Comments on Sep 23, 2026 Stakeholder discussion and revised straw proposal on default energy bids

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) Revised Straw Proposal on default energy bids (DEB) for storage and hybrid resources. These comments recommend protecting legitimate storage opportunity costs and state-of-charge (SOC) management without unnecessarily weakening market power mitigation or increasing costs to load. CalCCA supports continued development of the time-of-day (TOD) DEB methodology and recommends that the CAISO conduct additional analysis before finalizing the design. In summary, the CAISO should:

• Develop a TOD DEB with design details based on additional analysis of the need to reduce the TOD multiplier below 1.0 during net peak load hours and an evaluation of the proposed scaling methodology to allow stakeholders to assess the cumulative impacts of each DEB calculation element;
• Subject to the additional analysis described above, adopt a 1.1 multiplier rather than the previously proposed 1.4 multiplier recognizing that other elements of the proposed methodology, such as scaling, can also increase the storage DEB;
• Remove the proposed gas floor from the storage DEB because electricity prices, not gas prices themselves, are determinant of a storage resource’s marginal cost;
• Adopt the greater-of approach for variable generation hybrid resources with a minimum component-share requirement;
• Demonstrate that applying the greater-of approach to dispatchable hybrids will not materially weaken mitigation before prematurely concluding that the greater-of methodology will also apply to hybrids with dispatchable generation; and
  • Implement the proposed hybrid DEB for variable generation hybrids at this time given the need to close an existing gap, and monitor the greater-of methodology after implementation to determine whether enhancements are needed to make the hybrid DEB dynamic.

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

CalCCA supports the proposed timing of the initiative, which focuses on DEB enhancements and pauses near-term discussions on reframing non-generator resource (NGR) bidding at this time. If the CAISO explores reframing NGR bidding in the future, the CAISO should do so as an additional option for bidding that scheduling coordinators (SC) can elect to use, not a mandatory change, for the reasons described in CalCCA’s August 5, 2026, comments.[1]

[1]            See CalCCA Comments on the Straw Proposal for Uplift, Default Energy Outage Management, State of Charge and Stakeholder Discussion from July 22, 2026 (Aug. 5, 2026),

https://stakeholdercenter.caiso.com/Comments/AllComments/4e1e1c4d-8992-4917-8da5-60a6ad2016bb#org-69d600d5-4a3e-483d-8b27-3fade18ae06e.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

A. CalCCA Supports a TOD Storage DEB, Subject to Additional Analysis

CalCCA supports the CAISO’s proposal to modify the storage DEB to vary by time of day. A TOD approach better reflects storage resources’ costs when real-time conditions deviate from day-ahead conditions and recognizes that storage opportunity costs change throughout the day. The approach can also reduce the risk that market power mitigation results in inefficient dispatch that depletes storage before the hours in which stored energy is most valuable. The CAISO should, however, conduct additional analysis to ensure the proposed methodology appropriately balances these objectives with the need to protect customers from unnecessary costs. Specifically, the DEB should be sufficiently high to prevent market power mitigation from inefficiently depleting storage before it is most valuable, but no higher than necessary to accomplish that objective.

First, the CAISO should further evaluate the Department of Market Monitoring’s (DMM) recommendation to reduce the TOD multiplier below 1.0 during net peak load hours. The DMM’s proposal recognizes that storage opportunity costs may decline during these hours as the remaining opportunities to discharge diminish. Additional analysis will help determine whether a multiplier below 1.0 during certain hours can better reflect storage opportunity costs while maintaining appropriate protections for SOC management for the next day.

Second, the CAISO should provide analysis that incorporates the proposed scaling methodology. The CAISO’s analysis should evaluate the cumulative effect of the proposal’s various components, including the scaler, TOD multiplier, and gas floor. Evaluating these elements together is necessary to determine whether their combined effect reflects storage opportunity costs or could result in DEBs that are higher than necessary.

B. CalCCA Supports a 1.1 Opportunity Cost Multiplier

Subject to the additional analysis described above, CalCCA supports the CAISO’s proposal to use a 1.1 multiplier rather than the previously proposed 1.4 multiplier. The revised multiplier recognizes that other elements of the proposed methodology, such as scaling, can also increase the storage DEB. Using a 1.1 multiplier reduces the potential for multiple elements of the methodology to cumulatively overstate storage opportunity costs while retaining a margin to account for uncertainty. The CAISO should confirm this outcome through analysis that incorporates all components of the proposed DEB methodology.

C. The CAISO Should Remove the Gas Floor from the Storage DEB

CalCCA recommends that the CAISO remove the proposed gas floor from the storage DEB. The CAISO’s analysis indicates that the gas floor would influence the DEB in a limited number of instances. At the same time, when the gas floor does bind, it could have a significant effect on the DEB during periods of elevated or rapidly increasing gas prices.

More fundamentally, gas prices are not themselves a determinant of a storage resource’s marginal cost. The marginal value of charging and discharging storage is reflected through electricity prices, which already incorporate the effect of gas prices when gas-fired generation is marginal. Including a separate gas-price floor therefore risks increasing the storage DEB based on a cost that is not directly incurred by the storage resource and whose effect may already be reflected in LMPs.

Given the limited circumstances in which the gas floor would affect the DEB, and the potential magnitude of its effect during gas price spikes, the CAISO has not demonstrated that retaining the gas floor is necessary to reflect storage opportunity costs. The CAISO should therefore remove the gas floor from the final proposal.

The modifications and recommendations described above are intended to protect legitimate storage opportunity costs and SOC management without unnecessarily weakening market power mitigation or increasing costs to load. CalCCA supports continued development of the TOD DEB methodology and recommends that the CAISO conduct the additional analysis described above before finalizing the design.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

A. CalCCA Supports the Greater-of Approach for Variable Generation Hybrid Resources

CalCCA supports the CAISO’s proposal to establish a hybrid resource’s DEB using the greater of the DEBs applicable to its underlying components for hybrid resources combining storage and variable generation. This approach recognizes the different costs and opportunity costs of the resource’s components while providing a relatively simple and administrable methodology.

CalCCA also supports establishing a minimum component-share requirement to prevent a relatively small component with a higher DEB from determining the DEB for the entire hybrid resource. The data presented in the Revised Straw Proposal suggests the CAISO’s proposed 30 percent threshold as an appropriate starting point. The CAISO should monitor this threshold as the hybrid fleet evolves and revisit it if future resource configurations or market outcomes warrant modification.

B. The CAISO Should Further Evaluate the Greater-of Approach for Hybrids with Dispatchable Generation

CalCCA continues to recommend that the CAISO evaluate whether the greater-of methodology is appropriate for hybrids that include dispatchable generation, such as gas-plus-storage resources. Applying the higher component DEB to the entire hybrid could allow output from a lower-DEB component to bid above the DEB that would otherwise apply to that component, potentially weakening market power mitigation.

While a uniform methodology provides administrative simplicity, the CAISO should demonstrate that applying the greater-of approach to dispatchable hybrids will not materially weaken mitigation. If the analysis identifies material differences between variable-generation and dispatchable-generation hybrids, the CAISO should consider different treatment for these resource configurations.

C. The CAISO Should Monitor the Hybrid DEB Following Implementation

CalCCA generally supports the CAISO’s decision not to pursue a more dynamic hybrid DEB at this time given the need to close an existing gap (i.e., not having any form of DEB or mitigation for hybrid resources) and the additional implementation complexity required for a more dynamic option. The CAISO should, however, monitor whether the greater-of methodology results in DEBs that materially exceed the costs of the component providing incremental energy or otherwise weakens market power mitigation.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

CalCCA has no comments at this time.   

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

CalCCA has no additional comments at this time.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

The California Energy Storage Alliance (CESA) appreciates the opportunity to comment on the September 22, 2026 discussion of the Storage Design and Modeling – Default Energy Bids (DEB) and Outage Management revised straw proposal. The proposed storage DEB continues to improve from prior proposals.

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

CESA is supportive of the proposed timeline. CESA believes that the revised storage DEB design can be completed before the end of 2026 and brought for WEM Governing Body decision early in 2027.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

Removal of the 1.4 PBOC Multiplier used in Hydro DEB

CESA does not oppose removal of the 1.4 multiplier. As CESA noted in prior comments, the CAISO did not perform an empirical study to justify the multiplier but rather relied on extrapolating analysis performed when the hydro DEB was developed.

Include the Gas Floor from the Hydro DEB

CESA supports including the gas floor from the hydro DEB in both the day-ahead and real-time DEB which will help correctly position storage resources in the bid stack when mitigated. In addition, the gas floor is a fair representation of the cost a storage resource could be exposed to in the event it is prematurely dispatched and must buy-back its day-ahead position from a gas resource, particularly if there was an increase in gas costs from day-ahead to real-time.

Apply 1.4 Time-of-Day (TOD) Multiplier in Real-Time DEB

CESA supports applying a 1.4 multiplier to the real-time DEB in the hours before the hour that set the price-based opportunity cost, and a 1.0 multiplier starting in the hour the net load peak window begins. This will reduce the probability that a mitigated discharge bid will prematurely deplete the state-of-charge (SOC) before the resource is needed for the real-time net load peak. The proposed change to apply a value of 1.4 before the hour that sets the price-based opportunity cost and 1.0 after the later of either (1) the earliest of the Nth highest priced day-ahead LMPs, or (2) hour ending 18 (only in real-time) is consistent with CESA’s prior understanding. CESA does note that additional discussion and analysis should be performed to determine if hour ending 18 is too soon to lower the TOD multiplier to 1.0. Another approach could be to set the multiplier to 1.0 starting at the later of hour ending 18 or the first hour after hour ending 18 that was included in the price-based opportunity cost window. For example, assume that a 4-hour battery had the following 4 highest price hours in day-ahead: 9, 20, 21, and 22. Under this approach, the TOD multiplier would be reduced to 1.0 starting in hour ending 20 rather than hour ending 18.  CESA requests CAISO provide a numerical example for the full 24-hour day to illustrate how the proposal will be implemented.

