Cities’ Response:  The Six Cities recognize the logical interdependencies among requirements for outage substitution and other elements of the RA framework such as counting rules and planning reserve margin, including a potential for overlapping and unnecessarily expensive obligations.  At this time, however, the potential RA design elements remain so open-ended that attempting to evaluate interdependencies seems premature.

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

Six Cities’ Response:  As a practical matter, relying on enforcement of availability and performance expectations through contractual terms alone does not seem likely to be effective or consistent.  The Six Cities recommend that availability and performance incentives generally be administered by the CAISO.  In addition, the Six Cities recommend that availability and performance incentives be aligned with conditions during which the system is stressed or when there is risk of Resource Sufficiency Evaluation (“RSE”) test failure by the CAISO BAA.  While RA sufficiency and satisfaction of RSE requirements involve distinctly different metrics, failure of RA resources to make their committed capacity available when needed to pass RSE tests should be considered in developing performance incentives.  It would be appropriate to consider other aspects of availability or performance incentives when other RA design elements relating to qualifying criteria, planning reserve margin, and substitution obligations have been fleshed out.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

Six Cities’ Response:  In contrast to a number of other topics within the scope of this initiative, there appears to be a widely shared consensus that the RAAIM methodology is not achieving the objectives for which it was implemented and, in fact, appears to be counter-productive (e.g., by creating a disincentive to show contracted RA capacity in excess of monthly RA requirements.)  In light of the ineffectiveness of the RAAIM in achieving its objectives and the disincentives itcreates, the Six Cities recommend elimination of the RAAIM altogether on a provisional basis, retaining authority to reinstate the mechanism if there is a significant increase in failures to bid RA capacity.  At a minimum, the Six Cities recommend prompt consideration of modifications to the RAAIM to mitigate current disincentives as described below in response to Question No. 14.  The Six Cities would support further consideration of modifications to the RAAIM (or a RAAIM-type mechanism) depending on other changes to the RA design.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

Six Cities’ Response:  As noted above, the Six Cities recommend provisional elimination of RAAIM altogether.  If the CAISO is not willing to consider provisional elimination of the RAAIM, the Six Cities recommend considering the following potential modifications: (a) aligning the application of RAAIM more closely with potential scarcity conditions or potential failure of the RSE test, and (b) to encourage greater transparency regarding contracted RA resources, limiting the application of the RAAIM to resources that are necessary to satisfy RA requirements in a given month plus capacity that has been procured for substitution. 

In terms of alternative approaches to incenting availability and penalizing unavailability, the Six Cities encourage the CAISO to consider measures that would be targeted at supply that fails to meet must offer obligations by assessing such resources costs to secure replacement daily capacity from the resource substitution pool.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

Six Cities’ Response:  The Six Cities support evaluation of energy sufficiency during net peak hours and do not oppose consideration of possibly expanding the CAISO’s CPM authority to cover procurement to address circumstances where there are or may be concerns with energy insufficiency.  At this time, the Six Cities are unsure if it will be feasible to design an allocation methodology for CPM costs incurred to address energy insufficiency that is based on principles of cost causation, but the Six Cities are open to discussion of cost allocation approaches.  As a broader principle, the Six Cities continue to believe that the use of backstop procurement should be discretionary and should occur only in circumstances where there is an actual need to be addressed, rather than as an automated process in the event RA procurement does not meet a specified level (and in the absence of a need for additional capacity or energy).

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

Six Cities’ Response:  The Six Cities acknowledge the CAISO’s concerns about the decline in capacity offers into the CSP.  This observed decline of CSP offers certainly suggests a problem that merits consideration of possible changes to the CSP.  Although pricing under the CPM program provides one lever for the CAISO to use in addressing illiquidity issues, the CAISO could also consider changes to the level of commitment required of resources, which may be reluctant to undertake a lengthy CPM commitment to address a transient need.  For example, page 82 of the Issue Paper describes the CSP’s fairly strict set of requirements that result in limited ability to remove CSP-offered capacity once offered and a long (i.e., 30 or 60 day) potential commitment period.  Increased flexibility through measures like enhanced granularity in commitments or greater ability to recall capacity under specified circumstances may help with increasing the availability of CSP offers, and the Six Cities are supportive of measures that would help address the inflexibility in the current program.  That said, the Six Cities note that the CAISO has relatively recently adopted changes to the CPM program (i.e., Track 1 of the CPM Enhancements initiative, conducted in the 2022-23 timeframe) in an attempt to enable additional supply to participate in the CPM program, and it sounds like these changes may not have resulted in material amounts of additional supply. 

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

Six Cities’ Response:  The Six Cities are concerned with escalating costs throughout the bilateral capacity market, and it appears that the soft offer cap price may be contributing to a reduction in CSP supply, especially when combined with the programmatic features discussed in response to Question No. 16.  It may be that adjusting the soft offer cap to a higher level in specified conditions or during specific intervals, such as seasons, months, weeks, or even days, when coupled with other measures to mitigate the impact on ratepayers of increased prices, could help address the CAISO’s liquidity concerns.  The Six Cities stress that any measures designed to increase this price should be narrowly tailored and limited to specific circumstances and needs, rather than an across-the-board increase.  For example, a  pricing approach based on market prices rather than going-forward costs of resources could result in undue ratepayer exposure to costs if the CAISO maintains its current practice of designating CPM resources for a full 30 day period, versus allowing a more limited designation period that is targeted to actual need.   

