Comments on Revised draft tariff language

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

The California Community Choice Association (CalCCA) provides redline edits and an embedded comment to section 11.2.6.1 (see attachment) of the California Independent System Operator’s (CAISO) revised draft tariff language. These edits would allow resources and load serving entities (LSE) to complete the Day-Ahead Market Enhancements (DAME) Transitional Measures election process at any time during the three-year DAME Transition Period. It would require entities to provide 30 days’ notice to the CAISO of their election. This change reflects the fact that LSEs and resources may enter into Resource Adequacy (RA) contracts on a monthly basis and may enter into new RA contracts after the effective date of the tariff. CalCCA’s changes are consistent with the policy in the Revised Final Proposal, which did not communicate a one-time election process.[1]

As discussed at the June 23, 2023 call on the Draft Tariff Language, these changes are necessary because, while many RA contracts require the generator to transfer availability payments to its LSE counterparty, RA resources bid zero dollars Residual Unit Commitment (RUC) availability bids and get paid zero dollars for RUC awards. As such, many RA counterparties do not have the systems and processes in place to facilitate the transfer of such payments. Once DAME goes into effect and generators will be paid for their imbalance reserve and reliability capacity payments, a settlement process must be in place that accommodates existing contracts and contracts entered into during the transitional period to allow for the transfer of these payments from RA resources to LSEs. During the first three years of DAME, this settlement process should be the DAME Transitional Measures to give LSEs time to develop their own settlement processes.

[1]             Day-Ahead Market Enhancements Revised Final Proposal at 50: http://www.caiso.com/InitiativeDocuments/RevisedFinalProposal-Day-AheadMarketEnhancements.pdf.

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

CDWR appreciates the opportunity to submit comments on the DAME Revised Draft Tariff Language CAISO published on July 11, 2023. 

CDWR has the following comments about the impact of DAME tariff language on the Congestion Revenue Rights (CRR) management. 

1. CDWR strongly recommends CAISO provide Imbalance Reserve Up/Imbalance Reserve Down/Reliability Capacity Up/Reliability Capacity Down (IRU/IRD/RCU/RCD) locational Marginal Cost of Congestion (MCC) price forecasts to the market participants prior to the Market Simulation on the DAME and the DAME “go live” for a market participant to be confident in the CRR strategy and to be compliant to the current Officer Certificate Form (OCF). 

Discussion: 

The facts supporting the CDWR recommendation above are listed below: 

i.  Prior to the implementation of the MRTU in April 2009 and posting of its MRTU Tariff, CAISO had hosted at least six years of stakeholder processes that involved Day Ahead Market (DAM) LMP price studies and CRR design developments.  As a result, the market participants were well informed of the LMP and MCC prices, CRR Allocation and Auction processes which provided confidence in the expected outcome from participating in the CRR processes when the CRR market started. However, in the DAME initiative, as it stands now, market participants are not well informed and have no confidence in the expected outcome because forecasts of IRU/IRD/RCU/RCD MCCs are not available.  CAISO should provide the forecasted MCCs for these new products, before “go live”, to the transmission rate payers so they can establish sound CRR strategy from the beginning of the DAME version of CRR settlement. 

ii.  On October 2011, CAISO included the Market Participant Credit Requirement and a legally binding form known as the OCF, in the CAISO tariff.  As stated in the CAISO Tariff, to participate in the DAM scheduling and CRR markets, a market participant is required to sign the OCF.  With regards to the CRR part of the OCF (section 3), a market participant signing an OCF attests to having performed adequate CRR Training as provided by the CAISO, having sound CRR strategy, and having methods to limit exposure in the CRRs.  However, in the DAME initiative, as it stands now, because of lack of the forecast of IR and RC MCCs, such existing tools will not be effective as required by the OCF. 

iii.  On its DAME Tariff, CAISO proposes to add an IRU and IRD MCC settlement to the current DA MCC settlement of the DA CRR Notional Value.  With the addition of the IRU and IRD MCC settlements to the DA CRR Notional Value and inclusion of the RCU and RCD MCCs in the calculation of the congestion rents, CDWR believes that, regarding the CRR Strategy, market participants will not be able to make sound decisions in estimating congestion rents and CRR revenues because of the lack of forecasted IRU/IRD/RCU/RCD MCC values.  As a result, until the CAISO performs sound IRU/IRD/RCU/RCD MCC studies and makes the forecast available to market participants at least prior to the “go live”, a market participant will face the conflict in signing the OCF.  