As CESA discussed during the call, a TOD multiplier below 1.0 could introduce gaming opportunities since the cost to resolve congestion would be systematically lower in the real-time market than the day-ahead market. The real-time DEB should never be lower than the day-ahead DEB.  CESA does not believe using the 1.4 TOD multiplier introduces the same gaming concerns; however, introducing systematic differences should be minimized as it can lead to adverse market outcomes. CESA does support the 1.4 TOD multiplier but would also support developing a dynamic trigger for activating the 1.4 TOD multiplier. CESA previously recommended increasing the real-time DEB if there was a material deviation in the system-wide SOC. For example, assume the real-time system-wide SOC was 15-20% lower than the day-ahead SOC for a given operating hour (hour ending 10). Under the CAISO’s current proposal, this would trigger the 1.4 TOD multiplier until hour ending 18. This alternative approach would eliminate the systematic difference between day-ahead and real-time and only apply the 1.4 TOD multiply when there has been a material change in system-wide SOC. Similarly to the hour ending 18 design choice, the percentage deviation of the system-wide SOC that triggers the 1.4 TOD multiplier should be determined empirically.

Scaling Price-Based Opportunity Costs

CESA supports scaling opportunity costs-- upward only -- based upon historical comparisons of the hourly LMPs from the prior three days between markets. This change addresses the concern that day-ahead prices use in the storage DEB may be “stale” if the real-time price has been regularly higher than the day-ahead price over the past three days. This change aligns with the current negotiated DEB option for WEIM-only storage resources. 

CESA is unclear how the scalar, as described in the proposal, would provide meaningful value in the day-ahead market. The CAISO proposes to compare the prices from the market power mitigation run to the integrated forward market prices. CESA’s understanding is that prices in the market power mitigation run only include congestion from competitive constraints; whereas the integrated forward market prices include congestion from both competitive and non-competitive constraints.  Thus, the day-ahead scalar isn’t addressing “stale” prices but rather different price formation rules. CAISO should consider calculating the day-ahead scalar as the difference between the day-ahead market power mitigation run prices and real-time prices. The real-time storage DEB would not need a separate scalar and would be calculated the same as currently implemented. This would eliminate a systematic difference in the storage DEB between day-ahead and real-time that could lead to market inefficiencies as discussed in the TOD multiplier section above. 

Lastly, there is concern that using the scalar based upon the prior three operating days will miss the first day of price differences between day-ahead and real-time.  This concern could be partially addressed by the alternative approach for triggering the TOD multiplier as discussed above.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

CESA supports a 30% minimum share threshold for hybrid resources to use the DEB greater-of approach. This share threshold is consistent with 83% of the hybrid configuration in production today. Thus, 35 out of 42 hybrid resources are eligible to include the revised storage DEB.  CESA does request CAISO provide a clear definition of the “installed capacity” used to calculate the share of the hybrid resource.

CAISO stated that implementing their proposed greater-of approach would require significant implementation efforts given the need to calculate multiple DEBs for each operating hour. CAISO should consider if the greater-of approach or something similar could be implemented through Masterfile registration rather than a dynamic hourly calculation. For example, assume a hybrid resource was composed of 30% storage, 30% solar, 30% gas, and 10% hydro. The hybrid resource could select either the storage DEB, solar DEB, or gas DEB to be registered in Masterfile. The hybrid resource could change the election through the standard Masterfile change process and timeline. Thus, CAISO will only need to calculate a single DEB for the market. 

CESA recommends that the remaining 7 of the online 42 hybrid resources be grandfathered and not subject to mitigation as they are currently. The remaining hybrid resources only represent 63MW of capacity -- less than 3% of total hybrid capacity. CESA does support that, for any future hybrid resource which does not meet the requirements of the greater-of DEB, the resource’s DEB be set at the largest component’s DEB for the full hybrid resource.

CESA requests CAISO address the inconsistencies between the tariff and business practice manual (BPM) regarding dynamic limits highlighted by Terra-Gen. The tariff provides the following in Section 30.5.6.2: “Hybrid Dynamic Limits should reflect resource availability based on operating capabilities such as State of Charge and forecasted output from the variable component of a Hybrid Resource. Scheduling Coordinators may also use Hybrid Dynamic Limits to manage onsite charging of an energy storage component of a Hybrid Resource.” In the BPM for Market Operations, the following language is included: “Scheduling coordinators may submit hybrid dynamic limits to reflect four scenarios: 1) ambient unavailability, 2) unavailability of renewable generation due to lack of fuel resource (e.g. wind, sun) 3) unavailability due to state of charge or 4) to reflect onsite charging … Resource operators will need to manage the state of charge of any storage component through typical (Price, MW) bid submissions.”

The bold text above illustrates a disconnect between the tariff and relevant BPMs. The CAISO should edit the BPM language to correctly reflect the intent of the tariff to allow for unambiguous management of state of charge for the BESS component of a hybrid through dynamic limits. 

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

CESA appreciates CAISO’s response to our request for implementation dates for the OMS enhancements and the modeling of nonlinearity. However, CAISO’s statement that it “is on-track for implementing representation of nonlinearity no earlier than Spring 2027” is confusing, as it is impossible to be on-track without a defined target. CAISO decided to model nonlinearity in January 2026, and although a committed date was not expected at that time, roughly eight months have passed without a schedule being established. CESA asks that CAISO publish a target date and a committed implementation timeline as soon as possible.

CESA is concerned that the absence of a firm commitment suggests a lack of urgency in ensuring the full storage supply is accessible to the market. Until nonlinearity can be modeled, CESA and other stakeholders recommended that resources continue to use outage cards when entering the foldback region, with those outage cards exempt from RAAIM penalties. Without this exemption, storage resources are disincentivized from making this additional capability available. That outcome harms both CAISO and storage operators. During tight system conditions, this supply will not be visible to the market optimization or to operators, which is significant given the more than 20,000 MW of storage across EDAM and WEIM. For storage operators, it prevents the resource from selling during high-priced intervals without incurring a penalty.

CAISO did not support this request, reasoning that it would apply to only one additional summer before nonlinearity is represented in the market. However, if implementation slips beyond Spring 2027, CAISO would enter another summer underutilizing storage. A firm schedule would help avoid that risk, and an interim solution would mitigate it.

Finally, continuing to require outages for foldback operation will erode energy storage UCAP values used by the CPUC in resource adequacy accreditation. CESA believes this erosion is unjustified and inequitable, and it is another reason to adopt the interim approach while the market model is developed.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

CESA requests CAISO determine which components of the storage DEB calculation will be included in the tariff and which will be included in the BPM. Over time, empirical analysis may support modification of individual multipliers in order to continue to meet the storage DEB guiding principles.  CESA recommends including the 1.4 TOD multiplier and scalar be detailed in the BPM, CAISO could modify, through a stakeholder process to review the empirical analysis, without the need for a FERC filing.  The DEB design elements not based upon empirical data, such as the 1.1 adder applied to the PBOC and the 1.0 TOD multiplier should be in the tariff.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

Comments on Storage Design and Modeling: Revised Straw Proposal on

Default Energy Bids

Department of Market Monitoring

October 9, 2026

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Storage Design and Modeling: Revised Straw Proposal on Default Energy Bids issued September 17, 2026.[1] While DMM still has concerns with some features of the storage default energy bid (DEB), DMM appreciates the ISO's modifications to the original straw proposal and commends the ISO for providing empirical analysis demonstrating the potential impacts of the different DEB proposals. DMM supports the two revisions to the storage DEB proposed in the revised straw proposal. The ISO's analysis highlights the improved ability of both DMM's proposal and the ISO's revised proposal to estimate storage opportunity costs during peak hours relative to the ISO's original straw proposal.

First, the ISO proposes retaining a price-based opportunity cost multiplier of 1.1 rather than increasing it to 1.4 as proposed in the straw proposal. DMM supports this change because this multiplier applies throughout the day, and using 1.4 would substantially overestimate the marginal costs of storage resources during peak hours.

Second, the ISO proposes incorporating DMM's recommended time-of-day multiplier design, which decreases to a lower multiplier value at the later of the hour of the Nth highest day-ahead locational marginal price (LMP) or hour-ending 18. DMM supports this approach as it ensures that the time-of-day multiplier does not decrease to its lower value too early or too late.

DMM continues to recommend a time-of-day multiplier design that accommodates values less than 1 where appropriate to accurately reflect lower opportunity costs during the highest-priced hours at the end of the operating day. While DMM acknowledges that opportunity costs may reflect expected prices beyond the current day, this does not imply that DEBs during the peak hours need to be as high as peak-hour prices. Rather, DEBs in peak hours should reflect future charging and discharging opportunities following peak hours and into the next morning. DMM and ISO analysis have shown the average DEB values resulting from a 0.8 time-of-day multiplier are generally consistent with or exceed the value of those future opportunities.

The revised straw proposal also references a price-scaling adjustment that will adjust the prices used to calculate DEBs when there are large differences between those prices and prices in the final market run. DMM recommends that the ISO propose specific scalar calculations and provide updated analysis of the potential real-time DEB formulations previously analyzed.

DMM supports the ISO’s proposed interim hybrid resource DEB design. DMM continues to support the “greater of” approach and does not identify any material issues with the proposed 30 percent minimum share requirement. DMM continues to place high priority on the development of a DEB for hybrid resources to facilitate local market power mitigation, and recommends the ISO prioritize further enhancements following the implementation of this near-term solution.

Comments

Storage DEB

Retaining the opportunity cost multiplier value of 1.1 is more appropriate than increasing it to 1.4

DMM raised concerns that the ISO’s proposal to increase the price-based opportunity cost multiplier from 1.1 to 1.4 would greatly overestimate the marginal cost of battery resources during the highest-priced hours.[2]^,[3] The price-based multiplier was included in the original storage DEB formulation in order to provide additional headroom above the estimated highest opportunity cost of the day. Under the revised straw proposal, the opportunity cost multiplier remains at 1.1 and additional headroom is provided through the introduction of both the price adjustment scalar and the time-of-day multiplier.

The ISO provided analysis similar to DMM’s that compares the average DEB values under the ISO’s original straw proposal, the ISO’s revised straw proposal, and DMM’s proposal, along with the hourly average real-time pre-dispatch (RTPD) locational marginal prices (LMPs). This analysis highlights the extent to which the ISO’s original straw proposal overestimated storage opportunity costs throughout the day, particularly during peak hours when local market power concerns are the greatest.

DMM appreciates the ISO’s analysis demonstrating that retaining a 1.1 opportunity cost multiplier, rather than increasing it to 1.4, substantially reduces the overestimation of DEB values observed during peak hours. While DMM continues to believe that time-of-day multipliers and the price adjustment scalars may make the opportunity cost multiplier unnecessary, DMM supports the ISO’s proposal not to increase the multiplier to 1.4 and DMM does not oppose retaining the multiplier value of 1.1.

