Comments on Issue paper and track A straw proposal

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the EDAM ISO BAA Participation Rules Issue Paper and track A1 Straw Proposal (Issue Paper/Straw Proposal). CalCCA’s comments can be summarized as follows:

• The California Independent System Operator Corporation (ISO) should evaluate its roles as a BAA operator and a market operator with the ISO BAA stakeholders on a timeline that allows any resulting changes to the ISO tariff or business practices to effectuate the necessary separation between the two roles can be implemented for day one of EDAM.
• As an initial starting point, the ISO should take a conservative approach to setting the Confidence Factor. When using the historical performance of non-resource sufficiency evaluation (RSE) eligible supply to inform the Confidence Factor, the ISO should consider previous years with similar west-wide seasonality, loads, and temperatures and more recent trends that take into account more recent capacity conditions that affect economic import availability.
• The ISO should consider adding the following additional reliability criteria so that the ISO sets the EDAM Reliability Margin during other times of potential system stress: the issuance of a Flex Alert, a Residual Unit Commitment (RUC) infeasibility, or a Resource Adequacy (RA) outlook that predicts less available RA capacity than forecasted load plus reserves.
• While making transmission available to the EDAM on a hurdle-free basis may result in a reduction in transmission revenue and wheeling access charge (WAC) revenues relative to historical revenues, transmission revenue recovery and WAC revenues should be a transitional mechanism only, accompanied by a sunset date such that the proposal does not introduce indefinite uplift payments.
• In evaluating advisory RSE failures, expected RA offers must be considered before taking actions to cure to avoid over-procuring to cover RSE deficiencies that appear in the advisory timeframe but not in the binding run.
• The ISO should include Reliability Demand Response Resource (RDRR) as a load modifier to the RSE load forecast until it has met its use limitations.
• The ISO should adopt a metered load allocation approach in track A1 for RSE failure surcharges and develop an allocation methodology in track B that allocates charges to RA resources failing to meet their must-offer obligation first and to metered load second.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

The Issue Paper/Straw Proposal commits to further evaluating potential measures to increase the separation between the ISO’s roles as a BAA and market operator in a subsequent forum.[1] The ISO should conduct this evaluation with ISO BAA stakeholders on a timeline that allows the ISO to implement any resulting changes to the ISO tariff or business practices to effectuate the necessary separation between the two roles for day one of EDAM.

Given the significant implementation lift for EDAM, the ISO should also provide a detailed implementation schedule as soon as possible, including the sequencing of the rollout of EDAM implementation and the onboarding of EDAM entities. It would be prudent for the ISO to consider implementing EDAM before onboarding the first EDAM participant to ensure a smooth implementation before BAAs begin participation.

[1]             Issue Paper/Straw Proposal at 4.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

CalCCA supports the implementation of a net EDAM export transfer constraint that would limit EDAM export transfers out of the ISO BAA during stressed system conditions. The net EDAM export transfer constraint is defined as Net Export ≤ RSE Eligible Supply + Non-RSE Eligible Supply x Confidence Factor – RSE Obligation – EDAM Reliability Margin. In this initiative, the ISO and ISO BAA stakeholders will need to determine:

1. How to set the Confidence Factor that will be applied to non-RSE eligible supply (i.e., economic imports) to reflect the amount of non-RSE eligible supply the ISO BAA is confident will deliver; and
2. Under what conditions the ISO will implement the constraint and at what EDAM Reliability Margin quantity.

The ISO proposes to set the Confidence Factor based upon a review of historic performance on non-RSE eligible supply. As an initial starting point, the ISO should take a conservative approach to setting the Confidence Factor. As commenters at the May 11, 2023 workshop explained, the ISO BAA does not receive benefits from non-RSE eligible supply in terms of RSE credit and therefore the ISO BAA should be able to minimize the risks associated with exporting non-RSE eligible supply as an EDAM transfer. When using the historical performance of non-RSE eligible supply to inform the Confidence Factor, the ISO should consider previous years with similar west-wide seasonality, loads, and temperatures, and more recent trends that take into account more recent capacity conditions that affect economic import availability.