Thus, on balance, while the Six Cities would not oppose consideration of a revision to the current soft offer cap methodology, it may be premature to consider increases or other changes in the soft offer cap before determining other program elements that may help address the CAISO’s concerns.  The Six Cities would not want to see the CPM soft offer cap price exacerbating overall high prices in the region, and so any consideration of changes to the soft offer cap should be accompanied by a commitment to revisit pricing methodologies in the future. 

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

Six Cities’ Response:  Impediments are a combination of all factors listed in the Issue Paper, but fundamentally, showing excess capacity on RA submittals under the currently-applicable rules exposes resources to penalties and restricts substitution opportunities, and there is no incentive or benefit associated with showing any extra resources.  Because the Six Cities understand the CAISO’s concerns about visibility, the Six Cities support the CAISO’s recommendation for monthly reporting on any capacity that is expected to be available in addition to shown RA, but the disincentives that currently exist must be removed.  In particular, the Six Cities would support the ability of LSEs to report to the CAISO all of the additional capacity that they may have, either as owned resources or under a contract, and the reason that the capacity is not being shown as RA.  For example, the reasons could be that the resource is energy only, has been sold to another party outside of the CAISO, is not needed to meet the LSE’s RA requirements, is reserved for substitution, or other reasons.  However, with any agreement to provide the CAISO with a list of above-RA resources, there should not be any automatic imposition of additional availability requirements on additional capacity shown in such reports. 

Further, the Six Cities reiterate their request that the CAISO enable LSEs to show resources on their RA supply plans even if such resources are unavailable for part of the RA month.  Changing the monthly RA showing process to permit different RA values for internal RA resources for different days of the month, as is permitted for import RA resources, would help address the visibility concerns that the CAISO has identified and expand availability of capacity for outage substitution purposes.  This is an important change that is needed to enhance the flexibility of the RA fleet. 

The Six Cities’ recommendations around visibility and reporting are closely tied to the concept of a voluntary RA pool, which the Six Cities support.  Resources that are not designated on monthly RA plans, but that are reported to the CAISO as available (i.e., those that are not on outage or sold externally and serving as a high priority export) should have the option to accept a daily must offer obligation and provide RA supply to the CAISO in exchange for daily compensation—the Six Cities are not proposing a specific methodology for calculating this compensation at this time—and penalties if the resource becomes unavailable after accepting the daily commitment to provide capacity. 

An open question that the Six Cities are still considering is the relationship of the pool to the existing CSP.  It could be that the CSP and any pooling concept could be combined or at least synchronized.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

Six Cities’ Response:  The Six Cities do support a causation-based approach to allocation of EDAM RSE failure surcharges, and they have previously recommended development of a two-tiered approach to allocating these costs.  Any allocation of RSE failure costs should be based on consideration of all RSE-eligible supply and exports counted as CAISO BAA obligations in applying the RSE test.  The first tier RSE failure surcharges should be allocated to SCs that failed to offer RSE-eligible supply equal to or greater than metered demand or scheduled exports in proportion to each such SC’s supply shortfall.  The Six Cities would also like to explore the concept of allocating RSE failure surcharges to supply resources with must-offer obligations to the CAISO that fail to comply with such obligations as a part of the Tier 1 allocation.  Tier 2 would represent an allocation to metered demand and exports.  The Six Cities’ proposed approach is outlined in their June 14, 2023 presentation within the EDAM ISO BAA Participation Rules initiative.  The Six Cities oppose any allocation of RSE failure costs based on RA showings.

The presentation is available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/SixCitiesPresentation-AllocatingRSEFailureSurcharges-Revenues-EDAMISOBAAParticipationRules-Jun14-2023.pdf

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

Six Cities’ Response:  As a general matter, the Six Cities do not support the introduction of new capacity products at this time, but they do support the formation of a voluntary pool that would accommodate acceptance of daily RA commitments in exchange for compensation.  Apart from consideration of products resulting from formation of the RA pool, the CAISO should defer consideration of other new capacity products until there has been sufficient experience with EDAM design features so that the CAISO and stakeholders can assess if there is a need for new products.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

Six Cities’ Response:  The Six Cities do not oppose this proposal.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

Six Cities’ Response:  The Six Cities reiterate the importance of considering both interdependencies between RA policies and other market rules (e.g., price formation enhancements, new products under EDAM) and the inter-operability of the CAISO’s RA requirements with RA policies adopted by EDAM entities.  With consideration of augmented requirements within the CAISO, the CAISO should ensure that it is not creating opportunities for external balancing authority areas to lean on the CAISO or CAISO resources for reliability purposes. 