The time-of-day multiplier design should allow values less than 1 where needed to accurately reflect varying intraday opportunity costs

DMM continues to recommend a time-of-day multiplier that reflects both the higher opportunity costs in hours prior to the highest-priced hours and the lower opportunity costs during those hours. The proposal to limit the multiplier range from 1 to 1.4 addresses concerns about the DEB underestimating costs during the pre-peak hours, but does not address the longstanding issue that current storage DEBs may significantly overestimate marginal costs during peak hours, the very periods when local market power concerns are the greatest. Therefore, DMM continues to recommend a time-of-day multiplier that can take on a value less than 1 during peak hours.

The ISO stated that the time-of-day multiplier could not be less than 1 because it must capture the value of opportunities that extend beyond the current trade date and into the following day. DMM agrees with the ISO’s statement that opportunity costs are not limited to hours within the same trade date. However, DMM does not agree that this implies that the time-of-day multiplier should not be set less than 1.

The DEB in the evening peak hours should estimate the opportunity costs associated with future discharging and charging opportunities over the remaining hours of the current day and the early morning hours of the following day. A reasonable approximation of these opportunity costs should be closely aligned with prices during the hours in which those future charging and discharging opportunities exist.

The following figure compares the average DMM DEB during peak hours, using a 0.8 time-of-day multiplier, to the average RTPD LMP across the entire day. The figure is reproduced from the ISO’s revised straw proposal, with DMM adding a horizontal reference (green dashed) line representing the lower DEB value under DMM’s proposal during peak hours to allow for comparison with average RTPD LMPs.

Figure 1 Comparison of DMM’s average proposed DEB values over peak hours and average RTPD LMPs

Figure 1 shows that the lower DEB values produced under DMM’s proposed 0.8 multiplier are broadly consistent with prices during the hours following the evening peak and during the morning peak (e.g., hours-ending 1 to 6), while also exceeding average prices during the morning ramp hours. The alignment between the DMM DEB and average prices during the late evening and morning peak hours indicates that the DMM DEB very accurately reflects the value of future discharge opportunities. The fact that the DMM DEB is higher than morning ramp hours indicates it may even overestimate the opportunity cost of recharging in advance of the morning peak.

Together, these observations demonstrate that a DEB with a time-of-day multiplier that decreases to 0.8 during peak hours can appropriately reflect opportunity costs following the evening peak and into the next morning. Moreover, any real-time upward adjustment scalar adopted by the ISO would further increase these DEB values and provide additional headroom.

DEB design should balance providing sufficient headroom for efficient dispatch while still effectively mitigating local market power

DMM acknowledges that there may be instances where storage resources are mitigated to DEB values that could result in inefficient dispatch. No DEB will be a perfect approximation of marginal cost in every circumstance. However, the potential for outlier situations does not justify a DEB that significantly overstates marginal cost in the great majority of instances, to the point that it is no longer capable of mitigating market power.

Under the current bid cost recovery rules (BCR), storage resources are eligible to receive real-time uplift payments when they must buy back day-ahead schedules at a loss due to insufficient state-of-charge.[4] While DMM continues to recommend that BCR rules limit the circumstances in which storage resources receive real-time uplift for buying back day-ahead schedules due to insufficient state-of-charge, DMM previously identified buy backs due to mitigation as a potential consideration for a carve-out in future bid cost recovery designs.[5]

The day-ahead storage DEB should include the time-of-day multiplier to better reflect intraday opportunity costs and promote day-ahead and real-time market convergence

DMM also recommends the ISO incorporate the time-of-day multiplier into the day-ahead storage DEB as well. The ISO has argued that the time-of-day component of the DEB multiplier may not be as necessary in the day-ahead optimization because it considers the full 24-hour time horizon. In earlier comments, DMM has described in detail the importance of explicitly including an estimate of intraday opportunity cost in the day-ahead storage DEB, even in the context of 24-hour optimization.[6] The ISO reintroduced an opportunity cost component in the day-ahead storage DEB in 2022, and DMM recommended to the CAISO at that time further refinements to consider a more precise estimate of hourly opportunity cost that can reflect changing opportunity costs throughout the operating day. 

Additionally, incorporating the time-of-day multiplier into the day-ahead storage DEB would promote convergence between the day-ahead and real-time markets. DMM further notes that the ISO's decision not to include a time-of-day multiplier in the day-ahead DEB should not constrain the design of the real-time time-of-day multiplier or preclude the use of multiplier values below 1 during peak hours.

The ISO should provide analysis using their proposed methodology for scaling up DEBs to reflect differences in day-ahead and real-time prices

The ISO is proposing to incorporate a scaling process for both day-ahead and real-time storage DEBs to account for significant discrepancies between the prices across different market runs. DMM continues to support this concept and recommends that the ISO propose a specific methodology for calculating the adjustment scalar to allow stakeholders to review.

DMM also recommends that the ISO conduct analysis on the real-time storage DEB after incorporating the proposed adjustment scalar, similar to that included in the revised straw proposal comparing DMM’s proposed DEB formulation and the ISO’s revised proposal. Such analysis would allow stakeholders to better understand how the adjustment scalar interacts with the other DEB components and affects DEB values throughout the day, and how those values compare to the average RTPD LMPs across the day.

The inclusion of the gas floor in the storage DEB is not warranted as it does not directly relate to the marginal cost of storage resources

DMM continues to oppose the inclusion of the gas floor in the storage DEB calculation because it is not related to the marginal costs of storage resources. DMM does not agree that storage DEBs need to incorporate the gas floor because the gas floor is included in the hydro DEB, and DMM does not agree that DEBs should not be used to establish a preferred relative position of resources in the bid stack. DEBs should be designed to estimate the marginal costs of individual resources, with the appropriate bid stack position following based on cost.

Storage DEBs rely on locational marginal prices (LMPs) or default aggregation point (DGAP) values that are much more representative of real-time prices than the day-ahead index prices used in hydro DEBs. In addition, the ISO proposes several upward adjustments to storage DEBs, including the real-time adjustment scalar. DMM recommends the ISO propose a real-time adjustment scalar that more accurately provides protection against underestimating real-time prices than relying on the gas floor component that may inappropriately set storage DEB values during periods of elevated gas prices even if gas resources are not setting electricity prices.

The ISO indicates that the gas floor is impactful in less than 10 percent of resource-days and, according to the ISO, is most frequently the binding component on days when electricity prices are particularly low (e.g., due to congestion) rather than when gas prices are exceptionally high. While this finding may partially reflect gas price trends during the period examined, DMM does not understand why it is necessary for the gas floor to set storage DEBs during these intervals. The ISO argues that the gas floor would only be material in circumstances where it is material for both hydro and storage resources. However, DMM does not understand why storage DEBs should reflect the estimated cost of electricity generated by gas resources when actual electricity prices—and therefore the opportunity costs of storage resources—are lower.

DMM continues to believe that the appropriateness of a gas floor should be evaluated based on the design and objectives of the storage DEB itself, rather than its utilization in the hydro DEB. If an additional justification for including the gas floor is to increase the real-time DEB on days with same-day gas price spikes (as a proxy for real-time LMP increases compared to day-ahead), this may be duplicative in the presence of the ISO’s proposed but yet-to-be-detailed real-time price scalar meant to serve this purpose. Even if the gas floor affects only a limited number of intervals, DMM continues to believe that storage DEBs should be based on estimates of storage opportunity costs rather than the estimated costs of another generating technology.

Hybrid resource DEB

DMM supports the “greater of” approach to establish an interim hybrid resource DEB

Hybrid resources currently do not have a DEB and therefore are not subject to local market power mitigation. DMM continues to place a high priority on developing a hybrid resource DEB to facilitate local market power mitigation for these resources. DMM continues to support the ISO's proposed "greater of" approach, which is similar to DMM's recommendation to develop a near-term hybrid resource DEB by calculating the maximum of the DEBs applicable to each generation component within the hybrid resource. DMM supports implementing a practical near-term solution that can appropriately subject hybrid resources to local market power mitigation while more comprehensive enhancements are developed.

As part of the "greater of" approach, the ISO proposes a 30 percent minimum share requirement, under which a technology must account for at least 30 percent of a hybrid resource's total capacity for that technology's DEB to be considered in the "greater of" calculation. DMM does not object to the proposed 30 percent threshold and appreciates the ISO's efforts to address concerns that, without such a threshold, the resulting hybrid DEB could significantly exceed the marginal costs of the large majority of a hybrid resource's generation capacity. While this proposal represents a reasonable near-term solution, DMM continues to recommend additional hybrid DEB enhancements that more accurately reflect the costs and operational characteristics of hybrid resources as integrated systems composed of multiplier generation technologies.

Questions and comments

DMM welcomes questions, comments, and discussion directly from stakeholders on all market issues. If you have any questions about this initiative or any other issue, please feel free to contact DMM in any of the following ways:

Nicole Selling, Lead Market Monitoring Economist

nselling@caiso.com

916-817-7495

Adam Swadley, Manager, Market & Policy Analysis

aswadley@caiso.com

916-542-5127

DMM@caiso.com

[1]  Storage Design and Modeling: Revised Straw Proposal on Default Energy Bids, California ISO, September 17, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Second-Straw-Proposal-Uplift-Default-Energy-Bids-and-State-of-Charge-Management-Topic-Group-Storage-Design-and-Modeling-Sep-17-2026.pdf

[2]  Comments on Storage Design and Modeling: Straw Proposal on Default Energy Bids, Uplift, and State-of-Charge Management, Department of Market Monitoring, August 5, 2026: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-straw-proposal-on-default-energy-bids-uplift-and-state-of-charge-management-aug-05-2026.pdf

[3]  Supplemental Comments on Storage Design and Modeling: Straw Proposal on Default Energy Bids, Uplift, and State-of-Charge Management, Department of Market Monitoring, August 17, 2026: https://www.caiso.com/documents/dmm-supplemental-comments-on-the-storage-design-and-modeling-jul-15-2026-working-group-presentation-aug-17-2026.pdf

[4]  A stakeholder in the September 22 meeting noted that their resource did not receive BCR after buying back a day-ahead schedule at a loss due to insufficient state-of-charge resulting from earlier discharge due to mitigation. DMM notes that while storage resources are generally eligible for BCR in this circumstance, there are exceptions. For example, resources are not eligible for bid cost recovery when using the end-of-hour state-of-charge parameter or when constrained by the ancillary services state-of-charge constraint.

