Comments on 7/8 working group

1. Please provide your organization’s feedback the problem statements that were discussed during the Demand and Distributed Energy Market Integration working group meeting on July 8, 2025.

APS appreciates the opportunity to comment on the DDEMI Discussion paper and associated presentations. Within the “Enhancing demand flexibility market options” section, we are happy to see the topic of WEIM entities’ ability to represent demand response through base schedules, which would provide welcomed improvements to consistency and transparency within the market.

APS is supportive of PGE’s recommendation to create a non-participating resource model for DRs, as presented during the June 17^th stakeholder meeting. During the meeting, it was discussed that the new non-participating resource model should be flexible enough to allow WEIM entities to base schedule both positive and negative values to accurately reflect the expected load reduction event itself, but also any load increase leading up to or following the event (i.e.: customer thermostat program). APS believes that this flexibility should be a requirement of the new non-participating resource that is developed. Further, while this was presented as an “interim” solution, APS believes this is something that should be available even after any “preferred future state” solution is implemented. Some DR programs are not structured in a way to be responsive to price signals, especially at a sub-hourly interval, therefore the ability to self-schedule an hourly value will continue to be a solution that is needed.

The ability to base schedule the demand response via a non-participating resource will provide incremental improvements in consistency of inclusion of the event in the market as well as transparency around the impact of the event on RSE tests. APS encourages CAISO to pursue this as a viable alternative for WEIM entities as the DDEMI proposal progresses.

1. Please provide your organization’s feedback the problem statements that were discussed during the Demand and Distributed Energy Market Integration working group meeting on July 8, 2025.

The California Department of Water Resources – State Water Project (CDWR-SWP) appreciates the opportunity to provide comments on the July 8, 2025, Demand and Distributed Energy Market Integration (DDEMI) working group discussion on “Enhancing Demand Flexibility Market Options.” CDWR-SWP strongly supports expanding real-time load bidding opportunities to enhance demand flexibility and improve market efficiency. From CDWR-SWP’s perspective as a load-serving entity with critical responsibilities for water delivery, it is essential that any proposed market changes preserve the ability to recognize existing operational flexibility and participation capability and to memorialize those capabilities in a Participating Load Agreement (PLA) – as CAISO and CDWR-SWP have done in their PLA[1]. The provisions of the PLA have been, and continue to be, mutually beneficial for both CDWR-SWP and CAISO, contributing positively to market efficiency and grid reliability. Therefore, any changes proposed under the Demand Flexibility Market Options initiative must respect the foundational elements of the PLA while focusing on enhancements that offer additional benefits to participating entities and the broader market.

DWR-SWP offers comments on the following two topics:

1. Long-term modeling demand response resources as participating load. In its July 11, 2025, comments, the Department of Market Monitoring (DMM) recommended that demand response (DR) should be modeled as Participating Load rather than as a supply-side resource whenever technologically feasible. The CDWR-SWP appreciates this direction and would like to take this opportunity to share information about its Participating Load and to emphasize the importance of maintaining the existing functionality available to its Participating Load under both the PLA and the DR program.

As clarified by the CAISO during the July 8 meeting, CDWR-SWP’s Participating Load differs from traditional DR resources but provides substantial grid value, including RA, contingency response, and real-time operational support. For example, CDWR-SWP’s Participating Load is actively used to support grid conditions during periods of high load or system stress, including during System Emergencies as defined under CAISO Operating Procedure 4420—distinct from emergency-only demand response triggers.

CDWR-SWP recommends a gradual and incremental expansion of Participating Load functionality or modeling while preserving existing rights, ensuring continued voluntary participation, and upholding all rights and obligations under its PLA. Any reduction in the functionality guaranteed by the existing PLA could result in increased costs and limit CDWR-SWP’s ability to deliver value to both the market and the grid under the DR program.

Real-time load bidding. CDWR-SWP supports expanding demand-side bidding—specifically, real-time load bidding (RTLB)—to allow existing Participating Loads under the DR Program to submit real-time energy bids. As CDWR-SWP has previously stated, RTLB would enhance reliability, reduce curtailments, limit out-of-market actions, and unlock additional revenue by broadening participation across various technologies.