The Six Cities also reiterate their request for prompt consideration of recommendations presented by the Six Cities during the working group process for: (1) crediting against an LSE’s forecasted monthly peak load the load reducing capacity for in-front-of-the-meter battery resources, and (2) allowing locally developed projects to meet some percentage of RA needs without deliverability to the entire network, not to exceed load within a specified local area.  The Six Cities view these suggestions as straightforward and capable of being implemented quickly and easily; they are low-hanging fruit that can help to mitigate the challenges posed by over-crowding of the CAISO’s interconnection queue.  They are comparable to demand response programs or Virtual Power Plant concepts, but they would provide superior reliability benefits, because they could be visible to CAISO operating personnel and dispatchable.  The CAISO has not responded substantively to these suggestions by the Six Cities, nor identified any reasons why they could not or should not be implemented.

In addition to the proposed treatment of local area resources described above, the Six Cities continue to recommend consideration of modifications to deliverability requirements to expand availability of resources to the CAISO, including provisional or short-term recognition of import resources that lack an assigned allocation of MIC but could be delivered over paths that have unused MIC.

The scope of this initiative also should include reevaluation of the need for Flexible RA requirements in light of the implementation of Imbalance Reserves in the EDAM market design.  Implementation of the Imbalance Reserve and Reliability Capacity products are likely to affect the quantity of flexible resources that are needed and how flexible resources participate in the market.

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

SCE believes that the CAISO needs to consider changes to RA similar to the Slice of Day (SOD) mechanism that has been adopted by the CPUC. It is clear, both from the recent history of when reliability issues have arisen and from the CAISO modeling, that the peak hour is no longer the only period when reliability issues are likely to occur. Recently, reliability issues have typically arisen during the net-peak hour and an examination of the seven-day RA look-ahead provided in the Today’s Outlook demonstrates this point. Further, the results of the modeling the CAISO presented hinted that there may be issues starting to arise during the overnight periods in winter. This should not be surprising and, indeed, is the reason that the CPUC has modified its RA mechanism to SOD. Looking at the peak hour worked well when all (or the great majority) of generation was able to respond to dispatch instructions whenever they were issued.  However, our grid today is very different, and the changes are continuing. We regularly see close to 20,000 MW of renewable energy on the grid during the late morning and early afternoon hours when solar is producing. We have over 10,000 MW of battery storage on the grid now and it is expected to increase substantially within the next year. Neither of these types of resources can respond to dispatch instructions at any time. Renewables can only generate when the sun is shining or wind is blowing, and battery storage is only available if there has been sufficient excess energy to allow the resources to charge. An RA program that fails to acknowledge these realities will not lead to reliability.

SCE recognizes that some LSEs and/or LRAs may have issues with such a radical change to RA, but nonetheless the discussion should be held. If those entities believe that reliability can be achieved with the current program without considering hours other than the peak hour or energy sufficiency, they will have to convince the rest of the market of that. Even if the CAISO market is not inclined to adopt a SOD mechanism, it must adopt changes to consider the availability of resources at non-peak hours and to ensure that there is sufficient energy to charge storage.

At a minimum, the CAISO process must recognize that the counting rules and PRM used in the two methodologies will be different. As the discussions at the workshops and in the issue paper have demonstrated it is not appropriate for entities continuing to use a peak hour RA to use the counting rules that are designed to apply to the SOD mechanism. Efforts will need to be made to ensure that all LSEs contribute equally to the reliability of the grid.

SCE also believes that as we go through the process of examining and modifying RA, it will be important to consider not just what might work today, but also what will work for the grid we expect to have in the future. For example, the grid in 20 years is expected to contain very large amounts of solar and storage resources, but also still retain most of today’s natural gas fired resources, although they will not be used anywhere close to their usage today. This expected reality has significant implications for how those resources recover their costs and how to measure their availability. The mechanisms that we develop in this process should be forward-looking enough to be able to continue to provide reliability with such an expected grid.

2. Does your organization have other feedback not already captured in the questions above?

3. Would your organization like to present at a future meeting on a specific proposal?

4. Does your organization have any feedback back on the process for the RAMPD initiative?

One thing that is clear from the discussion in the issue paper is that there will be many issues that will require coordination between the various tracks. The CAISO will need to consider these interactions not just now when we are starting the process, but also as the various tracks move forward. It will likely be necessary to revisit schedules to accommodate the needs of a different track.

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

SCE encourages the CAISO to conduct a LOLE analysis for the actual RA resources provided by LSEs in 2024 and using the assumptions that would have been used in constructing the LOLE for the 2024 RA year. 

Alternatively, the CAISO could provide a comparison of the actual RA resources provided for each month of 2024 and the resources assumed in the most recent short-term modeling analysis that was presented in October. The CAISO should provide the resource list for each scenario they studied. 

Either of these options will help provide stakeholders with a baseline for the LOLE provided by the actual 2024 RA.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

As discussed above, the CAISO should be considering a methodology that addresses the issues already arising in reliability planning and which the current peak hour RA method does not address. To ensure the reliability of the grid, the CAISO will need to at a minimum consider the net peak hour and energy sufficiency.

CAISO must establish different counting and PRM rules depending on the structure of the RA program. It is clearly not appropriate to use counting rules based on the peak hour resource profiles for the SOD mechanism when the PRM and mechanism is only looking at the peak hour.

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

SCE has not yet determined its preference for a UCAP design or implementation method. SCE prefers that any mechanism rely on unit-specific data rather than resource type or generic outage information to determine the UCAP values in order to provide the correct incentives to the resources.