[5]  Comments on Storage Design and Modeling Updated Discussion and Issue Paper on Uplift and Default Energy Bid, Department of Market Monitoring, January 8, 2026: https://www.caiso.com/documents/dmm-comments-on-storage-design-and-modeling-updated-discussion-and-issue-paper-on-uplift-and-default-energy-bid-jan-8-2026.pdf

[6]  Comments on Energy Storage Enhancements Second Revised Straw Proposal, Section III: Addendum to revise day-ahead DEB for energy storage resources, Department of Market Monitoring, August 4, 2022: https://www.caiso.com/documents/dmm-comments-energy-storage-enhancements-second-revised-straw-proposal-aug-4-2022.pdf

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

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

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

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

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

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

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

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

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

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

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

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

ED Staff appreciates CAISO’s additional analysis and revisions to the storage default energy bid (DEB) and hybrid DEB approaches in the revised straw proposal. Staff supports continued development of a time-of-day approach for storage DEBs, and a “greater-of" methodology for hybrid DEBs. However, Staff is still concerned that the proposed storage DEB significantly overestimates marginal costs during peak hours, when the potential for local market power is the highest. Staff is also concerned about the effects on unwarranted bid cost recovery (BCR) payments and inefficient dispatch outcomes. Therefore, Staff supports further consideration of the Department of Market Monitoring’s (DMM) alternative storage DEB methodology outlined in their August 17th supplemental comments. In particular, Staff recommends: (1) removal of the gas floor from the calculation and (2) allowing a time-of-day (TOD) multiplier of below 1.0. 

Staff does not support inclusion of a gas floor in the storage DEB calculation because it does not reflect the resource’s marginal costs and can inflate its mitigated bid without any economic justification (see comments below #s 3 & 6).

Staff supports adoption of DMM’s proposed TOD multiplier below 1.0 during peak net-load hours to better reflect the change in opportunity costs and provide stronger market power mitigation. Staff requests additional empirical analysis from CAISO to understand whether this approach materially increases the risk of premature storage dispatch before high priced hours, and if not, what would be the justification for not allowing the TOD multiplier to be set below 1 during peak net load hours.

CAISO’s analysis shows that their revised proposal has a relatively small difference in revenue efficiency compared with DMM’s proposal. These results suggest that DMM’s method would provide stronger market power mitigation without substantial effect to the resource’s economic efficiency. Aside from the revenue efficiency metric, CAISO should also prioritize accurately estimating marginal and opportunity costs. Staff recommends that CAISO place greater weight on the empirical evidence evaluating the accuracy of each methodology in estimating storage’s marginal and opportunity costs, particularly during peak net-load hours.

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

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

ED Staff recommends that CAISO prioritize bid cost recovery (BCR) reform and DEB enhancements in the near-term. Staff agrees with the comments raised by DMM and Cal Advocates that any longer-term changes to the storage bidding framework should not delay more pressing market-design enhancements associated with DEBs and BCR.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

CAISO’s changes to the proposed storage DEB methodology include: 

• A reduction in the price-based opportunity cost multiplier from 1.4 to 1.1. 
• A time of day multiplier that decreases beginning in hour ending (HE) 18. 
• Continued inclusion of a gas floor in the calculation.

ED Staff appreciates CAISO’s revisions, especially the reduction in the price-based multiplier and using HE 18 as the point at which the TOD multiplier decreases. However, Staff still has questions and concerns on three elements of the methodology: (1) the gas floor (2) the 1.1 price-based opportunity cost multiplier, and (3) the 1.0 TOD multiplier.

Energy division does not support retaining the gas floor [2] as a component in the storage DEB calculation. As DMM noted [3], gas prices are not a determinant of storage marginal costs, and the gas floor therefore lacks a clear theoretical basis for inclusion in a storage-specific DEB. In the revised straw proposal, CAISO explains that the gas floor has limited effect on the resulting DEB and that it was retained in part to maintain similar treatment of storage and hydro resources. Even if the impact is generally limited, including a component that is not economically related to storage marginal costs creates a risk of unnecessarily inflating the DEB under certain market conditions. Staff recommends focusing on the objective of estimating storage’s marginal and opportunity costs rather than maintaining a methodology that is consistent with hydro resources, especially when the underlying cost drivers differ. Removing the gas floor would also greatly simplify the proposed calculation and reduce the risk of gas-price fluctuations disproportionately influencing the storage DEB.

ED Staff requests additional analysis and/or clarification demonstrating the need for a separate 1.1 price-based opportunity cost multiplier given the other upward adjustments incorporated into the proposed DEB calculation. Although Staff appreciates CAISO’s reduction of the price-based opportunity-cost multiplier from 1.4 to 1.1, Staff is still concerned that the combination of the price-based opportunity cost multiplier, real-time adjustment scalar, TOD multiplier, and gas floor result in DEBs that far exceed storage marginal costs. Staff would like to see, via empirical analysis, if the 1.1 multiplier is actually necessary when taking into account all the other proposed layering of scalars and multipliers.

ED Staff is concerned that not using TOD multipliers of below 1.0 may overstate storage opportunity costs during peak hours. Staff requests more analysis on why a TOD multiplier below 1.0 would not be appropriate to estimate intraday opportunity costs, given that during and after the evening peak, the opportunity costs of preserving stored energy for later is generally lower since the highest-priced period has already occurred (or is occurring). Staff recommends that CAISO allow the TOD multiplier to fall below 1.0 during peak demand periods. Specifically, Staff support further consideration of DMM’s proposed approach, where the multiplier would decrease below 1.0 during peak hours, with HE 18 serving as the floor to prevent the multiplier from decreasing too early. DMM’s analysis indicates that this approach better aligns the DEB with storage marginal costs and provides better protection against the exercise of local market power, with limited evidence of premature dispatch. [4]

[2] 11,068 MMBtu/MWh * Fuel region gas price, pg. 18 of Storage Design and Modeling: Straw Proposal on Default Energy Bids, Uplift, and State-of-Charge Management issued September 17, 2026. 

[3] Comments on the July 15, 2026 Storage Design and Modeling Straw Proposal on Default Energy Bids, Uplift, and State-of-Charge Management Topic Groups, Department of Market Monitoring, August 5, 2026: https://stakeholdercenter.caiso.com/Comments/AllComments/4e1e1c4d-8992-4917-8da5-60a6ad2016bb#org-c485bcc3-c7a7-49a3-a404-36b8e69b573d 

[4] 2024 Special Report on Battery Storage, Department of Market Monitoring, May 29, 2025: https://www.caiso.com/documents/2024-special-report-on-battery-storage-may-29-2025.pdf.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

ED supports the proposed “greater-of” methodology for hybrid DEBs. Staff recommends that CAISO continue to develop and validate the minimum share requirement [5] to be applied.

[5] Minimum share requirement is defined as: “A component must constitute at least N% of all installed capacity that is part of the hybrid resource for its default energy bid value to be considered as part of the greater-of approach.” Pg. 23 of the Revised Straw Proposal on Default Energy Bids issued September 17th, 2026. 

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

No comments at this time.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

Staff emphasizes removing the gas floor from the storage DEB proposal. Staff notes that CAISO’s analysis (Straw Proposal at p. 23) demonstrates that the gas floor could be most impactful to ratepayer costs in the shoulder seasons, i.e. May, when variable energy is insufficient and storage resources could be extremely useful in reducing reliance on fossil resources.

Energy markets should compensate storage for the distinct value it provides, especially flexibility, time-shifting, and grid reliability, rather than simply applying a gas-generator payment model. Paying storage like gas can misprice its value and operating costs and may discourage efficient charging and maximizing the value of discharging to reduce costs for ratepayers. Recognizing the similarities between hydro and storage as use limited resources may justify inclusion of the gas floor only temporarily until the hydro BCR formula can also be revised to be less reliant on a gas proxy. As the market moves to a larger percentage of hours where variable energy and not gas is on the margin, it will be imperative for market rules to allow ratepayers to enjoy the full benefits of the clean energy transition and not pay storage and hydro as if they are gas.

Treating storage default bids as if they were a gas generator favors legacy market structures rather than evolving the entire energy market to support a cleaner, more flexible grid that is increasingly dominated by near zero marginal cost resources (i.e. renewables) and balanced with the marginal cost of roundtrip efficiency losses (i.e. storage resources). For ratepayers to continue to support the clean energy transition, they have to receive as much of the economic benefits as possible.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) appreciates the opportunity to comment on the California Independent System Operator Corporation’s (CAISO) September 22, 2026 meeting on CAISO’s Storage Design and Modeling Initiative (Workshop)[1] and the September 17, 2026 Revised Straw Proposal on Default Energy Bids (Revised Straw Proposal).[2]

Cal Advocates provides the following comments on the Workshop and the Revised Straw Proposal:

• CAISO’s Revised Straw Proposal on the real-time (RT) storge default energy bid (DEB) methodology continues to overestimate RT opportunity costs during peak periods and may result in unduly high DEB values and excessive opportunity for the exercise of market power.
• CAISO should adopt the Department of Market Monitoring’s (DMM) proposal to set the RT time-of-day (TOD) multiplier to 0.8 in the hour that sets the price-based opportunity cost (PBOC), or hour ending 18, whichever is later.  CAISO should modify DMM’s proposal to set the TOD multiplier to 1.0 N hours after the multiplier is set to 0.8, where N is the duration of the storage resource, to facilitate any mitigated resource’s ability to retain residual state-of-charge (SOC) for dispatch in the following day.
• CAISO should adopt the “greater-of” approach for hybrid DEBs with an initial minimum 30 percent capacity-based share requirement for the component resource with the greater DEB.  CAISO should monitor the performance of the hybrid DEB to determine if additional refinements are needed.

[1] CAISO, Storage Design and Modeling Stakeholder Meeting on Default Energy Bids and Outage Management, September 22, 2026 (Workshop Slides).  Available as “Presentation - Storage Design and Modeling - Sep 22, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

[2] CAISO, Storage Design and Modeling Revised Straw Proposal on Default Energy Bids, September 17, 2026 (Revised Straw Proposal).  Available as “Second Straw Proposal - Uplift Default Energy Bids and State-of-Charge Management Topic Group - Storage Design and Modeling - Sep 17, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

CAISO should adopt the proposed timeline that would issue a final draft proposal on DEBs in mid-November 2026.[1]  CAISO should proceed expeditiously to implement the final adopted DEB reforms ahead of summer 2027.  Moreover, as Cal Advocates previously commented, CAISO should include Bid-Cost Recovery (BCR) within the scope of the final draft proposal and work towards a similar timeline to adopt and implement BCR reforms.[2]

[1] Workshop Slides at 8.