2. CDWR believes the addition of the IR MCC settlement to the day ahead CRR Notional value would exacerbate the CRR Auction Efficiency shortfall.  CDWR recommends that, prior to the addition of the IR MCC settlement to the day ahead CRR Notional value, CAISO runs studies to determine the root cause of CRR Auction Efficiency shortfall. 

Discussion: 

The CAISO’s Division of Market Monitoring (DMM) generates quarterly reports to monitor the market issues and performance. The graph presented on Figure 1.32 Auction revenues and payments to non-load-serving entities presented on the page 40 of the CAISO Q4 2022 Report on Market Issues and Performance[1] released on March 16, 2023, shows that, in 2022, the total annual CRR Auction Efficiency[2] shortfall reached levels seen in 2018 – the last year prior to the implementation of the Track 1B in January 2019.?  

CAISO had adopted Track 1B to curb the CRR Auction Efficiency shortfall by capping the payments to the CRR holders to the day ahead congestion rents.? As shown in the above-mentioned graph, The Track 1B was effective only for the first three quarters of 2019.? DMM identified the combined settlement account of the CRR Allocation and Auction processes as one of the reasons for the auction efficiency problem and recommends separation of the CRR Allocation and Auction processes.  

CDWR supports DMM’ recommendation and suggests that CAISO runs a study as to why the Track 1B is not as effective as it was in the first 3 quarters of 2019 after the CRR Track 1B reform was enforced.? With the addition of the IR MCC settlement, absent any effective mechanism to curb the CRR Auction Efficiency problem, the DAME version of CRR Settlement as proposed will only exacerbate the CRR Auction Efficiency shortfall.? Therefore, it is prudent for CAISO to run studies to determine the root cause of CRR Auction Efficiency shortfall, and potentially establish separate settlement accounts for the CRR allocation and auction processes prior to implementing the DAME version of CRR. 

[1] CAISO Q4 2022 Report on Market Issues and Performance released March 16, 2023: 2022-Fourth-Quarter-Report-on-Market-Issues-and-Performance-Mar-16-2023.pdf (caiso.com)

[2] CAISO Congestion Revenue Rights Auction Efficiency Track 1B Draft Final Proposal Second Addendum June 11, 2018, page 16, 5.3 Auction Efficiency: DraftFinalProposalSecondAddendum-CongestionRevenueRightsAuctionEfficiencyTrack1B.pdf (caiso.com)

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

Please see the attached: (1) redline edits to, comments on and questions on the Revised Draft Tariff Language in the Word document and (2) a list of MRP's edits to, comments on and questions on the Revised Draft Tariff Language in .pdf.  

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

PG&E provides comments to the revised tariff language in two areas (1) the transition solution that addresses the duplicative cost of RA resources associated with Imbalance Reserve revenue (section 11.2.6), and (2) the market deviation settlement mechanism for Imbalance Reserves (section 11.2.1). Additionally, PG&E requests that the CAISO to provide clarifications to the language, which were raised in our last set of comments[1].  

Transition Measures.

PG&E has identified incomplete definitions in Section of 11.2.6 and believes that it will be beneficial to designate certain criteria in the BPM for future improvements. For example, in the language below

• [11.2.6.1] “Scheduling Coordinators for resources and LSEs must complete the DAME Transitional Measures election process no later than thirty (30) days after the effective date of this Section 11.2.6.” 

On June 23^rd, stakeholders did not reached a consensus around specific timelines. There are open questions, such as, what if market participants want to extend this measure after the transition period? What if entities want to opt-in after the election timeframe? What if entities want to exit the process, what will be the exit dates? Will the exit entities be allowed to re-enter the process and what are the timeframes for re-entry? An alternative is to modify the language by removing the “30 day” provision while keeping the rest of the language to allow for a more thorough discussion of stakeholders to work through the specifics in the upcoming implementation working groups and define the timeline in the BPM later.

Another example is in

• [11.2.6.4]  “For RA Capacity and Flexible RA Capacity not subject to DAME Transitional Measures, the CAISO provides the Scheduling Coordinator for LSEs whose RA and Flexible RA obligations are met with that capacity information regarding the opportunity costs described in Section 11.2.6.3.1 and 11.2.6.3.3.”

PG&E requests the CAISO to confirm the understanding below:

• The CAISO will provide the information not subject to the period of transition measure and will continue sharing the information in the future.
• The CAISO will provide the information to relevant parities of RA resources, regardless of their choices of opt in the measure or not.