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

SCE does not support a mandatory substitution buffer provided by the LSEs. The existing PRM already incorporates a buffer for forced outages and the monthly nature of the existing RA mechanisms provides opportunities for resources to not be RA resources in specific months and to take maintenance outages in those months without needing to provide substitutes. The generators are in the best position to make sure that their resources are maintained in the most efficient method and to schedule maintenance to minimize the costs of the maintenance outages. Forcing LSEs to cover this will likely not provide the correct, or efficient, amount of resources in the substitute pool, and depending on how those resources are awarded may simply end up benefitting resource providers who are not as good at managing the maintenance outages for their generators. For resources such as local resources which must provide RA in all months, the CAISO should be able to work with generators to determine when they can take a planned outage without compromising the reliability of the grid and without requiring substitution, which may not be available in the local area anyway. 

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

The CAISO’s current outage definitions, which differ from what is reported in GADS, should be reconsidered. This is further emphasized by the difference between the CAISO BAA definition of a forced outage as an outage with less than seven days notice, and the Reliability Coordinator Procedure RC0630 definition of “Forced Outage – Facility/equipment that is removed from service real-time with limited or no notice.” Adding the concept of an “Urgent” outage may be helpful but does not resolve issues with forced outages being defined as less than 7 days notice. The potential changes to outage definitions must be discussed along with potential UCAP mechanisms and outage and substitution rules for RA resources.

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

SCE remains open to different possibilities but is leaning towards a standard mechanism implemented by CAISO. This would put every generator and LSE in a similar place and the CAISO is the only entity that has a connection with all generation.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

SCE remains open to different possible structures for UCAP, reforming or removing RAAIM, and including potential pay-for-performance mechanisms. SCE believes that a wholistic approach to evaluating the various options should be taken. The overall goal should be to provide proper incentives for resources to be available and perform when needed and to help guide retirement decisions. The analysis should look at the total compensation received by generators. This includes capacity or RA payments, energy and AS revenues, RAAIM, pay-for-performance, and/or other availability or performance penalties. As natural gas fired generation is used less and less for energy, their capacity payments will likely become more important in keeping them from retiring. Similarly, when their energy revenue is reduced, the impacts of the expected energy revenue in those specific hours they run, and any potential performance penalties or pay-for-performance incentives may take on additional importance.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

The discussion of how RAAIM might be modified, or whether a different type of performance incentive should be adopted must be considered along with an adopted UCAP mechanism. There must be an analysis of the structure of the markets and their impacts on the resources. That structure should provide incentives to the resources to actually perform when they are needed, take into account the potential risks of significant unavailability charges, and provide incentives to perform maintenance so the plants remain reliable. This analysis must be forward-looking and consider potential impacts when natural gas plants are not used much and only during extreme periods.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

As stated several times above, SCE believes that to ensure reliability in a rapidly changing grid, the CAISO must start considering the adoption of a SOD mechanism, or at a minimum expanding on the current peak hour RA concept to include at least net peak hour and energy sufficiency. Without sufficient energy, it is not clear what value storage brings. The existing CAISO CPM authority could likely cover any perceived need through the use of a “significant event” CPM designation. However, while this might be a usable method to prevent reliability issues, there are no clear rules or even guidelines on how expected shortages during net peak (or other) periods or expected energy insufficiencies would lead to a need for backstop procurement or how those costs should be allocated.  These issues should be addressed now, before they become significant issues.

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

SCE is not certain if the decline in offers to the CSP is a result of the existing soft offer cap, or the tightness of the entire capacity market. CPM is a backstop mechanism and should not be impacting the marketplace, but rather providing a failsafe against market failures. The goal should not be to ensure resources are bidding in to the CSP, but rather to minimize the need for CPM designations by ensuring the RA program is working properly, and providing a mechanism that can procure resources that were not provided by the RA mechanism.

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

The CPM should not have market role. It should only be used when for some reason the market has failed to secure sufficient resources to ensure reliability. If the market is working properly, there is no need for CPM. Resources should not be avoiding participation in the market in anticipation of getting a CPM award at the soft offer cap, and, similarly, LSEs should not be relying on the CPM as a way of avoiding high prices for capacity.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

The reasons why entities (LSEs or generators) don’t show all their contracted RA resources have been discussed extensively in the workshops. The workshops should focus on developing methods to allow resources to indicate their status to the CAISO without incurring MOO, potential performance and/or availability penalties, and still being able to be used for substitution or go on a planned outage without substitution.

The market should consider the need for information on resources different from the requirements of RA resources. LSEs and generators should be able to decide which resources they wish to commit as RA resources with all the requirements associated with being an RA resource. However, CAISO, as the market operator and BAA operator, should be able to know the status of non-RA resources, especially when those resources have accepted commitments to provide RA services to non-CAISO entities or areas. CAISO may also have a need for knowledge of who controls the capacity of the resources, i.e. whether the generator retains that control or has sold it to another entity, such as an LSE.

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

SCE previously suggested that RA could be used as a proxy for whether LSEs have supplied sufficient resources to avoid the RSE failure surcharges. However, as part of such an effort, the RA programs of the different LSEs must be “calibrated” so that each LSE is providing similar resources or reliability.  Any mechanism should also take into account non-RA resources that may be used by LSEs to meet their market needs.