The ISO proposes to set the EDAM Reliability Margin based on three criteria the ISO believes represent the greatest intra-day system reliability risks:

1. Replacement reserves based on forecasted Most Severe Single Contingency (MSSC);
2. Protection for a non-credible contingency based on weather conditions (i.e., fires); and
3. Gas operational flow order/curtailments.

CalCCA understands the proposal to say that the ISO BAA operators will set the EDAM Reliability Margin daily at hourly granularity based upon the one criterion that would result in the largest EDAM Reliability Margin. CalCCA agrees these criteria could signal intra-day reliability risk and supports using the greater of the three to set the EDAM Reliability Margin. However, criteria two and three require more definition around how they will be measured for setting the EDAM Reliability Margin. The ISO should provide examples that show when fire risk or gas operational flow orders/curtailments would result in the ISO BAA setting the EDAM Reliability Margin and to what level. It appears these criteria may require some level of operator discretion.

The ISO might consider adding additional reliability criteria so that the ISO sets the EDAM Reliability Margin during other times of potential system stress. Specifically, at the April 5, 2023 workshop, the ISO contemplated other criteria such as the issuance of a Flex Alert, a RUC infeasibility, or an RA outlook that predicts less available RA capacity than forecasted load plus reserves. While these criteria clearly signal potential stressed system conditions for the next day, the Issue Paper/Straw Proposal does not put forth any of these criteria for use in setting the net EDAM export transfer constraint. It may be because criteria number 1 above (replacement reserves based on forecasted MSSC) already covers these additional triggers. If not, the ISO should consider adding to the EDAM Reliability Margin when any of these criteria are met.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

CalCCA has no comments at this time.

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

The ISO proposes a process for determining the recoverable foregone historical WAC revenues, including revenues associated with reduction in WAC revenues at existing transfer locations; unrealized WAC revenues attributed to non-firm use of approved new transmission builds that increase transfer capability between EDAM BAAs; and revenues for wheeling-through transfer volumes for EDAM BAAs that exceed the total imports/export transfers from the EDAM BAA.

CalCCA continues to hold its position in the EDAM stakeholder process. That is, while making transmission available to the EDAM on a hurdle-free basis may result in a reduction in transmission revenue and WAC revenues relative to historical revenues, transmission revenue recovery and WAC revenues should be a transitional mechanism only, accompanied by a sunset date such that the proposal does not introduce indefinite uplift payments. The ISO proposes to forecast foregone WAC revenues based upon historical WAC revenues three years prior to EDAM implementation and then update this forecast only upon changes in EDAM BAA participation. This appears to result in uplift payments in perpetuity. Unlike cost recovery provided through the transmission access charge (TAC), WAC revenues are not guaranteed, and the evolution of EDAM does not warrant uplifts to cover these foregone revenues in perpetuity.

When entering into a transaction, it is important that the parties know the costs and benefits of that transaction.  In adopting a WAC process that will potentially create uplift (if the historical WAC revenues are not achieved), parties will undertake transactions whose complete costs will not be known until after they are settled.  This can lead to parties making the wrong transactions because they lack information on the total cost impact.  In addition, such uplifts will not always be paid by the entity that entered into the transaction and will therefore shift costs among market participants.  The ISO, as a market operator, should strive to avoid such market inefficiency.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

The ISO will run advisory RSEs at 6 am and 9 am before the binding RSE run at 10 am. Because the day-ahead market bidding deadline is also 10 am, the binding run will include all of the bids from RSE eligible resources, but the advisory runs will not. Therefore, the ISO proposes to publish RA offers expected between 6 am and 10 am along with the advisory RSE results to better reflect the supply expected to be included in the binding RSE run. CalCCA agrees with this approach. In evaluating advisory RSE failures, expected RA offers must be considered before taking actions to cure to avoid over-procuring to cover RSE deficiencies that appear in the advisory timeframe but not in the binding run. There is a risk that expected RA offers will not materialize or that the calculation of expected RA offers will change between 6 am and 10 am due to new outages. CalCCA expects this risk would be small, and that expected RA offers will largely reflect actual offers. The ISO should confirm this expectation by evaluating historical RA compliance with day-ahead must-offer obligations and historical RA outages submitted between 6 am and 10 am for the next day to determine the risk associated with assuming all resources with a day-ahead must-offer obligation will provide bids into the day-ahead market. Appropriate actions taken to cure advisory RSE deficiencies may depend on how realistically expected RA offers reflect actual RA offers.