[2] Cal Advocates, Comments on Straw Proposal for Uplift, Default Energy Outage Management, State of Charge and Stakeholder Discussion from July 22, 2026, August 5, 2026 (Cal Advocates July 22 Comments), Response to Question 2.  Available at: https://stakeholdercenter.caiso.com/Comments/AllComments/df58b4fb-60d0-4455-a93d-76cf99d51c22#org-43bd9820-8430-47c0-a347-9c7954478149.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

The Revised Straw Proposal would set the PBOC multiplier to a value of 1.1 in the day-ahead (DA) and RT DEB formulas.[1]  CAISO should adopt the 1.1 PBOC multiplier in the final draft proposal to more accurately reflect opportunity costs and mitigate storage resources’ ability to exercise market power that would be introduced by the adoption of a 1.4 multiplier as CAISO previously proposed.[2]  As Cal Advocates explained in prior comments, a 1.4 multiplier would significantly overstate the DEB, particularly in peak hours when storage opportunity costs are lowest and when the potential for market participants to exercise market power is highest.[3] 

The Revised Straw Proposal also includes a TOD multiplier to capture the dynamic nature of opportunity costs in the RT market.  RT opportunity costs are highest in the early hours of the day, when market prices are lowest, because storage can charge and retain SOC during earlier hours then arbitrage energy to discharge in later hours at higher prices.  Opportunity costs are lowest in later hours because energy arbitrage opportunities diminish.  The Revised Straw Proposal would set the RT TOD multiplier to a value of 1.4 before the hour that sets the PBOC,[4] or at hour ending 18, whichever is later (referred to here as the switch hour).  The Revised Straw Proposal would set the TOD to 1.0 in the switch hour and for the remaining hours of the day.[5] 

Cal Advocates[6] and DMM[7] recommended that CAISO set the TOD multiplier to a value above 1.0 in the earlier hours of the day and to a value below 1.0 in the later hours of the day.  The Revised Straw Proposal rejects DMM’s latest proposal to set the TOD multiplier to a value of 0.8 in the switch hour and for the remainder of the day.[8]  The Revised Straw argues that there may be legitimate opportunity costs in the last hours of the day due to higher prices during the following day’s morning peak.[9]

CAISO’s DEB reform problem statement indicates that the current static RT DEB has the potential to over- or under-estimate opportunity costs at different hours of the day.[10]  Nevertheless, the Revised Straw Proposal perpetuates the over-estimation of opportunity costs during peak hours, because the TOD multiplier is set to a floor value of 1.0 after the switch hour, and thus does not modify the PBOC that CAISO uses in the current DEB formula.

Cal Advocates agrees that there may be legitimate opportunity costs in later hours, and that CAISO should not necessarily dispatch mitigated resources if the resource’s intent in bidding is to maintain a SOC for discharge in the early morning hours at higher prices.  However, CAISO can mitigate this concern while adopting DMM’s proposal to set the TOD to 0.8 during peak hours.  Cal Advocates proposes the following modification to the TOD multiplier in the Revised Straw Proposal.

As in the current Revised Straw Proposal, CAISO should set the TOD multiplier to 1.4 before the switch hour.  CAISO should set the TOD multiplier to 0.8 in the switch hour and in the following N-1 hours, where N is the duration of the storage resource.  In the Nth hour following the switch hour, and for the remainder of the day, CAISO should set the TOD multiplier to 1.0.  In the case where the switch hour is less than N hours before the end of the day, the TOD multiplier resets to 1.4 in the next day’s hour ending 1.

For example, if the switch hour is hour ending 18, and the storage duration is two hours, the TOD multiplier would be set to 1.4 during hours ending 1-17, to 0.8 in hours ending 19 and 20, and to 1.0 in hours ending 21-24.  For a second example, if the switch hour is hour ending 19, and the storage duration is four hours, the TOD multiplier is set to 0.8 in hours ending 19-22, and to 1.0 in hours ending 23 and 24.

Cal Advocates’ proposed modification to the TOD methodology preserves the Revised Straw Proposal’s TOD multiplier of 1.0 in later hours when there may be legitimate opportunity costs, while incorporating DMM’s proposal for a TOD multiplier of 0.8 during peak hours when opportunity costs are lowest and market power concerns are highest.

[1] Revised Straw Proposal at 15.

[2] CAISO, Straw Proposal on Default Energy Bids, Uplift, and State-of-Charge Management Topic Groups, July 15, 2026 at 24.  Available as: “Straw Proposal - Storage Design and Modeling - Uplift, Default Energy Bids, and State-of-Charge Management - Jul 15, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Storage-design-modeling.

[3] Cal Advocates July 22 Comments, Response to Question 3. 

[4] The hour that sets the PBOC is the hour in the DA market with the Nth highest locational marginal price (LMP), where N is the duration in hours of the storage resource.

[5] Revised Straw Proposal at 18.

[6] Cal Advocates July 22 Comments, Response to Question 3. 

[7] DMM, Supplemental Comments on Storage Design and Modeling: Straw Proposal on Default Energy Bids, Uplift, and State-of-Charge Management, August 17, 2026 at 1.  Available at: https://www.caiso.com/documents/dmm-supplemental-comments-on-the-storage-design-and-modeling-jul-15-2026-working-group-presentation-aug-17-2026.pdf.

[8] Revised Straw Proposal at 19.

[9] Revised Straw Proposal at 12.

[10] Revised Straw Proposal at 13.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

The Revised Straw Proposal would adopt the “greater-of” approach for the hybrid DEB, under which the largest DEB of the component resources sets the DEB for the hybrid resource.[1]  The Revised Straw Proposal includes a condition that the resource with the largest DEB must constitute at least 30 percent of the total installed capacity of the hybrid resource.[2]  The Revised Straw Proposal adopts this minimum share requirement to ensure that hybrid DEBs reflect the characteristics of a significant portion of the hybrid resource.[3]  CAISO developed the 30 percent capacity threshold through an analysis of existing hybrid resources.  CAISO concludes that 83 percent of existing hybrids have a smallest component with at least 30 percent of the total hybrid capacity, and that most of the remaining hybrids have a smallest component with less than a 20 percent share of the total hybrid capacity.[4]

A minimum share requirement of 30 percent is a reasonable starting point to ensure that the hybrid DEB reflects the operational characteristics of the combined resources, while accommodating the great majority of existing resources.  Moreover, CAISO commits to ongoing monitoring to determine if the hybrid DEB should be further refined.[5]  CAISO’s monitoring should include a specific consideration of “edge-case” hybrids with minimum component shares of just under or exactly at 30 percent to determine if resource owners are unduly incentivized to achieve the DEB that is most favorable for their hybrid.  With this consideration, CAISO should adopt the “greater-of” approach with an initial minimum requirement share of 30 percent.

[1] Revised Straw Proposal at 25.

[2] Revised Straw Proposal at 25.

[3] Revised Straw Proposal at 25.

[4] Revised Straw Proposal at 26.

[5] Revised Straw Proposal at 25.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

Cal Advocates does not have comments at this time.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

Cal Advocates does not have additional comments at this time.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

NV Energy appreciates CAISO’s continued effort on improving market rules to reflect the unique characteristics of storage resources and allowing storage resources to effectively participate in the market. NV Energy supports the current direction and general timeline of the initiative.  

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

NV Energy appreciates CAISO staff presenting a near-term timeline during the September 22, 2026 stakeholder meeting.  However, NV Energy is concerned with the lack of discrete implementation dates and pace of some stakeholder initiatives.  NV Energy is cognizant of the limited resources and competing initiative priorities of CAISO staff and defers the realistic delivery dates to the CAISO staff.  NV Energy requests to improve transparency if CAISO staff could convey to stakeholders the priority ranking of certain stakeholder initiatives.  CAISO staff could do so in the Market Policy Catalog Roadmap Process if it is not already discussed within that forum.  While stakeholder survey results showing levels of support of various initiatives are presented in the Market Policy Catalog Roadmap Process, a similar concept from CAISO staff’s perspective could be helpful for stakeholders to understand why certain initiatives are delayed while others are not. 

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

NV Energy generally supports the revised straw proposal for storage default energy bids. NV Energy continues to support the gas floor and as mentioned during the stakeholder call, while only providing limited impact, when it is impactful it may be a better reflection of true real-time opportunity costs and help ensure consistent treatment with other energy-limited resources under mitigation.  NV Energy believes that the gas floor is needed under certain situations when mitigation may cause the battery to discharge too soon without the ability to charge before it is needed potentially negatively affecting hourly base schedules for WEIM-only entities. This is of particular concern for storage resources that do not have the ability to grid charge.  

NV Energy appreciates CAISO staff and the DMM’s analysis on the time-of-day multiplier.  NV Energy maintains the position that the time-of-day multiplier remain at or above 1.0.  NV Energy does not oppose the time-of-day multiplier decreasing in the latter of either (1) the earliest of the Nth highest priced day-ahead LMPS, or (2) hour ending 18 (only in real-time). However, NV Energy seeks clarification whether the lowered time-of-day multiplier would begin starting hour ending 18 or starting after hour ending 18, essentially applying the lowered time-of-day multiplier beginning in hour ending 19.  

NV Energy also appreciates CAISO staff's explanation regarding the definition of the charging default energy bid and acknowledges CAISO’s view that the difference would minimize the risks mitigation may pose to state-of-charge management by avoiding the market discharging and charging a resource at the same price. 

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

No comment.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

No comment.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

No comment.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

PG&E appreciates CAISO’s continued work on storage Default Energy Bid (DEB) enhancements and CAISO’s clear presentation of the proposal’s background and rationale during the September 22 stakeholder meeting.

PG&E supports moving forward with the proposed storage DEB changes, with a review of key parameters after one year of implementation. If BCR remains unchanged at implementation, these changes can also serve as foundation for potential BCR revisions. PG&E also supports the 30% minimum-share requirement for hybrid resources as a reasonable threshold.

Finally, PG&E supports CAISO’s identified 2027 implementation timelines for the storage DEB and outage management enhancements. To make these timelines meaningful, CAISO should provide transparent implementation plans with clear requirements, milestones, and opportunities for stakeholder review and testing.