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

The CAISO should be careful not to create additional capacity products that are not RA. Such products could reduce the amount of resources which bid for RA, and there is already some confusion about how non-RA reliability products, such as the SSR, impact RA and reliability.

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

SCE doesn’t feel that it would be too much to ask for RA resources to be required to bid into the day-ahead market by 9am. However, as part of the discussion of this change, the CAISO needs to clearly specify how it would use that information to avoid the RSE failures. CAISO should demonstrate a mechanism that can both determine after 9am that there is an RSE failure and that can then procure extra capacity that could be bid in by 10am. There is no point in revising the MOO for RA resources to bid into the day-ahead market by 9am if it won’t help with resolving any RSE failures.

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

Sunrise Power Company, LLC, is part of a leading national Independent Power Producer, Milepost Power.  Milepost Power owns and operates approximately 900 MW of electric generating assets in California.  We are a provider of Resource Adequacy (RA) and have vested interest in promoting a stable and transparent framework to ensure proper investment in our facilities to continue maintaining electric reliability for the ratepayers of California.   

We believe that a truly holistic RA process has been reasonably sketched out by CAISO in their November 7 “Issue Paper on Resource Adequacy.”  We encourage stakeholders to commit to exploring a comprehensive package of reforms with an emphasis on equitable resource counting, standardization of rules across Local Regulatory Authorities (LRAs) and operational flexibility for CAISO and suppliers in the electricity market.  Milepost believes that, at a minimum, stakeholders need to address two broad categories of the RA program and recognize a need for consistency between the two categories.  Decisions made in one area will directly affect the other.  Harmonization is a critical component of a holistic RA process. 

1. Standardized Counting Methodologies That Recognize Resource Reliability Across Entities 

Ensure consistency in resource accreditation methods between the CPUC, LRAs and CAISO.  With the dramatic changes in the resource mix and load profiles the CAISO will need to establish new counting rules to ensure consistency in establishing the Planning Reserve Margin (PRM) resulting in at least a .1 LOLE at the CAISO BAA level. This consistency could involve adopting uniform metrics like Unforced Capacity (UCAP) for all resource types, however shifting to UCAP will require thoughtful discussion on the both the mechanics of calculating UCAP and how those mechanics fit into the RA programs administered by non-CAISO stakeholders.  Such topics that would be pre-requisites for discussion: 

1. Determination of which subset of operating hours can best align a resource’s capacity accreditation with its actual availability to the market during critical reliability hours.  Milepost Power believes that these hours should be tailored to the greatest risk of expected unserved energy and loss of load probability.  CAISO’s Supply Cushion UCAP, WPP’s Equivalent Forced Outage Factor during Capacity Critical Hours (EFOF CCH) and PJM’s class-based ELCC with unit performance adjustments are all worth further evaluation; 

2. A thoughtful reevaluation of the capability of each resource and the testing of that capability.  Milepost Power believes that stakeholders should explore more accurate adjustments of NQC values given ambient conditions of the operating hours defined in (a); 

3. A determination on which accreditation factor, contingent on (a) and (b) would be appropriate in determining a translation from capability to UCAP.  As CAISO points out, there are many approaches to determining forced outage rates and there are shortcomings to a UCAP approach that could be buttressed by evaluating unit contribution to system reliability through ELCC assessment.  Milepost Power believes that adopting UCAP will require considerable administrative time and effort, and would suggest that stakeholders embrace a more comprehensive translation of capability to UCAP through: 

1. Adopting a methodology that calculates a resource-specific translation factor.  While a resource based marginal accreditation factor reflecting the contribution of reliability to the overall system for all resource types may be the foundation of a translation factor, each individual resource should be given an accreditation for its particular contribution based on outage history.  A class average EFORd would be inequitable and inefficient; 

2. Applying the methodology in (i) to all dispatchable resource types, including battery storage, imports and hydroelectric; 

3. Determine how different seasons may have different impacts on resource-specific translation factors; 

4. Determine how to incorporate the expected system wide translation factor can be incorporated into establishing PRM in a timely manner to ensure LSEs have certainty on what they need to purchase; 

5. Publishing the resource-specific translation factor on a timeline that aligns with the deadline for the Annual Filings for the CPUC jurisdictional RA programs.  Given the bilateral nature of RA in CA, any translation factor applicable to the prompt delivery year needs to be published with enough time to ensure proper rebalancing of contractual obligations with counterparties, so that all LSEs can fulfill their compliance obligations; 

4. Ensure that the methodology laid out in (a)-(c) is adopted across the entire RA stakeholder universe in a consistent, uniform fashion to ensure the CAISO BAA is reliable.  Milepost Power believes that CAISO is both best suited, and ultimately has the responsibility of delivering on, the nuances of actualizing Resource Adequacy into dependable, deliverable electricity and reserves in operation;  

5. Ensure there is a proper discussion around a transition period for market participants to understand the impacts and permit rebalancing.  Given the highly bilateral nature of the California RA market, we must recognize that LSEs and Suppliers have entered into contractual arrangements that may extend beyond the implementation of any reform.  Thoughtful discussion around the implementation timeline, with a focus on mitigating extreme disruptions in the marketplace, should be part of the holistic approach. 