The ISO contemplates accounting for RA RDRR in the RSE if the failure amount of the 9 am advisory run exceeds the quantity of expected RA offers. The ISO should include RDRR in the RSE and the ISO should include it as a load modifier to the RSE load forecast until the RDRR has met its use limitations. This approach would allow the ISO to account for supply that will be available in real-time.

In track B, the ISO will consider developing a mechanism for the ISO to procure cure capacity (similar to the ISO’s existing CPM authority). If the ISO develops its own curing mechanism, the ISO should cure advisory RSE deficiencies only (1) when it is reasonably certain a material deficiency will occur considering expected RA offers and prior efforts to cure deficiencies, and (2) after the ISO has weighed the costs of curing against the cost of the RSE failure and has ensured the cost of curing would not exceed the failure charges.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

In track A1, the ISO proposes to allocate RSE failure surcharges and revenues to metered demand. In track B, the ISO will consider allocation methodologies that more accurately reflect cost-causation principles. The Issue Paper/Straw Proposal puts two ideas forward: allocating to load-serving entities (LSEs) based on LSE-specific RSE targets net of LSE supply, and allocating first to RA capacity that fails to meet its RA obligations and second to metered demand. The ISO should adopt a metered demand allocation in track A1 as an interim solution, as developing an allocation methodology that aligns with cost causation will require additional stakeholder discussion and time to develop a feasible solution that accurately reflects the cause of the failure.

As CalCCA previously commented, it would be extremely difficult to tie a resource’s schedule to a particular LSE because there is not a one-for-one relationship between the schedule of a resource and the LSE for which it is serving. The only way for the ISO to allocate charges based on metered demand net of supply would be for the ISO to review contracts between LSEs and suppliers to understand the contractual obligation of the resources. The schedule alone does not provide this information. Further, this allocation cannot be done based upon an assessment of RA contracts alone. RA requirements and RSE requirements are not identical, and LSEs face RA penalties that follow cost causation principles specific to RA deficiencies. Any allocation methodology for RSE failure deficiencies should not be duplicative of RA penalties and should instead target the specific RSE requirements the charges would be based upon. RA requirements and RSE requirements are different and serve different purposes. LSEs enter into many different types of contracts with RSE-eligible resources beyond RA-only contracts, including contracts for substitute capacity and contracts for hedges (e.g., firm-energy contracts, call options, etc.). Additionally, resources may provide partial capacity or capacity to multiple different LSEs, making it difficult to determine which portion of the capacity ties to which LSE.

The ISO should adopt a metered load allocation approach in track A1 and develop an allocation methodology in track B that allocates charges to RA resources failing to meet their must-offer obligation first and to metered load second.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

Virtual power plants (VPP) out-of-state are becoming an increasingly available resource to California entities. The ISO should ensure VPPs can qualify for the RSE and clarify the bidding and modeling rules for virtual power plants to provide RSE capacity. 

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

CalCCA supports the WEIM Governing Body role in the Issue Paper/Straw Proposal. The scope of issues within this initiative, namely how the ISO BAA will operate under EDAM, falls squarely within the authority of the ISO Board of Governors. 

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

CalCCA has no additional comments at this time.  

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

No Comment.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

No Comment. 

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

A) The proposal states:

“the export transfer constraint will protect the ISO BAA when there are changes in conditions between day-ahead and real-time for which existing market products do not exist. The export transfer constraint is intended to provide incremental reliability benefits to the BAA in specific limited conditions.”

