Comments on Nov 1 working group meeting

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) November 1 Working Group Meeting (WG Meeting).

The WG Meeting focused on Problem Statement 1, which indicates there is a need for additional consistent, transparent, and timely information on the sufficiency of the resource adequacy (RA) fleet in the CAISO balancing authority area (BAA). CalCCA agrees with this need and offers the following observations and recommendations:

• CalCCA generally supports the CAISO’s efforts to develop a portfolio evaluation to test system-wide RA sufficiency in the CAISO BAA. The CAISO outlines a proposed framework that would include a year-ahead study using the shown RA fleet (short-term study), a two to four year forward study to test the sufficiency of authorized procurement (mid-term study), and a five to ten year forward study to test the sufficiency of long-term planning (long-term study). The study for each timeframe would be a stochastic assessment using study assumptions available at the time of study. The CAISO’s proposed study framework introduces several important questions that will need to be considered related to the purpose and use of the proposed portfolio assessments, including what steps will the CAISO take if it identifies an insufficiency in any of these study timeframes?
  • In the medium-term and long-term studies, the CAISO should notify the California Public Utilities Commission (CPUC) of such deficiencies and the CPUC can use the results provided by CAISO to compare with its own study results, and if needed, adjust its planning and procurement efforts in the IRP planning cycles and future Reliable and Clean Power Procurement Program (RCPPP) cycles.
  • For the short term, the CAISO must consider whether or not it would have time to cure an RA insufficiency after receiving showings and performing its short-term study. If the CAISO does cure insufficiencies, the CAISO would also have to clearly document how the CAISO would determine the cause is of an RA insufficiency for the purposes of backstop cost allocation.

These questions will need to be answered to develop a process that fits in well with the existing IRP and RA structures and provides the CAISO with the resources needed to meet reliability planning targets in all hours.

• Importantly, a portfolio evaluation must be transparent and provide the right signals for LSEs to minimize the potential for CAISO backstop procurement. This working group should explore ways to provide as much information to market participants as far in advance as possible to anticipate potential deficiencies in time to act to avoid such deficiencies. For example, in addition to the long- and medium-term assessments that may be useful in informing the sufficiency of long-term planning and medium-term new resource procurement, the CAISO could run a forward annual assessment that uses best estimates about resource counting values, LSE requirements, and other necessary inputs known at the time of the study to inform LSE procurement for the upcoming compliance year. The CAISO could then rerun the study with the shown RA fleet to confirm sufficiency based on procurement and showings that occurred.

• The detailed probabilistic assessment proposed by the CAISO would be helpful, but a simple stack analysis can complement this by increasing transparency and allowing for easy evaluation of alternative assumptions.[1]
• The CAISO should expand the scope of this problem statement to include the sufficiency of the RA fleet west-wide, not just in the CAISO BAA (see response to prompt 2). The CAISO depends on imports to meet RA requirements. The Western Resource Adequacy Program (WRAP) will soon have its own binding requirements its participants must meet with internal or external supply. The CAISO and RA market participants would benefit from an understanding of (1) the RA supply sufficiency outlook within California and within the West and (2) where RA supply (in aggregate) 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. 
• CalCCA continues to recommend the CAISO (1) regularly publish public reporting of aggregated year-ahead and month-ahead RA showing information, and (2) work with the CPUC to ensure credited resources’ RA capacity is accounted for when allocating CPM costs, as described in its October 20, 2023, comments on the October 6, 2023, Working Group.[2]

[1]             A good example of the type of information that could be provided with a stack analysis is the ERCOT Capacity, Demand, and Reserves Report which is updated twice a year: https://www.ercot.com/files/docs/2023/05/05/CapacityDemandandReservesReport_May2023_Revised2.pdf.

[2] https://stakeholdercenter.caiso.com/Comments/AllComments/5860a092-9299-4cf2-a3f7-60efa5105b32#org-f58bf016-3314-414e-a620-a7de2d0f30d5.

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

The CAISO should consider the following modifications to problem statement 1 in underline and bold text:

There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA) and in the non-CAISO WECC.

Without this, there are challenges in:

• Accessing and communicating the system-wide sufficiency of the CAISO BAA in light of the contracted RA fleet;
• Anticipating the amount of RA imports the CAISO can expect and the amount of RA-eligible resources within CAISO that will be contracted to entities outside the state; and 
• Addressing such concerns around CAISO BAA system-wide RA sufficiency in a timely and efficient manner.

