Comments on Draft Final Proposal

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

This response to question 1 contains the text of DMM's complete set of comments.  For a fully formatted version of DMM's comments, please see the PDF attached below the final question.

Comments on Rules of Conduct Enhancements Track 1

Draft Final Proposal

Department of Market Monitoring

August 15, 2023

Comments

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Rules of Conduct Enhancements Track 1 – Draft Final Proposal.[1] Track 1 of the Rules of Conduct initiative has a narrow scope, focused mainly on evaluating the meter data penalty design in response to stakeholder feedback.  DMM supports the various elements of the ISO’s meter data penalty proposal. 

First, DMM agrees with the ISO and stakeholders that the current penalty of $1,000 /trading day for inaccurate meter data submission can be overly punitive on small, long-term errors.  The proposal would change the penalty for inaccurate data to the lower of (1) $1,000/trading day; or (2) 30% of the error’s value.  This change should eliminate disproportionately large penalties for small errors that persist over long periods of time, while maintaining financial incentive for scheduling coordinators to submit accurate meter data.

Next, DMM supports the ISO maintaining the existing penalties on late meter data submission.  If the ISO values the timely and accurate submission of a particular type of data, DMM supports the ISO establishing or maintaining strict data submission deadlines and financial penalties for failing to meet the deadlines. 

Some stakeholders cited the potential low amount of penalties actually levied as evidence for considering whether it would continue to be worth the ISO’s efforts to monitor and enforce some rules of conduct deadlines.  DMM disagrees that a relative lack of any particular penalty is an appropriate indicator of a lack of value of maintaining the penalty.  A strict deadline and financial penalty for not meeting that deadline creates important incentives for market participants to perform the desired behavior by the deadline.  Removing the penalty for a particular submission deadline could result in increased non-compliance of that deadline over time.

For example, the tariff has not defined a clear deadline for some data that proxy demand response providers must submit for the ISO and DMM to be able to monitor their self-reported load reduction performance.  In the absence of a firm deadline, the ISO has not been able to levy penalties on the demand response providers for non-compliance with the data submission required by the tariff.  In the absence of these penalties, DMM has observed significant and ongoing problems with some proxy demand response providers ever submitting this required data.

DMM believes well-defined deadlines and financial penalties for not meeting those deadlines creates important incentives for market participants to perform the desired behavior.  DMM supports Track 1’s meter data submission penalty proposal for adding elements that help reduce or prevent potential disproportionately large penalties while maintaining provisions to deter non-compliance.   

[1] Rules of Conduct Enhancements Track 1 – Draft Final Proposal, California ISO, August 2, 2023: http://www.caiso.com/InitiativeDocuments/Draft-Final-Proposal-Rules-of-Conduct-Enhancements-Track1.pdf

2. Please provide comments on the WEIM Governing Body classification.

See DMM's complete set of comments in response to question 1 or in the PDF attached below the final question.

3. Please provide any additional input not included above related to the Draft Final Proposal.

See DMM's complete set of comments in response to question 1 or in the PDF attached below the final question.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

Idaho Power appreciates the CAISO’s efforts in reforming its Rules of Conduct so that the penalties are more appropriately in line with the magnitude of the associated error(s).  Idaho Power supports the CAISO moving forward with its proposal so that penalties for inaccurate meter data do not result in the continued assessment of unjust and overly punitive penalties.  The CAISO’s proposal to assess the lesser of either $1,000/day or a 30% penalty allows for penalties that are more commensurate to the magnitude of error.  Additionally, Idaho Power supports the CAISO applying the 30% penalty to only the generator meter error when the error is offset by a corresponding load meter error thereby eliminating a duplicative penalty. 

Idaho Power respectfully requests that during track 2 of this initiative, the CAISO continue to consider whether the Rules of Conduct are appropriately applied to WEIM entities.  Idaho Power asserts that the structure of the WEIM is such that meter data inaccuracies only impact the WEIM entity’s BAA and do not have a negative impact on the market.  In such instances, the CAISO should apply the lesser of a 30% penalty or a more nominal dollar figure as even a 30% penalty may be overly punitive.  Idaho Power recognizes the importance of ensuring the submission of timely and accurate meter data; however, the CAISO should consider the impact of inaccurate meter data submissions by WEIM entities and whether such inaccuracies result in negative impacts to other market participants.  Additionally, Idaho Power continues to encourage the CAISO to apply the 30% penalty to the net error between generation and load when offsetting errors are submitted.  

Idaho Power appreciates the opportunity to comment on the CAISO’s final proposal and CAISO’s work in reforming its Rules of Conduct.

2. Please provide comments on the WEIM Governing Body classification.

No comments.

3. Please provide any additional input not included above related to the Draft Final Proposal.

No comments.

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

Powerex appreciates CAISO’s efforts to develop a penalty structure for inaccurate meter data that will encourage accurate meter data submissions while ensuring “the cost is more proportional to the impact on the market and the ISO’s operations”. While Powerex is supportive of the direction of the proposal, Powerex continues to believe that an important refinement is needed to avoid penalties that may out of proportion with the magnitude of the error, as described further below.

CAISO’s current proposal for inaccurate meter data is a penalty based on the lower of (a) 30% of the absolute value of the error and (b) $1000/trading day. In the Draft Final Proposal, CAISO clarifies that in cases where a Western EIM (WEIM) Entity resubmits generation and load in the same hour, the value of error calculation would only apply to the updated generator meter data, and not to the corresponding updated load meter data. Powerex appreciates that, as a result of this clarification, the penalty would not be based on a duplicative 60% value of error calculation in these scenarios.

Despite this clarification, however, Powerex continues to believe that the proposal could produce penalties that outweigh the actual impact of meter inaccuracies on other market participants in certain cases when a WEIM Entity submits load meter data that is calculated based on its generation and interchange data. In these cases, it is likely that the corrected generation meter data submitted after the T+52B deadline is provided with an equal and offsetting adjustment to the WEIM Entity’s load meter data. For example, a correction to increase a WEIM Entity’s generation meter data by 1 MW will typically also include a corresponding correction to increase the WEIM Entity’s load meter by 1 MW in the same hour. Because the WEIM Entity’s generation and load are both increased by the same quantity in the same time period, the overall result is no net MWh impact to any other market participant in the WEIM. In other words, the “impact of the error” is effectively zero.

Powerex is concerned that in cases in which the corrected generation and load meter data are offsetting as described above, CAISO’s proposal to apply a penalty of 30% of the absolute value of the error (based on the generation only) could produce a penalty that is potentially outsized relative to the negligible nature of the error when considering that the generation and load updates effectively cancel each other out.

For this reason, Powerex reiterates its previous proposal that CAISO calculate the value of error term using an hourly calculation of the net MWh impact of the generation and load meter data corrections submitted by the relevant WEIM Entity (perhaps with a reasonable minimum penalty of $100 per trading day). This would more accurately reflect the actual impact on the market by reflecting offsetting corrections.

2. Please provide comments on the WEIM Governing Body classification.

See comments above. 

Powerex's comments are also available at CAISO Rules of Conduct Comments_Draft Final Proposal.pdf (powerex.com)

3. Please provide any additional input not included above related to the Draft Final Proposal.

See comments above. 

Powerex's comments are also available at CAISO Rules of Conduct Comments_Draft Final Proposal.pdf (powerex.com)