Imbalance Reserve (IR) products are being developed and will be required to be offered as a part of resource adequacy must offer obligation (RA MOO) under Day Ahead Market Enhancements (DAME) initiative to address changes in conditions between DAM and RTM. Does this mean that EDAM export transfer constraint will be irrelevant or insignificant with implementation of IR products under DAME?

B) RSE requirement is calculated using the Forecast, IR, and Ancillary service requirements. How does the RSE requirement compare to the default planning reserve margin (PRM)? Is the EDAM export transfer constraint imposed to maintain the PRM?

C) RSE eligible supply is not clearly defined in terms of the requirements from such resources. Are all the RA resources and the RA capacity from them considered “RSE eligible supply”?

D) Regarding the setting of EDAM Reliability Margin, the proposal states,

“For each hour, the parameter will be bounded, with the operators setting the parameter no higher than that indicated by the maximum of the following three variables: (1) Replacement reserves based on forecasted Most Severe Single Contingency (MSSC). This would be an appropriate upper bound to the parameter because the day-ahead market does not have an explicit product to reserve unloaded flexible capacity to ensure the ISO BAA is able to replace its contingency reserves within NERC required timelines”……

Under the replacement reserve category, does the proposal consider flexible RA capacity set aside each year for the contingency portion of the flexible RA capacity need assessment? The contingency portion of flexible RA is to mitigate gaps in the spinning reserve portion of the operating reserve in case of contingencies. ISO calculates flexible capacity needs for the contingency portion as the higher of MSCC or 3.5% of expected monthly peak load for each month.

The proposal indicates the proposed reliability margin criteria is conservative and the result of applying the conservative criteria proposed by the ISO staff is to limit exports through EDAM transfers and enhance the ISO BAA’s access to its internal supply to support reliability, including internal supply from RA resources. An assessment of potential contribution of the contingency portion of flexible RA to the EDAM reliability margin may provide an enhanced outlook.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

The proposal indicates there will be a transfer of IR and RUC products between EDAM BAAs.  Is the transfer subject to LSEs within ISO BAA meeting full IR and RUC requirements? Is it a correct understanding that the transfer of IR and RUC will take place only if a shortfall of these products exists in the ISO BAA?

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

No Comment. 

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

The misalignment of RA MOO hours and RSE advisory schedules imposes a risk of inaccuracy in RSE advisory schedules prior to 10 a.m. Approaches considered in the proposal to address this risk  are appropriate and CDWR will provide its response on the detailed process that may be forthcoming.

Under Track B Initial scoping, the proposal indicates that the existing capacity procurement mechanism (CPM) may not be sufficient to procure “cure capacity” defined as the capacity required for the ISO BAA to fully or partially cure a projected EDAM RSE failure. The proposal also envisions the existing Competitive Solicitation Process (CSP) as a potentially viable option. CDWR supports using CSP to procure “cure capacity”.  However, CAISO should carefully monitor and set parameters for when “cure capacity” is needed, since over-procurement could impose additional costs on ratepayers. CSWR would welcome further discussion on this point.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

CDWR supports Track A1 proposal to allocate RSE failure surcharges and revenues to scheduling coordinators in proportion to their metered demand.  CDWR understands this to be an interim solution until a long-term solution is proposed in Track B.

Regarding Track B potential solutions, CDWR believes Option 2, in which ISO staff recommends exploring how to develop RSE failure surcharge and revenue allocation methodologies using RA capacity that fails to meet its day ahead must offer obligation, may be more practical.

In general, Track B solutions should align with CAISO’s cost-causation principles.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

No Comment. 

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

No Comment. 

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

No Comment. 

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

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 this question #1, but there may be some formatting errors.