Sub-issues:

• RA Portfolio Evaluation does not exist today
• Lack of Non-RA Visibility, where non-RA is defined as RA-eligible resources not shown on a supply plan and not available to the CAISO BAA for its use in meeting RA or CPM needs (e.g., supply contracted outside the state, supply held back for substitution, etc.)
• Outdated Default Planning Reserve Margin

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

The CAISO should prioritize three issues within this initiative:

• Ensuring the CPUC’s SOD RA Program Aligns with the CAISO’s RA Validation Process and Backstop Process: The CAISO should (1) determine if the CPUC’s SOD program will meet the requirements of the CAISO evaluation, and (2) clarify the resource values and requirements LSEs will show and CAISO will validate. This confirmation and clarification should happen quickly, and has already started since the November 8, 2023, workshop. What will very likely require more stakeholder discussion, however, is how the CAISO will conduct backstop once CPUC jurisdictional LSEs are subject to SOD and non-CPUC jurisdictional LSEs are not. Ensuring all local regulatory authorities (LRA) bring their share of RA capacity necessary to meet reliability needs in all hours will be an important consideration for this initiative, especially considering the CAISO’s responsibility to administer the different RA programs adopted by each LRA.

• Replacing the Resource Adequacy Availability Incentive Mechanism (RAAIM) with an Unforced Capacity Counting Methodology: Past CAISO analysis shows that RAAIM is ineffective at incenting substitute capacity to replace RA capacity on outage.[1] Several reasons could contribute to RAAIM’s ineffectiveness including but not limited to sellers incorporating the risk of RAAIM charges into capacity pricing, scheduling coordinators’ payments and charges balancing each other out, or too many resources or outage types receiving RAAIM exemptions. Additionally, RA prices are reflecting the current RA market scarcity. The CPUC’s 2023-2024 RA market price benchmark is $15.23 per kilowatt (kW) -month and the potential RAAIM payment is $3.79 per kW-month (or 60 percent of the $6.31 per kW-month CPM soft offer cap). It is, therefore, logical to assume sellers would rather sell substitute capacity as RA than use it to avoid RAAIM charges. Given these shortcomings, the CAISO should evaluate other mechanisms to incent resource availability, such as the UCAP counting methodology described below. UCAP counting rules incorporate historical forced outage rates into the RA value of resources, rather than incorporating average forced outage impacts into the planning reserve margin, like California does today. Including forced outages in the counting rules creates incentives for generators to conduct planned maintenance to prevent unplanned, forced outages. It also informs the market of generators' historical availability so that entities can procure resources that are most reliable. The CAISO should work with the CPUC, which has scoped UCAP into its new RA proceeding, to evaluate how to incorporate UCAP into the CAISO and CPUC’s RA programs. Part of this evaluation should include whether special considerations need to be made to make UCAP compatible with SOD. Whether or not a UCAP methodology needs to be specifically tailored to SOD can be informed by evaluating how forced outage trends vary by hour. 
• Updating the CAISO’s Backstop Cost Allocation Rules to Consider “Credited Resources”: The CAISO’s tariff does not allow CAISO to consider “credited” resources (resources count for RA under CPUC rules but are not shown on CAISO RA plans and supply plans) when allocating CPM costs, a problem that revealed itself after the CAISO’s August 2023 CPM. The CAISO should work with the CPUC to ensure credited resources’ RA capacity is recognized, either through changes to the CPUC rules to have credit resources shown on supply plans or through a CAISO tariff change to support credited resources when allocating CPM costs.

[1]             CAISO RA Enhancements Fifth Revised Straw Proposal (July 7, 2020), at Appendix 8.3.

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

RA portfolio evaluation: CAISO should define what RA portfolio means and illustrate with numerical examples (could be a spreadsheet) for a desired RA portfolio information with time frames. For example, currently CAISO publishes 7 day ahead “RA trend” which could be the baseline information for a particular period. Whether the similar information can be provided in a monthly or an annually, or a multiyear timeframe, and whether such information can be meaningful for RA assessment, should be explored.

Non-RA visibility: First, what non-RA capacity covers should be defined. It should be explored whether it is possible for ISO to keep track, using Masterfile and outage management system (OMS), of non-RA resources or partial RA capacity resources' availability on an hourly basis based on the submitted and approved outages (forced / planned) and if that will provide additional value in RA assessment systemwide. This sort of short-term information may provide additional resources for grid reliability on an hourly basis.