RTLB would also enable CDWR-SWP to adjust the energy schedules of its Participating Load in real time to align with changes in water delivery schedules—resulting in significant savings in deviation costs. Furthermore, RTLB functionality would allow hundreds of megawatts of Participating Load to respond to real-time economic signals by increasing or decreasing consumption. It would also enable existing online capacity from the day-ahead market to be made available as either supply or demand in the real-time market—improving market efficiency without increasing real-time system costs.

CDWR-SWP recommends an incremental enhancement of the Participating Load model to incorporate RTLB while preserving the ability to memorialize existing rights and functionality under non-conforming PLAs. Specifically, under Article 4.5 of CDWR-SWP’s PLA, CDWR-SWP’s Participating Load may continue to elect to be treated as a Use-Limited resource and remain eligible to submit bids for Contingency-Only reserves. Under this provision, CAISO shall not generate bids or impose any requirement to bid or offer services equivalent to a must-offer obligation. Additionally, under Article 4.6 of the PLA, CDWR-SWP’s Participating Load qualifies as a Resource Adequacy (RA) resource used to meet the RA obligations submitted in its monthly RA Plan and may submit a bid or submission to self-provide Ancillary Services (e.g., Non-Spin) in the Day-Ahead Market. These provisions allow CDWR-SWP to contribute to grid efficiency and reliability while respecting CDWR-SWP’s primary function of water delivery. Enhancing the Participating Load model to incorporate RTLB will only increase CDWR-SWP’s contributions to grid efficiency and reliability.

CDWR-SWP envisions participating in RTLB using the additional energy and capacity that is available after its day-ahead awards and its existing PLA obligations. CDWR-SWP further recommends that RTLB participation remain voluntary[2] and include an opt-in feature that allows for discrete dispatch instructions—recognizing that its Participating Loads operate at discrete levels (i.e., pumping units at its facilities are either on or off).

In summary, CDWR-SWP recommends:

• Enhancing demand flexibility market options must preserve the ability to memorialize the full operational functionality of Participating Load under a PLA. For CDWR-SWP, this includes RA qualification and obligations, use-limited optionality, contingency flags, and the ability to bid Non-Spin Ancillary Services.
• A phased and incremental implementation of RTLB should be pursued, with clear guidance on the long-term market design.

CDWR-SWP appreciates the opportunity to provide these comments and looks forward to working collaboratively on the topic of “Enhanced Demand Flexibility Market Options” while safeguarding the operational capabilities required to meet water delivery and grid reliability objectives. CDWR-SWP recognizes the importance of this effort and supports continued progress on these enhancements

Following the discussions of the July 8^th meeting CDWR-SWP suggests the following problem statement:

Problem Statement: Participating Loads are currently unable to submit energy bids for demand in the real-time market, which limits their flexibility and responsiveness. Allowing both upward and downward energy bids for demand—while preserving key features of the existing Participating Load Models and Participating Load Agreement, such as energy offers, contingency bidding, and non-spin ancillary services—would enhance system flexibility and improve market efficiency. Any enhancement should expand participation options without compromising the operational functionality currently in place. These enhancements could include but not limited to, discrete real-time dispatch instructions for the energy bids and the qualification of the additional demand capacity in real-time for Resource Adequacy purposes.

[1]  Participating Load Agreement: Amendment No. 5 to the First Amended and Restated Participating Load Agreement Between California Department of Water Resources and California Independent System Operator Corporation, accessed July 17, 2025, https://www.caiso.com/Documents/Aug25-2023-AmdtNo5-PLA660withCDWR-ER23-2711.pdf

[2] DWR is not proposing any change to the RA requirements for resources shown on its RA supply plans, including obligations to offer resources, use-limited resources or contingency-flagged resources as applicable.

1. Please provide your organization’s feedback the problem statements that were discussed during the Demand and Distributed Energy Market Integration working group meeting on July 8, 2025.

Comments on Demand and Distributed Energy Market Integration Working Group

Department of Market Monitoring

July 22, 2025

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Demand and Distributed Energy Market Integration Working Group presentation dated July 8, 2025.[1]^{, [2]} In these comments, DMM adds to our previous comments from the ISO’s Demand and Distributed Energy Market Integration (DDEMI) Working Group Meeting on July 11, 2025.[3] These comments address the following two reliability demand response resource (RDRR) topics:

• Minimum on-line times and costs. RDRR should have their minimum on-line times, costs, and start-up costs accurately included in the market to avoid RDRR attrition, and continued access to these reliability resources. Included parameters should be limited to those necessary to accurately model the physical characteristics of the resources. Should these parameters be included, DMM recommends the ISO have processes in place to validate the reasonableness of these parameter submissions.
• Allow for discrete RDRR larger than 100 MW. DMM supports the removal of the 100 MW cap for discrete RDRR to improve market efficiency and access to reliability resources, to the extent necessary, to accurately reflect physical characteristics of these resources.