Comments on Extended Day-Ahead Market ISO Balancing Authority Area Participation Rules Issue Paper and Straw Proposal

Department of Market Monitoring

June 7, 2023

Introduction

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Extended Day-Ahead Market ISO Balancing Authority Area Participation Rules Issue Paper and Track A1 Straw Proposal (Straw Proposal).[1]  DMM recognizes that this initiative focuses on market rules for only the CAISO balancing area’s participation in the extended day-ahead market (EDAM).  However, one of DMM’s core duties is to “review existing and proposed market rules, tariff provisions, and market design elements and recommend proposed rule and tariff changes to the CAISO, the CAISO Governing Board…”.[2]  As the proposed market rules will be decided by the CAISO Governing Board, it is within the scope of DMM’s role to review and make recommendations on the policy.

While this initiative develops rules specific to the CAISO balancing area, we have attempted to make our recommendations apply generally to any potential EDAM balancing area.  We hope aspects of these comments may be useful to stakeholders in other balancing areas as they redesign their OATTs to facilitate EDAM participation.   

Setting the net export transfer constraint

DMM continues to support the EDAM proposal to allow each balancing authority area (BAA) to utilize a net export constraint to determine hourly limits on net exports of EDAM energy, imbalance reserve up (IRU) and reliability capacity up (RCU).  Under the proposed EDAM design, during tight system conditions each balancing area needs a mechanism to help ensure EDAM transfers do not cause it to take responsibility for load curtailment caused by another balancing area with a capacity shortfall.

The EDAM should continue to increase coordination and collaboration between Western balancing areas. However, the ISO did not ultimately propose that all EDAM balancing areas share load curtailment if there is a collective supply shortfall. Instead, if there is a collective supply deficiency in real-time, the real-time optimization will identify EDAM balancing areas that do not have sufficient supply to meet their real-time load, export and EDAM transfer obligations. 

As a result, if one or more balancing areas do not bring sufficient capacity to the EDAM in tight system conditions, EDAM transfers can shift responsibility for potential load curtailment from balancing areas that have insufficient capacity in the day-ahead time frame to balancing areas that had sufficient capacity in the day-ahead time frame. 

One way this shift of responsibility can occur is when greater net load uncertainty materializes than the imbalance reserve up product is designed to procure.[3] In addition, if an EDAM area allows convergence bidding, virtual supply can also cause the balancing area to assume responsibility for real-time load curtailment even if the area provided sufficient capacity to cover its obligations in EDAM.[4]   

As a result, during tight system conditions each EDAM balancing area needs a mechanism to help ensure EDAM transfers do not cause that area to take responsibility for load curtailment caused by another balancing area with a capacity shortfall.  The net export constraint is intended to provide this critical function in the EDAM design.

EDAM balancing areas that do not have day-ahead must offer obligations and that do not allow virtual bidding could potentially prevent this adverse outcome by withholding capacity in excess of their EDAM resource sufficiency evaluation (RSE) requirements. However, even for these balancing areas, utilizing a net export constraint would be more efficient because it would allow the balancing area to bid their excess capacity into EDAM. This would allow this additional capacity to be efficiently re-dispatched within its own balancing area through the EDAM optimization.

For a balancing area that allows convergence bidding or has day-ahead must offer obligations in excess of its EDAM resource sufficiency evaluation requirements, the net export constraint could be critical for ensuring its reliability in situations when other EDAM balancing areas’ capacity shortfalls could cause the EDAM footprint to have insufficient supply in real-time.

The net export constraint will not be able to serve this critical function in the EDAM design if a balancing area has not obtained authority under its open access transmission tariff (OATT) to properly utilize the constraint in tight system conditions.  Therefore, it is important that each balancing area develop and test procedures for implementing its own net export constraint prior to EDAM participation. For the constraint to be effective in preventing shifting of responsibility for load curtailment from another balancing area, these procedures must allow sufficient flexibility to cover the dynamic nature of a balancing area’s load and resource uncertainty, which can fluctuate based on the specific mix of resources a balancing area is relying on for a particular day.