An individual LRA should retain the ability to establish its own PRM consistent with good utility practice and California regulatory schemes.

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

No comment at this time.

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

No comment at this time.

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

CAISO’s proposed Problem Statement 1 is:

There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in:

• Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and
• Addressing such concerns in a timely and efficient manner.

Sub-issues

• An RA Portfolio Evaluation does not exist today
• There is a lack of Non-RA Visibility
• The default Planning Reserve Margin is outdated

While MRP does not disagree that additional information on the sufficiency of the RA fleet in the CAISO BAA is necessary, there is a threshold question of whether, in aggregate, the RA programs of the LRAs within the CAISO BAA meet or exceed the 0.1 LOLE reliability standard. This is extremely important, because if the CAISO finds the RA fleet is not able to meet the 0.1 LOLE reliability standard, the CAISO’s ability to engage in backstop procurement, apart from “significant events”, is limited to meeting the RA requirements set by the LRAs. If those RA requirements do not meet the 0.1 LOLE metric in the first place, the CAISO’s ability to maintain reliability is hampered. 

MRP, therefore, proposes to insert a new Problem Statement 0 as the first Problem Statement:

There is a need for the CAISO to ensure the collective ability of the RA programs within its footprint meet the 0.1 LOLE metric.  If the RA programs within the CAISO footprint do not meet this metric, then the CAISO shall engage in backstop procurement, regardless of whether the shown RA fleet is sufficient to meet the LSE requirements.

Sub-issue: There is a need for additional information regarding the sufficiency of the LRA RA programs to meet 0.1 LOLE.

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

MRP appreciates the discussion during the working group meeting regarding the CAISO’s goals for its RA fleet sufficiency analysis.  The spirited discussion highlighted the importance of such an analysis to ensure reliability on a forward-looking basis.  MRP believes, however, that the analysis being considered by the CAISO, which is based on the shown RA fleet, may not provide sufficient time for LRAs to take action to cure any problems.  As stated in MRP’s previous comments, the CAISO should perform a LOLE analysis based on the shown RA fleet, in 2022 or slightly earlier, to determine whether the shown RA portfolio met the 0.1 LOLE standard.  This will inform stakeholders and market participants with regards to how well the California RA programs have performed. 

MRP recommends the CAISO perform an LOLE and PRM analysis to determine the minimum amount of capacity that needs to be procured for the next compliance year to inform the CPUC as well as the LRAs.  Additional LOLE studies pertaining to years two and four would provide additional data points for the market and improve overall reliability.  Finally, the CAISO should calculate the annual RA PRM that is needed for the monthly RA program to maintain a 0.1 LOLE on an annual basis.  MRP is not opposed to considering monthly PRMs, because that would match the monthly RA program design better, but MRP notes that, to its understanding no LRA currently uses monthly PRMs.  

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

MRP strongly believes that the working group should discuss and agree that the CAISO should initiate the LOLE studies noted by MRP above to inform the working group.  These studies are based on the shown RA fleet in 2022 (or earlier), a LOLE and PRM study for the next compliance year, and finally a LOLE study for years two to four.  MRP requests that the goal for the next meeting be to develop a concrete plan for the next steps needed for the CAISO to promptly move forward with this analysis.

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

Please refer to NCPA RAMPD discussion paper comments submitted October 20, 2023. 

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

Please refer to NCPA RAMPD discussion paper comments submitted October 20, 2023. 

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

Please refer to NCPA RAMPD discussion paper comments submitted October 20, 2023. 

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

PG&E remains committed to supporting CAISO in establishing the Resource Adequacy (RA) working group (WG) and encourages future discussions to evaluate the problem statement 1, specifically addressing overall system reliability information issues and related sub-issues.    

PG&E recommends increased transparency and detailed insights from CAISO regarding current modeling gaps and the goals of the proposed suggestions for future RA modeling. Additionally, PG&E seeks clarification on the following points:  

• The adequacy of CAISO’s current assessments of system RA to determine whether the issuance of Capacity Procurement Mechanism (CPM) is necessary. 

• CAISO’s intentions regarding potential modifications to CPM rules and any identified issues with the current CPM rules. 

• The specific information that CAISO lacks for assessing RA sufficiency in the existing studies and any recommended improvements to the current studies.? 

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

During the RA WG number two, the CAISO presented an overview of stakeholder comments received on the problem statement 1 addressing “overall system reliability information issues”. 