PG&E recommends removing “regarding the opportunity cost,” which would allow for flexibility of including other information associated with the cost bucket of Imbalance Reserves in the BPM.

Finally,

• [11.2.6.3] “The CAISO allocates the opportunity cost component of that revenue, calculated as the integral of the positive difference between the Energy LMP and the Energy Bid over the capacity range of the overlapping IRU, to the Scheduling Coordinator for the resource.” 

PG&E recommends that this be included in the BPM, as per opportunity cost calculation for Ancillary Service Pricing in section 4.3 [Ancillary Services Procurement] in the BPM for Market Operations.

Market Deviation Settlement for Imbalance Reserves (IR)

• [11.2.1.8.1] “A resource’s unavailable IRU quantity is the amount, if any, by which the resource’s Day-Ahead Schedule for Supply plus Ancillary Services Awards other than for Regulation Down plus the IRU award minus the Five-Minute Imbalance Reserve Quantity exceeds the resource’s Upper Economic Limit as adjusted by applicable Outages in the FMM.  The CAISO charges a resource with an unavailable IRU quantity the product of the unavailable quantity and the highest of the RTPD Flexible Ramp Up Price, the RTD Flexible Ramp Up Price, or the resource’s Locational IRU Price.”
• [11.2.1.8.2]  “A resource’s unavailable IRD quantity is the amount, if any, by which the resource’s Lower Economic Limit as adjusted by applicable Outages in the FMM exceeds the resource’s Day-Ahead Schedule for Supply minus the Ancillary Services Awards for Regulation Down minus the IRD award plus the Five-Minute Imbalance Reserve Quantity.  The CAISO charges a resource with an unavailable IRD quantity the product of the unavailable quantity and the highest of the RTPD FRD price, the RTD FRD price, or the resource’s Locational IRD Price.”

PG&E recommends that the language “minus/plus the Five-Minute Imbalance Reserves quantity” should be removed from the Tariff, since exempting any awarded capacity from the No Pay process is inappropriate and could create incentives for resources to withhold the full amount of their awards to the market. 

PG&E is concerned that the language proposed would allow a resource to reduce its corresponding economic limit by an amount equal to its five-minute ramp capability while being shielded from any associated No Pay process.  Therefore, PG&E believes that the total amount of IR capacity impacted by outages, or other modification of a unit’s economic limits, should still be subject to the proposed No Pay process.  Moreover, PG&E believes that additional language should be included in this Tariff so that the full impact of this No Pay process is applied to the portion of an IR capacity award. This is unavailable in the Real-Time market due to reduction in a resource’s ramp rate, as per the process applied to Ancillary Service capacity under Tariff section 8.10.8.1.

PG&E also requests that references be included in both these sections to explicitly link them following section 11.2.1.8.3, to better clarify the process for determining the correct order of payment recission should a resource have multiple capacity awards within a settlement interval.

• [11.2.1.8.3] “For Settlement Periods in which a resource receives both a RUC Award and Imbalance Reserves Award and is unavailable in the RTM, or only bids a portion of its combined award, the CAISO first applies charges per Section 11.2.2.2 to the quantity of unavailable Reliability Capacity and then applies charges per this Section 11.2.1.8 to the remaining unavailable capacity.  If a resource has an Ancillary Services Award, RUC Award, and Imbalance Reserves Award in the same Settlement Period and is unavailable in the RTM, then the CAISO first applies the rescission rules in Section 11.10.9 before determining any unavailable quantities pursuant to this Section 11.2.1.8.3.”

PG&E requests clarification that the CAISO intends to apply rescission processes for Ancillary Service Capacity, as outlined in section 11.10.9, before evaluating unavailable Reliability Capacity and/or Imbalance Reserve capacity quantities (in that order) as appears to be established in this section.  This ordering does not appear to be consistent with sections 11.2.1.8.1 and 11.2.1.8.2, which indicate that Imbalance Reserve rescission occurs before determining any Ancillary Service capacity No Pay.

Issues remained from PG&E’s last comments[2]

• [40.10.6.1(d)] Bidding obligation for Reliability Capacity. The only reference to bidding obligation for RC is in - a section that relates to flexible RA capacity. It is not clear whether CAISO intents to have the bidding obligation for RC be based on flexible RA capacity. PG&E suggests that it should be based on generic RA capacity.
• 40.6.1(5)/40.10.6.1(a)] Bidding obligation for Imbalance Reserves. Inconsistency between Section 40.6.1(5) and 40.10.6.1(a) - is the bidding obligation for IR based on generic RA capacity or flexible RA capacity? PG&E recommends that the bidding obligation for IR be based only on the flexible RA capacity.
• [40.6.1(5)/40.6.1(1)(a)] Self-schedule bids. Inconsistency between Section 40.6.1(5) and 40.6.1(1)(a) relating. PG&E recommends that 40.6.1(5) be clarified that only resources with flexible RA capacity be required to submit IR bids.