One controversial aspect of the ISO’s proposal is to allow bid-in supply that will not count towards the BAA’s EDAM RSE, such as non-resource adequacy imports, to increase the net export constraint limit.  Procedures that allow non-resource sufficiency evaluation (RSE) eligible bids to relax net export transfer constraints under normal operating conditions would allow for greater potential trades and benefits across the EDAM. Under normal conditions, relaxing net export constraints to account for non-RSE eligible bids might create a small and unlikely potential downside risk. But the balancing area that increases the net export constraint would potentially benefit as well. Generation within this balancing area, including generation controlled by load serving entities, would have the opportunity to sell more energy into the EDAM if its balancing area has lower restrictions on transfer exports. Less restricted transfers would provide higher potential benefits for participants within the balancing area as well as for the overall EDAM.

When capacity is tight across western markets — and risks of shortages are higher — a balancing area may want to discount non-RSE eligible bids when calculating the net export transfer constraints. Under tight system conditions, resources not eligible for the EDAM RSE may not show up in real-time markets as they historically do under normal conditions. The balancing area is ultimately responsible for its reliability, and operator judgement and good utility practice should inform how operators set the net export constraint.

Similarly, the reserve margin portion of the net export constraint calculation should also be set using the balancing area operator’s judgment and good utility practice. The straw proposal lists three criteria for setting the reserve margin: (1) replacement reserves for the most severe single contingency, (2) protection for non-credible contingency from weather events, and (3) gas operational flow orders/curtailments. These items seem reasonable. However, DMM recommends that each EDAM balancing area not set its policy to unnecessarily restrict the balancing area from including other future risks in the reserve margin, consistent with good utility practice, that have not been contemplated in the straw proposal.

DMM recognizes that the use of a net export constraint can reduce the potential efficiency benefits of an extended day-ahead market relative to not using a net export constraint. However, other fundamental elements of the EDAM design have made this constraint the critical tool for balancing areas to ensure EDAM transfers do not shift responsibility for load curtailment from another balancing area when they have brought sufficient capacity to EDAM.

DMM continues to believe the ideal EDAM design would involve a stringent day-ahead resource requirement sufficient for meeting all participating EDAM balancing areas’ reliability thresholds.  This would then allow mutually agreed upon sharing of any supply shortfalls that ultimately materialize in real-time.[5]  DMM understands that it would have been extremely difficult for diverse balancing areas to agree upon one standard set of day-ahead reliability standards for this initial phase of EDAM implementation.

DMM continues to recommend that the ISO and participating EDAM balancing areas work towards this goal in upcoming initiatives to enhance the EDAM design.  In the meantime, some loss of potential EDAM efficiency due to the use of the net export constraint in tight system conditions is an unfortunate, but necessary, cost for the implementation of this initial design.

Tagging non-resource specific imports that count towards EDAM RSE

The final EDAM proposal states that if prior to the start of the STUC run for an hour, an EDAM BAA does not e-tag non-resource specific imports that counted towards the EDAM RSE, “the proposal is to remove the BAA from the pooled WEIM RSE approach.”[6] The proposal also “allows the EDAM entity to cure these failures through resupply of the capacity by the STUC horizon, through additional real-time bids, to replace the supply previously not tagged.”[7]

Clarifying EDAM policy for curing untagged imports

DMM’s understanding is that the ISO plans to more clearly define what will count as “additional real-time bids” to prevent a balancing area from being removed from the pooled WEIM resource sufficiency test in its development of EDAM business process requirements.  DMM continues to highlight this as a potential market design issue that may have consequences that warrant an expedited future policy change.[8] DMM recommends that the ISO clarify this EDAM policy as soon as possible so that each EDAM balancing area can design its own tariff provisions for incentivizing imports to tag by the deadline and for curing any failures to prevent removal from the pooled WEIM RSE.

The ISO has indicated that the bids used to cure the untagged imports may only be bids that were not submitted in the day-ahead market.  This may have unintended adverse consequences. For example, in balancing areas with resource adequacy programs, all energy and capacity that is forward procured is expected to bid into the day-ahead market. Thus, an EDAM balancing area could procure significantly more capacity than needed to pass the EDAM resource sufficiency evaluation, but may have a very limited quantity of resources that have not been offered into the day-ahead market.  In this situation, a relatively small amount of untagged imports could cause a balancing area with much more capacity than was necessary to meet its resource sufficiency requirements to be removed from the pooled real-time WEIM resource sufficiency test.