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

PG&E understands that CAISO has identified an implementation timeframe of no earlier than spring 2027. To make that timeframe meaningful and enable stakeholders to assess the proposed changes, identify potential operational issues, and prepare for implementation, PG&E requests a detailed and transparent plan identifying key milestones, including BRS publication, stakeholder review and comment, testing, and deployment.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

PG&E supports the revised straw proposal, including the proposed multiplier change to 1.1 and the gas-price floor.

• PG&E supports the Price Based Opportunity Cost (PBOC) 1.1 multiplier as a reasonable balance between mitigating potential market power and avoiding systematic underestimation of storage opportunity costs. Values below 1.0 could increase the risk of under-compensating storage resources during reliability-critical periods and could limit their ability to participate effectively. PG&E further supports the maximization approach and understands the use of DGAP as necessary to accommodate WEIM entities that may not have comparable day-ahead market price information.
• PG&E understands that the gas-price floor acts as a proxy for the default energy bid to better reflect current market conditions when gas prices exceed historical assumptions or gas-fired peaking generation is marginal; removing it could understate storage opportunity costs during stressed conditions. With this in mind, PG&E recommends codifying the gas floor as proxy of or forecast of day-ahead prices. This way, if a better forecast or proxy is found, the method can be updated without major changes to the tariff.
• Both the multiplier, its identified amount (1.1), and the gas-price floor should be reviewed after a year of performance (or earlier if necessary) to ensure to ensure these parameters continue to balance market power mitigation, state-of-charge management, and revenue efficiency. An example of future analysis should assess whether local market power mitigation is appropriately applied during high-value periods. Because key DEB parameters—including the static 1.1 opportunity-cost multiplier and TOD multiplier—are empirically based.
• PG&E supports DMM and WPTF’s recommendation to specify adjustable values and applicable hours in the BPM rather than the tariff, allowing CAISO to refine them through the stakeholder process. PG&E also requests a post-implementation review timeline, similar to the governance process for DAME configurable parameters,
• PG&E encourages CAISO to implement the proposed framework without waiting for additional studies, while continuing to monitor mitigation outcomes and battery performance.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

PG&E supports CAISO’s proposed 30% minimum-share requirement for hybrid resources. Because the requirement is based on capacity rather than energy, the proposed threshold represents a reasonable compromise for determining when the storage component is sufficiently material to warrant application of the hybrid default energy bid framework.

Although the threshold may not address every possible hybrid configuration, PG&E supports moving forward with the 30% requirement. Market participants that anticipate material adverse impacts from the proposed threshold should identify those impacts during the current stakeholder process so that specific concerns can be evaluated without delaying implementation of the broader proposal.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

PG&E supports CAISO’s decision in the 2026 Market Policy Catalog to implement the Storage Outage Management Enhancements in the first half of 2027. To make this timeline meaningful, PG&E requests that CAISO provide a transparent implementation plan identifying the applicable BRS and technical specifications, key milestones, and opportunities for stakeholder review and testing. CAISO should also distinguish between administrative or system-configuration updates and broader functionality that requires additional testing. This information is critical for stakeholders to identify potential operational issues.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

San Diego Gas and Electric (SDG&E) appreciates CAISO’s efforts to improve storage design and modeling and to address challenges related to the default energy bid (DEB) calculation and hybrid DEBs, and offers the following comments on the September 22 meeting and revised straw proposal.

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

SDG&E supports CAISO's near-term timeline and appreciates the continued progress made through the stakeholder process. Given the maturity of the proposal and the limited number of outstanding issues, SDG&E supports advancing the initiative toward a mid-November draft final proposal. As part of the draft final proposal, SDG&E requests that CAISO provide an estimated implementation timeline and key deployment milestones to help stakeholders prepare for the revised framework. SDG&E also appreciates the Outage Management System (OMS) enhancement updates provided during the stakeholder process and encourages continued communication regarding implementation progress.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

SDG&E appreciates CAISO’s continued analysis and stakeholder engagement regarding enhancements to the storage DEB. Overall, SDG&E is supportive of the direction of the revised straw proposal and believes the modifications improve the DEB calculation’s accurate reflection of storage opportunity costs.

SDG&E supports CAISO’s proposal to reduce the price-based opportunity cost (PBOC) multiplier from 1.4 to 1.1. CAISO and DMM analyses demonstrated that the combination of a 1.4 PBOC multiplier with other upward adjustments in the DEB calculation resulted in DEBs that exceeded real time (RT) prices in almost all intervals. The 1.1 multiplier better estimates a resource’s opportunity cost, and results in a DEB that more accurately reflects the marginal cost of storage resources. However, as the storage fleet continues to grow and evolve, storage resource dispatch and mitigation may follow new patterns. This evolution may require periodic re-evaluation of multiplier values if patterns change significantly, using instances where the DEB is below the real-time location marginal price as a key metric.

SDG&E also supports the proposal to decrease the time-of-day (TOD) multiplier at the later of hour ending (HE) 18 or the hour of the Nth-highest hourly day-ahead price. Under the previous proposal, if the Nth-highest hour occurs in the morning the TOD multiplier would decrease for the remainder of the day. This could result in premature, uneconomic dispatch of mitigated resources and prevent them from preserving state-of-charge for evening reliability needs. The inclusion of an HE18 floor will effectively protect against these instances.

SDG&E requests clarification regarding the precise timing of the TOD multiplier decrease. It is unclear whether the lower multiplier would be effective during HE18 itself, or beginning after HE 18.

Lastly, SDG&E remains generally supportive of retaining the gas floor as part of the storage DEB calculation and appreciates the additional analysis CAISO has provided regarding the frequency with which the gas floor is the binding component of the DEB. However, additional analysis would help stakeholders better understand the magnitude, timing, and operational significance of the gas floor.

Specifically, it would be helpful to understand how significantly the gas floor calculation exceeds the next highest DEB element when it binds. Additional clarity on the seasonal pattern of when the gas floor binds most frequently in May, and if this is due to low PBOC or significant divergence between DA and RT prices, would also be informative.Lastly, an illustration or example of how the gas floor could better estimate storage marginal cost when DA and RT prices significantly diverge could provide evidence of how the gas floor, while infrequently a material factor in the DEB, could better represent storage resources under certain market conditions.

If the gas floor is retained, additional transparency regarding the fuel-region values used in the calculation would be of value. While correlated, individual fuel-region values may differ significantly enough that a subset of geographically located resources see instances of a binding gas floor more than others. It is important to understand whether generic fuel-regions will be used in the calculation, or if more specific fuel-regions will be used on a resource-by-resource basis and whether these can be updated in the Resource Data Template.

Overall, SDG&E believes the revised proposal is a meaningful improvement over the July straw proposal and looks forward to continued stakeholder discussion to finalize the storage DEB framework.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

SDG&E generally supports CAISO's proposed hybrid default energy bid framework, including the greater-of approach and the proposed 30% minimum share requirement. We appreciate CAISO's continued efforts to refine and develop mitigation methodologies that better account for the operational characteristics of hybrid resources. At this time, SDG&E does not oppose the proposed minimum share threshold.

While SDG&E is supportive of the proposal, we encourage CAISO to provide additional transparency regarding how the effectiveness of the minimum share requirement will be evaluated over time. SDG&E would be interested in understanding if and how CAISO plans to assess market outcomes, mitigation effectiveness, and bidding behavior under the proposed framework.

As the hybrid resource fleet continues to evolve, SDG&E also recommends that CAISO periodically review the 30% minimum share threshold to ensure it continues to produce the intended mitigation outcomes and appropriately reflects hybrid resource participation and operational characteristics. Periodic evaluation would help determine whether the threshold remains effective or if future adjustments may be warranted based on observed market performance and stakeholder experience.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

No further comment.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

No comment.

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

Southern California Edison (SCE) appreciates the opportunity to provide comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids. SCE’s comments can be summarized as follows: 

Storage Default Energy Bid Enhancements 
SCE generally supports reducing the price-based opportunity cost multiplier and supports the proposed scaling methodology and time-of-day framework. However, SCE recommends that CAISO clearly document the rationale for the proposed multipliers, establish a process for periodic review, and ensure the default energy bid remains a reasonable and transparent fallback mechanism rather than a strategy intended to maximize resource value. 

Natural Gas Floor Proposal 
SCE remains concerned that the proposed natural-gas-based floor could result in default energy bids that exceed competitive market prices during periods when natural gas is not the primary driver of market outcomes. SCE recommends additional scenario analysis to evaluate when the gas floor would bind, its impact on mitigated bids, and whether it is appropriate to maintain storage default energy bids above competitive market conditions under those circumstances. 

Charging Default Energy Bid Formulation 
SCE supports continued development of a charging default energy bid but recommends further evaluation of the proposed $14.74/MWh VOM introduced as part of the 2026 Variable Cost Operations Review initiative. SCE is concerned that the proposed formulation could materially reduce charging bids and diminish economically efficient charging behavior under certain operating conditions. CAISO should demonstrate the impacts of the design and explain how it preserves efficient charging incentives while maintaining consistency between charging and discharging bids. 

Hybrid Resource Default Energy Bids 
SCE generally supports the proposed greater-of approach for hybrid-resource default energy bids because it is more likely to reflect the relevant costs associated with a resource’s configuration. However, SCE recommends that CAISO provide additional flexibility for resources that fall below the proposed minimum storage-share threshold when an alternative approach more accurately reflects their operating characteristics and costs. 

Outage Management Implementation 
SCE appreciates CAISO’s implementation update regarding outage management enhancements and does not have substantive concerns with the proposed changes at this time. SCE encourages CAISO to continue providing implementation updates and communicating any operational or system-readiness considerations that may affect market participants. 

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

SCE understands that CAISO intends to move forward with a draft final proposal expected in mid-November. SCE does not oppose an efficient schedule but believes CAISO should resolve key design questions before advancing the DEB enhancements. Most importantly, CAISO should provide additional details regarding the objective, methodology, and ongoing administration of the time-of-day approach. CAISO should explain why the selected multipliers and transition hours are appropriate, what market conditions or empirical measures they are intended to address, and how frequently CAISO expects to reassess them. Providing this information before the draft final proposal would allow stakeholders to evaluate the proposal on its merits, reduce the likelihood that material design questions remain unresolved at the end of the stakeholder process, and help stakeholders understand when future changes to the TOD approach may be warranted. SCE is concerned that, without a clearly defined methodology and reassessment process, CAISO may continue applying TOD multipliers that no longer reflect evolving system conditions, particularly if increased storage penetration materially changes the timing or duration of peak periods. 