2. Incentives for Reliability and the Role of Substitution 

The standardized counting methodologies for forward showing represent a first step toward ensuring system planning is consistent with reliability planning.  A consistent, uniform method on counting resources across the CAISO BAA should give stakeholders, in particular the CAISO, confidence that it can better evaluate changes to the resource mix.  The actualization of RA in the spot electricity market requires a process for rebalancing RA obligations due to changes in availability, particularly outages.   

RAAIM reform would likely be a necessary part of adopting a uniform counting methodology.  First, depending on the counting methodology, there may already be an incorporation of unavailability that properly penalizes resources.  Second, RAAIM has already been shown by stakeholders to be an ineffective and inefficient solution to availability.  It is difficult to have a robust discussion on RAAIM without having made additional progress on standardized counting.  Better accreditation and standardized counting could help eliminate the need for RAAIM in its entirety, or at least provide for a discussion around tailoring availability incentives and penalties around the times where the system is indeed short energy and reserves, rather than just penalizing and rewarding availability in an arbitrary fashion.   

Furthermore, there is considerable room for improvement around planned outage scheduling and the Substitution RA market.  Fundamentally, Milepost Power does not object to the need to procure Substitute RA in the bilateral market.  However, there are administrative burdens to procurement that can be costly to Suppliers and those costs are implicitly born by LSEs through higher RA prices.  Any considerations around Substitute RA reform would also need to be contingent on both the development of a standardized counting rule and decisions around RAAIM reform.

2. Does your organization have other feedback not already captured in the questions above?

Just the continued recognition that the scope of a holistic approach may seem daunting but should also be viewed as necessary of an investment in California’s infrastructure as development of a new electric generating facility or transmission project. 

3. Would your organization like to present at a future meeting on a specific proposal?

We are open to presenting to particular ideas and potential paths at a future date.? 

4. Does your organization have any feedback back on the process for the RAMPD initiative?

We have been encouraged by the inclusive and serious nature of the discussion and look to be more engaged in this process. 

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

We would like to continue to see more information about how climate change may or may not be driving uncertainty around both supply and demand.  We would like to see more information around assumptions driving load growth (weather, electrification, large load interconnections) and ensuring they are consistent across the CAISO BAA.  We would like to see more information around the sensitivities of changes in the supply, particularly retirement of traditional dispatchable resources, and their impact on LOLE and unserved energy.

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

Ideally, the CAISO BAA should operate under a standardized, harmonized counting methodology that allows for treating RA obligations as fungible.  This fungibility is crucial to reducing friction in the bilateral market and providing CAISO the best opportunity to make informed, reliable dispatch decisions in the electricity market.  The counting rules should include an accreditation methodology that accounts for individual resource impacts on total system reliability that allow for the CAISO to demonstrate that the BAA meets a 1 in 10 LOLE in a transparent, routine manner. 

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

Please see our preferences delineated in the answer to Question 1 

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

Must be associated with the counting methodology.

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

Unlike other parties we do not have as strong a view on the substitution rules.  We believe that the RA market itself represents the incentive to show capacity.  If some market participants opt to hold on to capacity for possible substitution in the future as a risk management position, they are doing so at the cost of showing that RA and potential financial benefit.  This should be a rational, measurable risk.  Thus, the incentive to show resources for RA is determined by the price established by a willing buyer and a willing seller.  

However, easing the burden of planning maintenance outages and avoiding forced outages is clearly in the interests of all stakeholders.  We believe that the most transparent and efficient solution would be what was proposed in the Issue Paper around establishing a planned outage buffer.  While we recognize there are challenges in ensuring the buffer is consistently applied across LRAs, those challenges will exist under alternatives such as moving to annual or seasonal showings.   

The pool proposal would have the benefit of being more customizable, but stakeholders will have to determine just how much time and effort in the process is worth drawing up this new market design to replace something that is, while not perfect, generally available in the marketplace.  There are clearly benefits to reducing the transaction costs and providing less friction among suppliers looking for more specialized contract delivery terms, however.  Given that, if stakeholders are prepared to review the idea of a voluntary substitution pool administered by CAISO, we look forward to the details

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

Consistency in the outage definitions among other areas of the Western Interconnect is likely the most sensible starting point, especially given the reliance in imports from the rest of the West. 

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

They are all highly interconnected.  Milepost Power believes that standardized counting rules, widely adopted by all of the CAISO BAA should be a core principle that allows for a more consistent discussion of how to approach outages, substitution and availability. 

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

Milepost Power believes that RA obligations need to be properly managed in the spot electricity market through scarcity pricing incentives.  Given this need, CAISO is best placed to manage availability and incentive reforms.  Any changes to counting rules, including a shift to UCAP, would likely require reform or elimination of RAAIM.  At the very least, a change in RAAIM pricing and hours of applicability would be need to be reviewed. 

Exemptions from RAAIM should be limited, if not entirely removed, and all LRAs should be encouraged to participate under the same availability rules.  The fragmentation in performance incentives and penalties will merely continue to contribute to lower confidence in system reliability overall and less equitable outcomes for both the Suppliers who have to take on those risks disproportionately and the LSEs who have to pay those suppliers for taking the risk on.