• [40.6.8] “The CAISO submits a Generated Bid for RUC Availability Bids for Resource Adequacy Resources for which a RUC Availability Bid was not submitted as required in Section 40.6.1(4).  For RA Resources that submit a RUC Availability Bid for RCU with an insufficient quantity, the CAISO extends the quantity component of the Bid using the submitted price component of the Bid.  For RA Resources that fail to submit any RUC Availability Bid for either RCU or RCD, the Generated Bid is for the required quantity with a $55 price component.”

PG&E recommends the CAISO to remove the value of inserted RC bids and use the language of “Default Capacity Bids” to allow flexibility of modifying this value based on future market responses.

• [30.5.1(bb)] “In addition to meeting any obligations applicable to Resource Adequacy Resources, a Scheduling Coordinator for a resource supporting Self-Schedules of exports at Scheduling Points backed by non-Resource Adequacy Capacity shall submit a RUC Availability Bid for RCU at $0/MW for a quantity equal to or greater than the quantity of the export.”

PG&E requests the CAISO to confirm if the value $0/MW is correct, or it should be the Default Capacity Bid value for RC.

• [27.4.3.5] Effectiveness threshold. PG&E requests the CAISO to clarify the meaning of the language that “The CAISO sets this threshold at two-tenths of a percent (.2%) divided by any applicable Deployment Factor” with an example.
• [31.3.4] E-tag requirements from IR awards. PG&E would like the CAISO to clarify System Resource’s IR awards, if any, should the incoming transmission line or path be derated such that the participant cannot tag to the appropriate or expected quantities.
• [30.7.3.5] Bid insertion for MSG resources. PG&E requests the CAISO to define the bid insertion scenarios for MSG when a resource is awarded RCD and its reliability dispatch is in a lower configuration than its energy award in the IFM.

[1] PG&E’s comments to Draft Tariff Language of Day-Ahead Market Enhancements, available at: https://stakeholdercenter.caiso.com/Comments/AllComments/9c757394-5e78-4f00-b17e-a722bc437d72#org-2a0e6ebc-b08c-4e64-8182-b60393bc96d1

[2] I.d. 1.

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

PacifiCorp has no additional comments to those in the attached revised draft tariff language. PacifiCorp appreciates the opportunity to comment on the revised draft tariff language and looks forward to participating in the upcoming meeting.

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

The Six Cities submit the following suggested revisions, comments, and questions on the Revised Draft Tariff Language:

Section 11.2.1.9.2 - - In the third line, change “IRU” to “IRD”.

Section 30.7.12.5.3 - - In the last sentence, remove the misplaced paragraph break that splits the sentence.

Section 31.5.1.2, last sentence - - It seems likely that optimizing RMR capacity at $0/MW in RUC could result in RMR capacity being utilized to support BAAs other than the CAISO BAA.  Why not use a non-zero amount (e.g., the amount of the RMR capacity payment) for optimization but have a separate provision to credit the revenues received by the RMR resource for any RUC awards against RMR payments?

Section 31.5.5.2, last sentence - - If CAISO will only issue Exceptional Dispatch instructions to resources within the CAISO BAA, does this mean that all de-commitments for RUC will be CAISO BAA resources?

Section 31.5.8, last sentence - - Why deem the entire award Undispatchable as opposed to the amount not properly tagged?

Appendix A - Amended Terms, Definition of RUC Award - - The text of the paragraph in black font at the end of the definition appears to be erroneous or misplaced.

Appendix A – New Terms, Definition of Locational RCU Price - - In the last line, correct the spelling of “Constraints”.

Appendix A– New Terms, Definition of Non-VER Physical Supply - - Is the definition meant to disregard supply from VERS located in the CAISO BAA?  If not, change “located in an EDAM Entity” to “located in a BAA in the EDAM Area.”

Appendix A – New Terms, Definition of RUC Procurement Target - - Change “of behalf” to “on behalf” and insert “BAA” before “, as specified“.

1. Please provide any redline changes and embedded comments your organization may have on the Day-Ahead Market Enhancements revised draft tariff language as an attachment to this comment template, and provide any additional comments in the text box below:

see attached