PG&E reiterates its previous comment that the problem statement should be restated to reflect the core issue at hand: 

• PG&E’s Proposed Revision of Problem Statement 1 reads as follows: Current processes and procedures do not provide sufficient visibility into the generation fleet to enable CAISO to ensure system reliability.  

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

As highlighted in our comments submitted on 10/20, PG&E recommends that the CAISO RA working group prioritizes the following items: 1) exploring Local Regulatory Authorities LRAs program alignment with CAISO’s RA rules; 2) addressing the RA Substitute Capacity Rules; 3) exploring Unforced Capacity (UCAP) counting rules and revisions to RAAIM.

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

Problem statement 1 requires further explanation of the specific issued to be addressed. For example, the reference to “consistent transparent information” lack details about what will be included. Further, the flow of information is unclear, SDG&E believes more information could be provided to the Load Serving Entities (LSE)s from CAISO.  For example, CAISO could provide information on load forecasting and load migration for the CAISO portfolio and individual LSEs.

Further, there is a gap between CAISO and the California Public Utilities Commission (CPUC) Resource Adequacy (RA) programs such that the programs have different requirements.  Given this gap, SDG&E questions whether, and to what extent, CAISO will be able to align with CPUC’s Slice of Day (SOD) program. This deadline is rapidly approaching as the SOD test year is scheduled to be in 2024 followed by implementation in 2025. 

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

No Comment

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

SDG&E recommends the following items be prioritized in the following order as part of the Resource Adequacy and Program Design initiative.

#1 SOD interoperability with CAISO systems to accommodate change-

First and foremost, CAISO RA systems should have seamless interoperability with the CPUC RA SOD program, with matching requirements.  

#2 Alignment with CPUC requirements and methodologies-

As the resource mix is changing, and more variable energy resources such as batteries become an increasing part of the generation stack, counting rules and methods to value their capacity should follow. These updates should be made while keeping reliability a focus of the operation of the grid.

#3 Future alignment with Extended Daty Ahead Market (EDAM) market

How Resource Adequacy and Resource Sufficiency Evaluation (RSE) in EDAM will function remains to be seen. Policy should be developed to more accurately allocate failure costs of the EDAM RSE, and using RA may be an option to achieve this. There should, however, be significant alignment in requirements for planning purposes and to maintain appropriate portfolio sales and transactions.

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

After the November 1 Working Group Meeting, further clarity is necessary about how the CAISO assesses the need to undertake backstop procurement. The CAISO referenced using a stack analysis for the monthly and annual RA analysis to determine if CPM should be undertaken. It would be helpful if the CAISO would provide historical values for the annual showing and months when the CAISO did not need to conduct any CPM and for months when it did. For the annual showing the CAISO should explain whether the decision to perform backstop was based on the annual showing being under the 90% showing requirement for the summer months. For the monthly showings, this should include showing the aggregate analysis used in those months, including the aggregate RA requirement and the aggregate summation of the NQCs. Further, the CAISO should identify if they used any other analysis to determine the need for backstop procurement, such as the expected amount of excess capacity at the net load peak as opposed to the gross load peak. The CAISO has used CPM for backstopping LSEs, but also for “significant event” CPMs. The CAISO should explain how it makes a determination that a significant event has occurred that would threaten reliability to such an extent that it feels it is necessary to procure additional capacity.

The same type of historical information should be provided for local and flexible RA. Especially for local RA, the CAISO should explain how it would determine that a collective deficiency in local RA exists even when all LSEs have met their local RA requirements. This situation is possible because of how local RA resources may have different effectiveness levels for specific RA local areas. The CAISO also needs to explain whether they make local backstop decisions after the annual showings or wait until the month-ahead showings to determine that local backstop procurement is needed.

It seems from the information presented by the CAISO that the only probabilistic analysis done to determine resource sufficiency currently is the summer assessment, but this seems to be based on the expected fleet rather than the RA fleet. Perhaps the CAISO could perform a similar analysis for a month, or sample of months, using the RA only fleet committed for the month. It would be useful to have a comparison of the results from this analysis with the simple stack analysis the CAISO currently used to assess the sufficiency of aggregate RA.