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

SCE generally supports reducing the price-based opportunity cost multiplier from 1.4 to 1.1 because the revised value should provide a more reasonable fallback while avoiding an unnecessarily elevated DEB.  SCE also generally supports the proposed scaling methodology and the 1.0 time-of-day multiplier outside the applicable peak period. Nevertheless, CAISO should explain the basis behind each multiplier, including the intended market outcome and how CAISO determines whether a value is functioning as designed. SCE recommends incorporating that methodology into the applicable BPM, together with a process for periodically re-evaluating the values using updated operational data and system conditions. The objective should not be to make the DEB a strategy that maximizes resource value, but rather to establish a reasonable and transparent fallback bid that can be administered consistently over time. 

SCE continues to have concerns regarding the proposed natural-gas-based floor. A gas-price floor may produce a DEB that materially exceeds the competitive locational marginal price during periods when gas is not the marginal driver of market prices, particularly as the system increasingly relies on solar, storage, and other resources. This could result in mitigated bids remaining above competitive market conditions and potentially increasing system costs. SCE therefore recommends additional scenario analysis before a final position is adopted. For example, CAISO should test the floor on representative high-gas-price days and on lower-priced or negative-price days, compare the resulting DEB with competitive market prices, and explain whether the floor produces an inefficiently high fallback bid under those conditions.   CAISO’s observation that the gas floor is unlikely to be the binding variable setting the storage DEB in most cases does not, by itself, demonstrate that the gas floor is necessary or empirically supported as part of the storage DEB formulation.¹  SCE is concerned that including the gas floor primarily to align storage with hydro or gas-fired resources in the bid stack may introduce an administrative adjustment that is not necessarily tied to storage’s marginal cost or prevailing competitive market conditions. CAISO should therefore evaluate the intervals in which the gas floor would bind and explain whether it is appropriate for mitigated storage bids to remain above competitive prices under those conditions. 

SCE also requests additional evaluation of the proposed charging DEB, particularly the application of variable operations and maintenance (VOM) costs after determining the applicable discharge DEB.  It is not clear how the proposed $14.74/MWh VOM introduced as part of the 2026 Variable Cost Operations Review initiative would impact charging awards.  The revised formulation would subtract that value regardless of which component sets the discharge DEB. This could materially lower the charging DEB and make it more difficult for a resource to obtain a charging award when charging remains economically appropriate in anticipation of higher-priced conditions later in the day, including during heat-wave conditions. SCE recommends that CAISO demonstrate the effect of the proposed formulation across representative operating conditions and explain how the design preserves efficient charging incentives while maintaining the required monotonic relationship between charging and discharging bids. SCE is generally supportive of developing a charging DEB, but believes this specific interaction should be examined further before the proposal is finalized. 

¹ CAISO states that the gas floor would be one of several elements considered within a maximizing function and that, in most cases, it is unlikely to be the binding variable setting the storage default energy bid. CAISO further states that inclusion of the gas floor would have “fairly limited impact in most circumstances” and seeks stakeholder feedback on whether there is merit to including the gas floor despite its limited impact. CAISO, Revised Straw Proposal on Default Energy Bids, Storage Design and Modeling Initiative, Sept. 17, 2026, p. 16. 

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

SCE generally supports CAISO’s proposed greater-of approach for hybrid-resource DEBs because it is more likely to reflect the relevant cost associated with the resource configuration. SCE also acknowledges CAISO’s indication that a 30 percent minimum storage share would encompass most  of the hybrid configurations reflected in the presented data. However, a uniform threshold may not appropriately address every configuration. SCE recommends that CAISO clarify whether a hybrid resource falling below the 30 percent threshold could seek an alternative or negotiated DEB treatment when it can demonstrate that the greater-of approach better represents its operating characteristics and costs.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

SCE appreciates CAISO’s implementation update concerning the outage management topic group items. The meeting discussion identified near-term enhancements involving the automatic acceptance of requests to update existing outage cards and the ability of new resources to test their charging capability during the new-resource implementation process. SCE understands that these items arise from previously approved BPM revision requests and does not have substantive concerns with the update at this time. SCE encourages CAISO to continue communicating implementation timing and any operational or system-readiness considerations that could affect participating resources.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

SCE does not have any additional comments. 

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

Terra-Gen appreciates CAISO’s continued work on the storage and hybrid default energy bid (DEB) proposals and is overall supportive of the direction in the revised straw proposal. Terra-Gen supports the revised time-of-day storage DEB, including the use of the 1.1 multiplier on the price-based opportunity cost component. Terra-Gen recommends that CAISO conduct a storage-specific analysis of that multiplier after implementation, and that CAISO track which component of the DEB sets the bid in each interval. Terra-Gen also asks that the draft final proposal include a proposed implementation date for each revised or new DEB formulation. 

On the hybrid DEB, Terra-Gen supports the proposed 30% minimum share requirement on a going-forward basis but recommends that existing hybrid resources be permitted to access the higher DEB of any technology currently installed at the facility. CAISO’s concern about incentivizing future hybrids with diminutive storage capacity shares does not apply to operating plants and can be addressed by applying the minimum share prospectively. Terra-Gen also recommends that CAISO resolve the misalignment between the tariff and the Market Operations BPM on the use of dynamic limits to manage the state of charge (SOC) of hybrid resources. CAISO states that scheduling coordinators can manage hybrid SOC through economic bidding and dynamic limits, but economic bids are overridden during mitigation and the BPM does not clearly permit dynamic limits for SOC management. Terra-Gen asks that both tools be discussed in the next draft proposal and in follow-on stakeholder meetings. Finally, Terra-Gen supports CAISO’s outage management enhancements and the representation of non-linearity, asks for clearer implementation timelines, and recommends that CAISO begin developing component-level outage reporting for hybrids to support a workable UCAP framework.

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

Terra-Gen has no immediate feedback on the initiative's near-term timeline. CAISO should include a proposed implementation date for each revised or new DEB formulation in the draft final proposal. 

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

Terra-Gen is overall supportive of CAISO's revised straw proposal for the storage DEB enhancements. The revised straw proposal makes reasonable revisions to the time-of-day (TOD) DEB enhancement.  

While Terra-Gen prefers the 1.4 multiplier applied to the price-based opportunity cost (PBOC), using the proposed 1.1 multiplier appears reasonable in light of the lack of analysis supporting that multiplier value. The revised straw proposal notes that the prior 1.4 value was "derived from analyses intended to limit hydro operations to four hours or less on more than 90 percent of days" as part of the hydro DEB. Terra-Gen recommends that once the DEB is implemented, the CAISO conduct a similar analysis specific to storage to ensure that the multiplier is grounded in storage specific analysis. 

Terra-Gen recommends that CAISO compile data once the final DEB is approved and implemented to understand which portion of the revised storage DEB sets the overall DEB for different intervals. Terra-Gen appreciates the analysis in the revised straw proposal around how often the gas floor component would set the DEB. CAISO should continue that analysis once the DEB is implemented which could then reveal interesting data and could be used for future modifications.  

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

The 30% Minimum Share is Reasonable for New Resources, but Existing Hybrids should be permitted to access DEBs from Existing Installed Technologies 

Terra-Gen is supportive of the 30% minimum share requirement on a going-forward basis. However, we do believe that all existing hybrid resources should be allowed to use the higher DEB for any technologies currently installed at the facility. CAISO puts forth two separate arguments on what DEBs are meant to represent, and the need to have a minimum share. These reasons are used to support the CAISO’s rationale for not “grandfathering” existing hybrids. 

The first rationale CAISO puts forth is that “default energy bids are intended to approximate a resource’s marginal cost.” Terra-Gen agrees with this premise. However, CAISO has not provided sufficient data and analysis showing why a 30% minimum share differentiates the marginal cost profile of different hybrid plants. For example, stakeholders do not have clarity on if two different 100 MW hybrids, one with 30% BESS and 70% solar, and the other with 29% BESS and 71% solar, have sufficiently different marginal costs that justify different DEB access. Utilizing this proposed minimum share is therefore a reasonable policy decision on future non-operating hybrids that give developers enough information and foresight to determine how to size a plant accordingly.  

The second argument in the revised straw proposal is that the CAISO "believes that the possibility of having the greater-of approach may incentivize the development of hybrid resources with diminutive shares of storage or gas components to access higher default energy bids is, in and of itself, a significant gap that demonstrates the rationale for a minimum threshold." Terra-Gen understands and supports the CAISO's desire to minimize unintended consequences from establishing a DEB with no minimum share. However, that can be accomplished by only applying the minimum share on future projects. The CAISO's language expresses a concern on the development of future resources and is not pertinent to operating plants.  

Taken together, an existing resource could not have been constructed as to inappropriately access a higher DEB, nor has the CAISO sufficiently demonstrated that dividing existing hybrids up by this minimum share truly represents resources with distinct marginal cost profiles for purposes of estimating reasonable costs during mitigation. Terra-Gen is ultimately comfortable with the 30% minimum share provided it is applied prospectively and that existing resources can access any DEB from existing installed technologies. 

Existing Misalignment Between the Tariff and the Business Practice Manuals Create Operational Uncertainty and Must Be Resolved 

In Terra-Gen's last round of comments on the hybrid DEB, we believed it was premature to apply a DEB to hybrids without clearer tools for managing the SOC of hybrids given that the market model does not manage it as it does for standalone and co-located BESS. In response, the CAISO "reiterates that scheduling coordinators are able to manage their hybrid resources through economic bidding and the use of dynamic limits, as specified by the tariff and business practice manual. As such, the ISO believes that there are existing tools available for hybrid resources to manage their state-of-charge." 

Terra-Gen recommends that CAISO discuss both economic bidding and dynamic limits as tools to manage the SOC of hybrids in the next draft proposal and include it as a topic of discussion in follow-on stakeholder meetings. There are challenges with both approaches, and one of these tools is unusable during mitigation. 

While scheduling coordinators can currently use economic bidding to manage the SOC of hybrids, this instrument is in fact unavailable in intervals when a resource would be mitigated. Consider that under mitigation, economic bids are overridden and set to the DEB. This can cause resources to deplete SOC too early in the day, harming reliable operations of the system. Economic bidding is therefore not a tool that SCs can use under mitigation as the very act of mitigation takes that means away from the SC. 