DMM continues to recommend that the ISO address this issue by defining “additional real-time bids” to include any bids in excess of what was required to pass the EDAM resource sufficiency evaluation.  If this is not the policy for the initial EDAM implementation, the ISO should monitor to determine if this issue is causing inappropriate EDAM RSE failures and be prepared to quickly adjust the policy.  If the initial policy is to only allow supply that was not bid into the day-ahead market to cure untagged imports, the risk of inappropriate EDAM RSE failures increases the importance of each EDAM balancing area developing incentives for imports to tag and developing policy for curing untagged imports that could result in the balancing area’s removal from the EDAM pool for the WEIM RSE.

Each EDAM BAA should develop incentives for imports to tag and policy for curing untagged imports

As describe above, the EDAM policy for tagging non-resource specific imports could result in a small quantity of imports untagged by the STUC run causing the entire EDAM balancing area to be removed from the EDAM pool for the WEIM RSE.  After the ISO clarifies the EDAM rules for supply that will count towards curing untagged imports, it will be important for each EDAM balancing area to develop rules in its tariff to properly incentivize imports that count towards the EDAM RSE to tag prior to the STUC run.  This may warrant additional analysis of the financial consequences to an EDAM BAA from being removed from the pooled WEIM RSE in order to adequately assign these costs to the importers who caused it.

Similarly, it will also be important for each EDAM balancing area to develop policy for how it may cure any non-resource specific imports that fail to tag before the STUC run.  This policy should include the conditions in which entities besides the scheduling coordinators for untagged imports should intervene to prevent EDAM RSE failure, and who should bear the costs of capacity required to cure the untagged imports.

Clarifying which EDAM BAA is responsible for an untagged non-resource specific import that was supposed to wheel through one EDAM BAA to count towards the EDAM RSE of another EDAM BAA

If a non-resource specific import contracted to count towards an EDAM BAA’s EDAM RSE requirement schedules on the border of that EDAM BAA, the policy is clear that this EDAM BAA will bear the consequences of that import not tagging by the start of the STUC run.  However, consider a scenario of a non-resource specific import that counts towards one EDAM BAA’s EDAM RSE.  Now assume that this non-resource specific import is ultimately supported by an import into a second EDAM BAA that is wheeled through that second EDAM BAA using Bucket 1 transmission and then imported into the first EDAM BAA, which counts this import as EDAM RSE supply.  In this scenario, the EDAM policy is not clear on which of the two EDAM BAAs will bear the consequences of the import failing to tag by the start of the STUC run.

DMM’s current understanding of the planned implementation of supply using Bucket 1 transmission from EDAM BAA 2 to count towards the EDAM RSE requirements of EDAM BAA 1 is that the ISO will simply increase the EDAM RSE requirement of EDAM BAA 2 and decrease the EDAM RSE requirement of EDAM BAA 1.  In this wheel-through scenario, this would imply that the consequences for the import failing to tag would fall on the EDAM BAA that the import is simply wheeling through (EDAM BAA 2 in this example).  DMM questions whether this would be the most appropriate policy. 

Regardless of the final policy decision, DMM recommends that the ISO clarify which EDAM BAA will bear the consequences of the untagged import in this scenario as soon as possible.  Each EDAM BAA will need to develop policy for addressing possible untagged non-resource specific imports wheeled through its BAA, and this policy will depend on which BAA is responsible for the consequences of the import failing to tag.  