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

As SCE as previously commented, the most important RA topic for the CAISO to consider is the interaction and coordination with the CPUC’s Slice of Day (SOD) mechanism which will be tested in 2024 and be fully implemented in 2025. There are several aspects of this:

• The single RA number for each resource will likely differ for many resources from the ELCC value that was previously provided. The CAISO needs to understand these differences and account for any potential impacts on reliability that these changes might cause.
• In light of the previous issue, the CAISO needs to clearly indicate how it will determine if backstop procurement will be needed. LSEs need to understand whether their procurement will trigger CAISO backstop, even if it meets the CPUC SOD requirements. In the past, many LSEs have incurred CPUC penalties for failing to have sufficient RA, but have rarely been faced with backstop charges from the CAISO. Under the changed SOD framework, understanding how the CAISO will determine the need for backstop procurement is critical.
• The CAISO needs to coordinate with the CPUC to ensure that the validation it does provides the CPUC with the information it will need to determine if the LSEs have met their RA requirements. This may turn out to not be an issue but should be examined.

Given the tight conditions in the RA market the last few years, LSEs will likely start their RA procurement for 2025 very soon. If the rules for RA at the CAISO are not known it will be difficult to undertake efficient RA procurement. Thus, it is important that the CAISO resolve these issues as soon as possible, and by next spring at the latest.

The next item also involves coordinating with the CPUC, which will be considering adopting a UCAP mechanism. In order to do so, the CAISO will need to consider potential changes to its RA procedures. These discussions should also include any required changes to RAAIM and changes to the must offer obligations (MOO) consistent with use-limited resources and how they are shown in the CPUC Slice-of-Day proposals. These discussions should also include any potential changes required in MOO when DAME and EDAM are implemented.

Another item of coordination with the CPUC after their adoption of the Slice-of-Day is whether there is a continuing need for Flexible RA. This issue is also related to new products, such as the Imbalance Reserve Product proposed in the DAME.

There is also a need for a comprehensive evaluation of the existing RA mechanisms to ensure that RA is providing the appropriate reliability for the CAISO grid. This discussion should include an examination of the PRM, as well as broader RA changes, such as expanding the current peak hour requirements to also include net peak hour requirements or a mechanism similar to the CPUC’s Slice-of-Day mechanism to ensure that sufficient resources and energy exist in all hours.  As part of this comprehensive evaluation of RA, it will be necessary to consider how the near-term assessments of reliability in RA should be coordinated with more longer-term analysis of resource sufficiency. The CPUC will hopefully consider how RA and IRP work together to ensure that sufficient resources are identified with enough lead time to ensure that the resources are actually online and available to provide the RA. The CAISO needs to consider this integration of longer-term forward planning and the near-term RA outlook. RA should be designed to provide the proper signals for LSEs working with resources to make the correct decisions about the retirement of existing resources and the building of new resources, hopefully without the need for out-of-market actions.

These comprehensive discussions should also include discussions about what type of RA might be needed in the broader EDAM market, or at a minimum how the CAISO RA system will work within the EDAM. As the start of EDAM has been delayed, this issue might best wait until the elements of CAISO RA are better know.

This is why we moved to SOD.  I don't think we should say this here.  [JN1]

1. Please provide your organization’s feedback on the November 1, 2023 Resource Modeling and Program Design Working Group Meeting.

Problem Statement 1: There is a need for additional consistent, transparent, and timely information on the sufficiency of the RA fleet in the CAISO Balancing Authority Area (BAA). Without this, there are challenges in: • Accessing and communicating the system wide sufficiency of the CAISO BAA in light of the contracted RA fleet; and • Addressing such concerns in a timely and efficient manner. Sub-issues: • An RA Portfolio Evaluation does not exist today • There is a lack of Non-RA Visibility • The default Planning Reserve Margin is outdated

Western Area Power Administration Sierra Nevada Region (WAPA SNR) appreciates the opportunity to provide input to the Resource Adequacy modeling and program design. As a federal agency, WAPA SNR is responsible for marketing federal hydropower generated by the Central Valley Project (CVP) to meet its statutory responsibilities to serve project-use energy pumping requirements and market available hydropower generation under its Power Marketing Plan to preference power allottees. In northern California, WAPA SNR serves load in both the Balancing Authority of Northern California and the CAISO. WAPA SNR delivers its generation from many large and small hydro facilities of the CVP to its loads.  WAPA SNR owns, operates, and maintains an extensive high voltage transmission network extending to the load center of Northern California.  To a large extent, WAPA SNR’s generation, supplemented by power purchases from the Pacific Northwest, supported by its transmission network, follows its load in the CAISO, especially in the spring and summer.