Comments

Reliability demand response resource minimum on-line time and costs

DMM continues to believe RDRR should have their operating parameters accurately reflected in the market.[4]^,[5] These parameters may include both the minimum on-line time, and start-up and minimum load costs. If RDRR needs to be able to reflect these parameters to the market to ensure accurate representation of costs and physical characteristics, then their inclusion in the market model is appropriate to ensure there is no RDRR attrition and continues the market’s access to these reliability resources.

While DMM supports consideration of the proposal to allow RDRR to submit additional operating parameters, the ISO should also ensure it would have processes in place to validate the reasonableness of resource commitment cost submissions. Currently, proxy demand response (PDR) resources can submit a wider range of minimum on-line times, and have the ability to submit minimum load and start costs. This suggests these operating parameters can be made available for RDRR. DMM has found some PDR resources submitting very large commitment costs for the amount of capacity offered, and recommends the ISO develop guidelines for RDRR if this functionality is to be extended to RDRR.

Eliminate the 100 MW discrete RDRR cap

DMM supports improvements to the CAISO market that allow for increased and improved market function through accurate representation of resource costs and physical characteristics. The elimination of the 100 MW cap for discrete RDRR may allow some market participants to more accurately reflect their resources to the market, supporting more efficient access to reliability resources. As a result, DMM supports the elimination of the 100 MW cap for discrete RDRR to the extent it is needed to accurately represent some RDRR in the market that otherwise may be forced to participate as continuous RDRR.

[1] Demand and Distributed Energy Market Integration Working Group Discussion Paper, California ISO, June 13, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/DiscussionPaper-DemandandDistributedEnergyMarket-June13-2025.pdf

[2] Demand and Distributed Energy Market Integration Working Group, California ISO, July 8, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Demand-and-Distributed-Energy-Market-Intgeration-Jul8-2025.pdf

[3] Comments on Demand and Distributed Energy Market Integration Working Group Discussion Paper, Department of Market Monitoring, July 11, 2025: https://www.caiso.com/documents/dmm-comments-on-demand-and-distributed-energy-market-integration-jun-13-2025-working-group-discussion-paper-jul-7-2025.pdf

[4] Comments on RDRR Bidding Enhancements Issue Paper/Straw Proposal, Department of Market Monitoring, November 12, 2021: https://www.caiso.com/documents/dmm-comments-rdrr-bidding-enhancements-issue-paper-straw-proposal-nov-12-2021.pdf

[5] Comments on RDRR Bidding Enhancements Revised Straw Proposal, Department of Market Monitoring, January 11, 2022: https://www.caiso.com/documents/dmm-comments-reliability-demand-response-resource-bidding-enhancements-revised-straw-proposal-jan-11-2022.pdf

1. Please provide your organization’s feedback the problem statements that were discussed during the Demand and Distributed Energy Market Integration working group meeting on July 8, 2025.

PGE appreciates the July 8 DDEMI discussion and the CAISO’s openness to enabling EIM entity DR programs to be base scheduled. This would be a meaningful near-term improvement for PGE and other EIM entities that currently rely on the Load Forecast Adjustment (LFA) tool to manually communicate load shifts associated with DR programs to the CAISO. EIM entities, including PGE, currently have limited avenues for DR participation under the status quo and the ability to base schedule DR resources would be a meaningful improvement.

However, PGE views base schedules as a near-term, transitional solution rather than a long-term end state, especially for future EDAM participants. Current PEMs remain a primary barrier to transitioning our DR resources to full market participation (particularly those involving frequent dispatch or BTM-integrated technologies). PGE supports continued exploration of enhanced or new participation models (e.g., mPDR) that can reflect the performance of emerging technologies like EVs and storage and urge CAISO to ensure compatibility of these solutions within EDAM. PGE is currently agnostic to the design mechanism, so long as it delivers a workable path to resource participation.