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

Accurate market prices are needed to properly incentivize resource availability and encourage market participants to take actions that would improve system conditions in the real-time.  Furthermore, scarcity prices aid in price formation that can lead to better optimization of the batteries, dispatchable hydroelectric, dispatchable thermal assets and net imports.  Reduced revenue opportunities in the electricity & ancillary services markets because of the increased penetration of zero marginal cost renewable generators and poor price formation puts upward pressure on RA prices over time even if procurement keeps up with load growth.  Scarcity pricing has the additional benefit of being applicable to the entirety of the CAISO BAA. 

Alternatively, a more fulsome discussion of shifting to a Pay for Performance (PfP) or a comprehensive reform of the RAAIM pricing and hours of applicability is welcome.  Supplier experiences in both PJM and ISONE show how important the proper price, trigger conditions and stop-loss levels will be in establishing PfP.  Low probability, high impact events are difficult to forecast and may not be efficiently priced in electricity, ancillary services or RA markets.  There have been proponents in PfP markets of using a graduated PfP rate, similar to scarcity pricing using a graduated Operating Reserve Demand Curve (ORDC).  Milepost Power believes that a graduated PfP based off of different operational triggers could provide a more thoughtful, dynamic approach than what is currently in PJM or ISO-NE market design.   If RAAIM were to continue, Milepost Power also believes that RAAIM evaluation hours should be narrowed to match the subset of operating hours used to evaluate accreditation in the counting reform.  Furthermore, the RAAIM price needs to be reconsidered to better reflect the cost of replacing RA in spot, or with a more thoughtful review of what the cost to the system is to a spot substitution of that RA.

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

See our answer to question 13 for our primary concerns around RAAIM.  Milepost Power believes a wholesale review of RAAIM would be welcome, but it is difficult to narrow the features that would be subject to change without having first resolved the counting methodology and the associated details stemming from Track 1.

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

The soft offer cap is not an appropriate means of procuring RA.  A central procurement act, if it is to truly be competitive, will need to better reflect the competitive dynamics of the RA market as a whole.  Given the transaction prices that have occurred over the past few years, the soft offer cap is proving to be uncompetitive. 

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

Central procurement events should be viewed as a function of an inability to secure needed RA in a timely manner.  Given that, a few different approaches could be relevant.  For example, reviewing publicly available pricing data of where the market has transacted and choosing a percentile of that distribution that reflects the higher ranges of prices could more accurately reflect the market’s implied cap on RA.  Another approach could be a more thoughtful analysis around the implied cost of shedding load for the month in which the central procurement event is being called.  If stakeholders are looking for competitive offers for a central procurement, fundamentally the structure of the offer cap needs to be higher, not lower, than where the market is trading.

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

Milepost Power believes that Suppliers incentive to provide RA is entirely a function of the tradeoff between the price of RA and the risk taken on to supply that RA.  A better functioning RA market, as described in the first two sections of this questionnaire, may lead to far better showing of RA ahead of additional procurements that would be required during the delivery year. 

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

We recognize that shorter-term capacity products may be desirable to address reliability concerns in the spot market.  However, we have always viewed capacity products as a system planning tool that points revenues to generators to ensure the ability to produce electricity, when needed, is maintained.  As a result, these capacity products often are reflective of the need to either retain generating capacity through covering long term fixed operating and capital expenditures, or to incentivize the building of new resources to ensure long term system adequacy.  Shorter duration capacity products may require even higher pricing to cover the shorter duration needs as a result.  What may be far more effective, is better price formation inside of the electricity market through enhanced scarcity pricing or the incorporation of the need for more reserves for flexible generation.  Shorter duration capacity products in the spot market indicates a system that does not have enough electricity and reserves and that should be reflected through electricity prices.  

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

Milepost Power is open to further discussion around moving the day ahead bidding deadline.  As a supplier of electricity, we have generally taken the position that a later deadline is often more efficient because it incorporates more information of operating conditions that could affect availability and profitability for the next operating day.  However, we recognize the concerns around EDAM RSE and believe the benefits of bringing in the DAM deadline by one hour likely outweigh our availability concerns.  If the DAM results were to also be accelerated by one hour, at least in practice if not guaranteed, there may be additional benefits for natural gas generators when it comes to natural gas nominations that could help reduce uncertainty and costs associated with rebalancing. 

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?

1. (Questions 1-4: OVERALL) 1. What recommendation does your organization have for which attributes to put together to create a holistic RA process at the ISO? Please highlight how your recommendation considers interdependencies and tradeoffs that meets the overall objectives of RA:

WPTF believes that the CAISO has not sufficiently demonstrated there is a problem that needs to be solved in all areas under discussion within the holistic RA program. While there is clear need for additional BAA modeling and updating the default PRM and counting rules as well as an update to the 100% planned outage rules, the rest of the identified areas have murky or anecdotal problem statements. 