As a Local Regulatory Authority (LRA), WAPA SNR established its own Resource Adequacy (RA) Plan and published it in the Federal Register/Vol. 72, No. 144/Friday, July 27, 2007/Notices. In the RA plan, WAPA designates its hydroelectric facilities in the Balancing Area of Northern California (BANC) as a system resource with 100 percent of its forecasted capacity as Qualifying Capacity, which is determined by the 50 percent rolling 12-month forecast for the appropriate month. Due to Federal policies in support of the Marketing Plan in WAPA SNR’s marketing and operations processes, WAPA SNR cannot make CVP hydroelectric units available to the CAISO for Planning Reserve Margin (PRM). WAPA uses the CVP hydroelectric units as Qualifying Capacity to meet WAPA SNR’s load in the CAISO Balancing Authority Area. WAPA currently does not own or operate any conventional thermal or intermittent generation resources. WAPA has been using capacity procured from qualifying resources to meet its PRM obligations.

In recent years, WAPA SNR has experienced increased difficulty in procuring RA capacity from the market and the price for RA capacity has increased drastically. WAPA SNR believes this is the core problem to be addressed by this RA modeling and program design initiative. The high price is caused by shortage of supply due to the decrease of conventional generation, the unrecognized RA capacity due to CAISO counting rules or CIRA system limitations, and the inflated demand for RA capacity due to misapplication of operational criteria to planning capacity. WAPA SNR believes the important and the urgent issue is how to address the broken RA market. When load serving entities have problem procuring RA capacity even at ever increasing prices, the solution is not to increase the RA demand that is already inflated. The starting point should be to take a closer look at what the CAISO really needs from an operational perspective. For example, does the CAISO really need local RA capacity at a level sufficient to cover the August peak load for all the other months of the year? When the generation fleet was comprised of primarily conventional thermal generators, by ignoring fuel storage and emission limitations, one could perhaps assume that if a generator was supposed to be available in August, it should also be available in April. However, today’s generation mix has changed and therefore the existing rules regarding local RA and must offer obligations are obsolete. WAPA SNR appreciates this timely RA discussion and hope this initiative can focus on the important and urgent challenge of RA capacity shortage for the CAISO and for the load serving entities.

According to the fundamental concept of supply and demand in microeconomics, increasing the demand for the RA capacity by the CAISO will not reduce RA capacity shortage; it will only exacerbate the shortage in the bilateral market and drive up the price even further. Higher market prices for RA at this point does not incentivize more supply for RA capacity because the RA prices are already very high and many RFOs (Requests for Offer) of RA do not receive offers. This phenomenon indicates that the supply curve and the demand curve have no intersection! The RA capacity shortage can only be addressed by the LRAs because RA capacity takes years of planning to install. The generation resource planning process is complicated and influenced by factors beyond short term market prices. Government policy and regulations play a crucial role in the generation resource planning process. Moreover, the generation resource planning process must also balance sufficiency (or abundancy) against costs. The generation planning activities should be left to the LRAs who have jurisdiction over such activities. Each LRA is different because they are subject to different regulations and have different resource mix. They face different challenges that require different solutions. The CAISO has neither the jurisdictional authority nor the LRA-specific domain knowledge or the financial accountability to devise suitable RA plans for all the LRAs. One-size-fit-all solutions will not work.

The CAISO only needs operational capacity regardless of whether it is labeled as RA according to some rules that can be imperfect. For example, the CVP generation provides substantial amount of power and energy to serve California load. But the CVP generation capacity is not recognized by the CAISO as RA capacity because it is a use limited resource outside of CAISO BAA. Since the CVP generators are in BANC, SNR meets its RA obligations for the loads in the CAISO partially using the imports backed-up by the CVP generations. Since imports are not recognized by the CAISO as use limited resources, WAPA is not able to show and get full credit for providing RA using CVP generation. Although physically the CVP generation is providing power and energy to serve load in the CAISO BAA, on the CAISO’s book, the CAISO does not see this capacity as “RA capacity” and cannot use this capacity to reduce its net demand for RA capacity. From power system operation viewpoint, the CAISO just needs working capacity regardless of whether it is labeled as RA or not. WAPA SNR believes that by recognizing all the capacity and by determining sensible capacity requirement, the “RA capacity” shortage situation can be mitigated.