CAISO mentions the use of dynamic limits, and Terra-Gen recommends that as part of advancing a hybrid DEB, CAISO should make targeted edits to the Market Operations BPM to bring it into compliance with the tariff itself. Consider that the tariff provides the following in Section 30.5.6.2: “Hybrid Dynamic Limits should reflect resource availability based on operating capabilities such as State of Charge and forecasted output from the variable component of a Hybrid Resource. Scheduling Coordinators may also use Hybrid Dynamic Limits to manage onsite charging of an energy storage component of a Hybrid Resource.” 

CAISO implements this tariff provision through the following language contained within the Market Operations BPM: “Scheduling coordinators may submit hybrid dynamic limits to reflect four scenarios: 1) ambient unavailability, 2) unavailability of renewable generation due to lack of fuel resource (e.g. wind, sun) 3) unavailability due to state of charge  or 4) to reflect onsite charging….Resource operators will need to manage the state of charge of any storage component through typical (Price, MW) bid submissions.” 

Terra-Gen previously presented on this issue at CAISO's June 30, 2025, storage design and modeling meeting. In general, commenters expressed support for Terra-Gen's presentation, and numerous stakeholders echoed our concerns over the lack of clarity applicable to the use of dynamic limits. Unfortunately, this issue was never resolved and Terra-Gen continues to believe that this is a critical item to advance along with a hybrid DEB. To reiterate from Terra-Gen's June 30, 2025, presentation: CAISO has removed prior terminology related to DLs explicitly referencing "SOC management" in the BPM, but the continued presence of "reflecting onsite charging" and "manage onsite charging" remains, which presents challenges because these concepts are inherently linked to SOC management. If CAISO agrees that dynamic limits are an appropriate tool to manage SOC of hybrids, edits to the BPM are needed to reflect this. Alternatively, if CAISO does not agree that dynamic limits are an appropriate tool to manage the SOC of hybrids, stakeholders will need additional clarity on CAISO's expectation on proper SOC management given that economic bids are not a viable tool to use under mitigation. 

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

Terra-Gen is supportive of CAISO's OMS enhancements along with the representation of non-linearity. As other stakeholders pointed out during the storage meeting, CAISO should provide clearer timelines for the implementation of non-linearity in the market model. Terra-Gen supports implementing non-linearity in the market model and the associated master file fields as soon as possible. 

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.

Terra-Gen recommends that CAISO begin to think through new outage enhancements for hybrids that will allow component level reporting of outages. As discussed in Terra-Gen's July 2025 stakeholder presentation, hybrid outage data does not distinguish between individual components. The CPUC will be examining a proper UCAP methodology applied to hybrids as part of the next track within the current RA proceeding. Stakeholders will be unable to provide a workable UCAP framework for future outage data because the current OMS configuration does not distinguish between components. This presents a challenge as not all generation technologies will have an RA accreditation based on UCAP (i.e., VERs). CAISO should consider basic updates to the OMS that will allow SCs to select which technology an outage is applicable to. From there, the data only needs to be accessible to CPUC Staff when they need to compute annual forced outage rates applied to the UCAP-eligible components. Terra-Gen would welcome more discussions with CAISO on how best to make targeted OMS enhancements that provide this data to SCs and CPUC staff. CPUC Energy Division Staff comments on Terra-Gen's prior presentation follow a similar theme: "Staff supports the development of more granular outage classifications for battery storage resources, which could be valuable inputs to future Unforced Capacity (UCAP) design in coordination with CAISO."

1. Please provide a summary of your organization’s comments on the September 22, 2026 stakeholder meeting and the revised straw proposal on default energy bids.

WPTF supports the CAISO’s continued work to improve storage default energy bids (DEBs) and the proposed near-term timeline. We encourage the CAISO to commit to implementing the updated DEB before summer 2027. Accurate DEBs are needed to avoid premature discharge and preserve storage availability during net load peak hours, particularly under stressed summer conditions.

WPTF supports retaining the gas floor component and a time-of-day (TOD) multiplier no lower than 1.0. The gas floor provides a safety net when forecasted prices fail to reflect actual opportunity costs, while a multiplier below 1.0 could lead to premature discharge and fail to account for the value of preserving state of charge (SOC) for the following day. We appreciate the modification that prevents the multiplier from dropping to 1.0 before HE18, but recommend additional analysis to determine whether HE19 (or later hour) would better align with the policy objective.

For hybrid resources, WPTF remains concerned that the proposed 30% minimum share requirement would prevent some existing resources’ DEBs from appropriately reflecting the opportunity cost of their storage component. We suggest considering either grandfathering existing hybrids or setting the threshold at the lowest component percentage currently on the system. We also recommend clarifying how scheduling coordinators (SCs) should manage SOC for resources below the threshold, including the appropriate use of dynamic limits and any resource adequacy (RA) implications, and explicitly confirming whether implementing hybrid DEBs would make all hybrid resources subject to mitigation. Lastly, we appreciate the CAISO talking through the complexity of the hybrid DEB and would appreciate clarification from the CAISO on if the implementation hurdles are making CAISO reconsider if a hybrid DEB should be implemented or if the CAISO is thinking through modifications that can be made to simplify the implementation complexities?

2. Please provide your organization’s comments on the initiative’s near-term timeline as shared during the September 22, 2026 stakeholder meeting.

WPTF supports the proposed timeline and encourages the CAISO to commit to implementing the updated DEB before summer 2027. Ensuring optimal utilization of storage resources is important throughout the year, but particularly during stressed summer conditions. The concern this policy seeks to address is well known: inaccurate DEBs can cause storage resources to discharge prematurely in real time, leaving them unavailable during the net load peak hours when they are needed most.

Suboptimal utilization increases overall market costs regardless of system conditions. During stressed summer conditions, it can also create reliability concerns if mitigation causes storage resources to discharge earlier in the day and leaves insufficient energy available to meet the net load peak. Implementation before summer 2027 would help address these concerns ahead of the period when the consequences are most significant.

3. Please provide your organization’s comments on the revised straw proposal for storage default energy bid enhancements.

WPTF supports the revised straw proposal’s continued inclusion of the gas floor component and a TOD multiplier that does not fall below 1.0. We also appreciate the CAISO’s modification to when the multiplier drops to 1.0. However, we believe additional analysis and discussion would be helpful to support the selection of HE18 rather than, for example, HE19.

WPTF agrees with the CAISO and several other stakeholders that the gas floor is needed in the DEB formulation. Although the analysis suggests it does not materially affect the DEB most of the time, it provides a safety net when forecasted LMPs do not accurately reflect opportunity costs. For example, the forecast may miss high prices that materialize on the first day of a heat wave or during periods of gas price volatility. In those circumstances, the gas floor helps ensure the DEB at least reflects the elevated gas costs likely to influence market prices.

With respect to the proposed TOD multipliers of 1.4 and 1.0, WPTF does not support reducing the multiplier below 1.0, as some stakeholders have suggested. A multiplier below 1.0 would discount the cost estimate used to establish the DEB. Applying that discount during net load peak hours also fails to account for the possibility that a resource should preserve SOC for discharge the following day, rather than discharge all four hours that day. For a fully charged resource at that point in the day, the Nth highest-priced discharge opportunity may not occur until the following day. Those prices are not yet known when the DEB is applied, and lowering the multiplier below 1.0 could further understate opportunity costs and lead to suboptimal utilization.

WPTF appreciates the proposed modification to apply the 1.0 multiplier beginning with the Nth highest-priced hour, but no earlier than HE18. Under the previous iteration, if the Nth highest-priced hour occurred in the morning, the lower multiplier would apply throughout the midday hours. That outcome would not align with the policy’s objective of avoiding premature discharge. The analysis supports this concern by showing that the Nth highest-priced hour occurs well before the net load peak on a meaningful share of days.

However, WPTF recommends additional analysis to determine whether HE18 is the appropriate earliest hour for applying the lower multiplier. Consider a four-hour resource on a day when the highest-priced hour is HE20, followed by HE19, HE21, and HE6, with the same pricing pattern the following day. Under the proposal, the 1.0 multiplier would begin in HE18 because the fourth-highest-priced hour occurred in the morning. A fully charged resource could then discharge in HE18 through HE21 and, absent an opportunity to recharge, be unable to capture the higher-priced opportunity in HE6 the following day. In this example, reducing the multiplier in HE18 could still be too early.

WPTF suggests focusing the analysis on days when the Nth highest-priced hour occurs before HE18 or when only three of the four highest-priced hours occur after HE18. For those days, the CAISO should examine which evening hours contain the remaining highest prices and how frequently those prices occur in HE18 versus HE19 and later. If the highest-priced evening hours are concentrated in HE19 and later, that would support moving the earliest application of the 1.0 multiplier from HE18 to HE19.

4. Please provide your organization’s comments on the straw proposal regarding hybrid default energy bids, particularly on the proposed minimum share requirement.

WPTF appreciates the analysis provided but does not believe it supports drawing the minimum share threshold at 30%. That threshold would create a clear divide among hybrid resources already participating in the market. Some would receive DEBs that reflect their storage component, while the remaining seven units could receive DEBs of approximately $0/MWh, assuming those units combine storage and renewables and the renewable component’s DEB is approximately $0/MWh.

WPTF suggests considering either grandfathering all existing hybrid resources so they can use the higher of their component DEBs without a minimum share threshold, or setting the threshold at the lowest component percentage currently on the system. Either approach would address concerns for existing resources while allowing resources moving through the interconnection process to account for the new market rules when sizing their components and deciding whether to use the hybrid or co-located model. Furthermore, we believe it would be helpful to have discussions around the incentives a threshold may create for resources going through the interconnection process.

WPTF would appreciate a clearer explanation of how the CAISO expects SCs to manage resources that fall below the threshold. For a hybrid combining storage and gas, a DEB based on the gas component may not reflect the opportunity cost of preserving the storage component’s discharge capability for later in the day. If the hybrid is mitigated to that DEB during midday hours, the storage component could discharge prematurely. A similar concern arises for a hybrid combining storage and renewables if its midday DEB is approximately $0/MWh. In that case, how should the SC preserve sufficient SOC to discharge later in the day?

If the CAISO envisions SCs using dynamic limits to address these situations, WPTF recommends clearly documenting that this is an appropriate use of the tool. We also believe the CAISO should consider and explain any RA implications associated with managing a hybrid resource in this manner.

5. Please provide your organization’s comments on the check-in on the outage management topic group implementation.

6. Please provide any additional comments, feedback, or examples. You can upload supporting materials using the attachments field below.