Because WPTF has not seen evidence from the CAISO that there are additional problems that need to be solved from a reliability or efficiency perspective, beyond those WPTF identified above, we do not have a position on many of the elements under discussion. WPTF asks the CAISO to clearly demonstrate a problem and estimate the size of the problem, before identifying or seeking solutions from stakeholders. 

2. Does your organization have other feedback not already captured in the questions above?

3. Would your organization like to present at a future meeting on a specific proposal?

4. Does your organization have any feedback back on the process for the RAMPD initiative?

WPTF strongly prefers initiatives that begin with clear analytical and data-based problem statements, broad stakeholder support that these are problems, and an assessment of the magnitude on these problems, prior to moving foward with the market design. 

5. (Questions 5-8: TRACK 1: Modeling, Default Rules, and Accreditation) What key iterations would your organization prefer to see explored in the RA modeling inputs & assumptions in order to have the most accurate assessment of the reliability of the CAISO BAA?

6. With the goal of updating the default RA rules in CAISO’s tariff in mind, what combination of resource counting rules and resulting planning reserve margin makes the most sense for the CAISO BAA? How frequently should these be revisited?

7. What kind of UCAP design and implementation method would best capture relevant considerations for resource availability in CAISO’s RA fleet?

WPTF does not support the CAISO moving foward with UCAP without further demonstration that this works with the CAISO's holistic default counting rule design. WPTF supports the CAISO assisting the CPUC with their UCAP design for slice-of-day, and in this circumstance providing clear outage data with nature of work categories so that UCAP can be designed to best predict future gas and storage availability. 

8. What improvements to CAISO’s unit testing program could better reflect the capacity of resources in weather conditions that correlate with peak load?

WPTF supports the CAISO continuing the explore the idea discussed during the workshop whereby the monthly NQC accounts for both deliverability and an assessment of maximum possible capacity. The MPC could be determined by some combination of testing and actual energy dispatch. For example, the CAISO could use the maximum of (maximum energy output of prior 3 years on top 10 peak load days, tested value during similar ambient weather conditions) or something similar to limit administrative burden. 

9. (Questions 9-14: TRACK 2: Outage and Substitution and RAAIM Reform) 1. What are the pros and cons of a mandatory substitution buffer provided by LSEs in the annual/monthly procurement horizon versus an outage substitution pool funded by SCs taking outages administered by the CAISO (e.g.)? What specific approach to outage and substitution would your organization like to see proposed in the future straw proposal and why? )

10. Please provide your organization’s feedback on updates CAISO should make to outage definitions and how it relates to UCAP design.

WPTF does not support the CAISO moving foward with UCAP without further demonstration that this works with the CAISO's holistic default counting rule design. WPTF supports the CAISO assisting the CPUC with their UCAP design for slice-of-day, and in this circumstance providing clear outage data with nature of work categories so that UCAP can be designed to best predict future gas and storage availability. 

11. How does your organization’s preferred approach to outage and substitution interact with LRA planning rules, UCAP, and an availability and incentive mechanism?

12. For availability and incentive reforms, where/when should these incentives be managed? For example, for what resources should incentives be managed in LRA/LSE tariffs/contracts or in a standardized mechanism implemented by the CAISO? If managed by a CAISO mechanism, how does your organization’s preferred approach to UCAP relate to the availability and performance incentive design if not all LRAs resources move to UCAP and if UCAP does not apply to all resources?

13. What specific approach to availability and incentive mechanism would your organization like to see proposed in the future straw proposal (e.g., reforming RAAIM, moving to pay-for-performance, etc.,)?

14. If your organization would like to see RAAIM reformed, what are all the aspects that should change (e.g., link with the EDAM RSE versus changing inputs such as: changing the incentive level of RAAIM, when RAAIM is applied, eliminating the deadband, changing applicability, etc.)?

15. (Questions 15-21: TRACK 3: Resource Visibility and Backstop Procurement Reform) Particularly in light of the CPUC’s slice of day reforms, should CAISO assess energy sufficiency and/or net peak needs and update CPM authority?

The CAISO should include a resource sufficiency check as a part of the LOLE modeling initiative/process and if there are concerns, only then open a stakeholder initiative. The CAISO should not discuss or implement a process prior to doing a transparent analysis where stakeholders can provide feedback that demonstrates there is an energy sufficiency concern. 

16. Does the decline of capacity offers into the Competitive Solicitation Process (CSP) indicate a need for policy change in the soft offer cap methodology or other aspects of the Capacity Procurement Mechanism (CPM) program? If so, what should these changes be and how would they help ensure capacity is available for backstop procurement when operators need it?

17. If the soft offer cap were to be changed from its current cost-based approach, what market role would the new methodology be creating for the CPM program and why is that an improvement on the current framework?

18. What impediments exist today to showing all contracted capacity as RA or offering it into the CSP? What structures and processes would help promote visibility and access to this capacity?

19. Does your organization support developing a causation-based approach to allocating EDAM RSE failure surcharges? If so, how should this approach be structured and what, if any, are the key barriers that must be overcome?

20. Are there new capacity products that could enhance CAISO’s approach to the EDAM RSE? If so, how should they be structured and priced?

21. Does your organization have input on moving the day ahead bidding deadline to 9AM?

22. (Question 22: OTHER) Does your organization have other feedback not already captured in the questions above?