As the CAISO plans to use the extended day-ahead market (EDAM) to enhance reliability and renewal resource integration, WAPA SNR believes that EDAM can also foster RA capacity diversity benefit. For example, the CVP generators would be modeled in the EDAM as generators instead of imports to the CAISO. It makes sense to enable CVP generations to provide RA directly as use limited resources if WAPA SNR joins EDAM. However, the linkage between Resource Sufficiency and Resource Adequacy must be externalized from the EDAM itself because the LRAs are in the best position to ensure their planning capacity is provided to the CAISO in accordance with their RA plan. The CAISO’s focus should be enforcing Resource Sufficiency at the LRA level or the LSE (load serving entity) level through market incentives and settlement consequences. The current EDAM design of enforcing Resource Sufficiency at BAA level is inadequate. The goal should be having every LRA or LSE bring sufficient energy supply to meet their load forecast and sufficient flexible capacity to provide ancillary services and enable congestion management. The onus should be on the LRAs who have the jurisdictional authority over planning to demonstrate their responsibility and accept accountability.

In summary WAPA SNR suggests:

1. The primary problem is RA capacity shortage and high prices,
2. The CAISO refine its “RA” capacity requirements according to the month of the year and time of the day,
3. The CAISO recognize all operationally available capacity to meet its operational needs, and
4. The CAISO focus on operational capacity through Resource Sufficiency and leave RA capacity planning responsibilities to LRAs,
5. The CAISO leverage “RA” capacity diversity in the EDAM by letting the LRAs and LSEs do their job and accept accountability.

2. In light of the working group discussion on Problem Statement 1 on visibility and transparency of the reliability of the ISO BAA, please provide any suggested edits to the problem statement. Alternatively, please provide your own problem statement.

In light of the discussion provided above, WAPA suggests the following problem statement.

Problem Statement 1: The primary problem is RA capacity shortage and high RA prices. To reduce net RA capacity demand and increase effective RA capacity supply in the operational timeframe, several sub (or means) problems can be addressed by CAISO market design without encroaching LRA’s jurisdictional authority:

1. Refine the CAISO’s local RA requirements according to the month of the year and the time of the day, instead of applying August peak load to all other months of the year.
2. Consider all available capacity in assessing operational needs and backstop procurement in the operational time frame regardless of whether such capacity is labeled as RA or not according to rules of the LRAs.
3. Hold LRAs responsible for bringing sufficient operational capacity to the CAISO (EDAM) by validating and settling the shortage penalties associated with Resource Sufficiency at LRA or LSE level.
4. Recognize use limited (e.g., energy limited) resource in the EDAM footprint in assessing RA capacity and operational capacity eligibility and requirements.
5. Enhance or overhaul the CAISO’s CIRA system to allow all LRAs to show RA capacity to the CAISO according to the LRA’s RA plans to improve transparency and CAISO’s visibility.

3. Please provide a prioritized list of RA topics you believe the working group should address in order of importance.

WAPA SNR suggests the following topics to be addressed:

1. The CAISO address questions regarding how it interprets its jurisdiction regarding reliability and how it will not encroach over a Local Regulatory Authority’s jurisdiction. Through this working group process and its outcome, no action plan shall result in encroachment of an LRA’s authority.
2. Refine the CAISO’s local RA requirements according to the month of the year and the time of the day, instead of applying August peak load to all other months of the year.
3. Expand the eligible CAISO’s local RA resources from CAISO BAA to the EDAM footprint.
4. The CAISO address limitations for counting import backed by resources of types listed in CAISO Tariff section 40.6.8(d), which CVP generation meets, to count as RA capacity or RA resource. This type of import should be exempt from bid insertion by CAISO in conformity with CAISO Tariff section 40.6.8(d).
5. The working group shall explore the development of an official CAISO BAA RA capacity market. Unlike the RA resource bilateral contracts approach, an official RA capacity market allows for transparency of supply, demand, and prices. Everyone will be more on a level playing field when it comes to RA procurement when using an official RA capacity market via auction.
6. The CAISO shall consider all available capacity regardless of whether the capacity is labeled as RA in the operation timeframe in assessing capacity sufficiency.
7. Develop validation and settlement rules for Resource Sufficiency at LRA or LSE level.
8. The CAISO shall consider the financial risk exposure for LSEs brought about by longer term RA frameworks. For example, WAPA SNR’s load is comprised of preference customers by contractual relationship, hence, there is uncertainty of long-term firm load levels.