Clarifying implications of a non-resource specific import counted towards EDAM RSE but that ultimately tags its source as being from an EDAM BAA

The ISO’s proposal contemplates the possibility of a non-resource specific import counted towards an EDAM BAA’s EDAM RSE.  The ISO would model the import as a distributed injection at the sink BAA’s Demand Aggregation Points.  The proposal then describes the policy for how the real-time market would treat such an import, if the import ultimately sourced from within the EDAM footprint:

In the real-time market, once the source of the supply is known, the scheduling coordinator would be expected to submit a bid at the resource if the source supporting the firm delivered energy is located within the EDAM footprint. The scheduling coordinator would be expected to cancel the DA schedule at the resource in the EDAM footprint through a base transfer deviation with the ISO at the applicable interface between EDAM areas. This base transfer associated with the resource in the footprint would contribute to the ISO WEIM RSE.[9]

DMM asks the ISO to clarify this policy.  If a non-resource specific import tags as ultimately being sourced from within an EDAM BAA, it seems reasonable to automatically set the real-time tagged energy amount on the import resource that cleared the day-ahead market to 0 MWs, forcing the importer to buy back the day-ahead cleared quantity at the relevant real-time market price.  This could also expose the importer to each EDAM balancing area’s penalties for failing to tag an import.  It is not clear if this is the intended EDAM policy.  It is also not clear how the EDAM and WEIM implementation will adjust to allowing the power in this scenario to count towards the WEIM RSE of the EDAM BAA that was the sink of the non-resource specific import, rather than towards the WEIM RSE of the EDAM BAA that is ultimately tagged as the source.  EDAM BAAs will need to develop rules in their tariffs to account for the potential of being the import source or sink in this scenario.

Prioritization of load and EDAM transfer curtailments

Under the EDAM final proposal, after the supply offered in the real-time WEIM under stressed system conditions has been exhausted, the market software will assign any supply shortfall to the balancing area with insufficient supply.  Based on the proposed software constraints that will be used to effectuate this design feature, DMM understands that the real-time software will assign higher priority to transfers out of EDAM energy, imbalance reserve, and reliability capacity than to the native load in balancing areas that have the EDAM transfers out. 

The EDAM final proposal clarifies that if load must actually be curtailed, the balancing area to which the real-time market software assigns the shortfall will not be responsible for delivering all EDAM transfers out while curtailing the shortfall. Instead, “the EDAM BAA would afford market transfers and load equal prioritization subject to operational discretion and coordination, consistent with good utility practice. This means that load and transfers will be curtailed on a pro-rata basis.”[10]

DMM’s understanding is that current good utility practice does not entail curtailing load and firm exports pro rata in all curtailment situations. This was also expressed in the comments of several stakeholders on the EDAM draft final proposal.[11] The proposal therefore appears to create some ambiguity over how balancing areas may operationalize the prioritization of load and transfer curtailments in emergency situations.

While such situations may be rare, each balancing area’s understanding of how other areas in EDAM will prioritize any necessary curtailments is likely to have a significant impact on how balancing areas behave in the EDAM market under tight system conditions. This is also likely to shape the procedures developed in each individual balancing area’s tariff development to prepare for EDAM participation. Therefore, DMM recommends that the ISO continue working with other potential EDAM balancing areas to clarify what the actual operational prioritizations will be under various load curtailment scenarios in more detail. DMM believes these clarifications will be critical in each balancing area’s stakeholder initiatives to develop rules for EDAM participation.

Allocation of RSE failure costs

To the extent possible, balancing areas should allocate EDAM RSE failure costs to those who can act to avoid or cause the costs. Resources contracted to provide EDAM RSE capacity that do not bid into the EDAM should be allocated RSE failure costs because they contribute to the failure by not making the capacity available to the EDAM. Similarly, if the amount of contracted capacity is less than needed to pass the EDAM RSE, the entities responsible for contracting to provide EDAM RSE capacity should pay the failure costs.

It follows that RSE failure costs should be allocated to contracted resources not bidding into the EDAM first, with the remainder allocated to the entities contracting capacity to meet RSE requirements. If a balancing area is short by 100 MW, and 70 MW of contracted capacity did not bid in, then total procurement was 30 MW short. The entities contracting to meet RSE requirements should be allocated costs based on their 30 MW of under procurement. The contracted resources that did not bid into the EDAM should be allocated costs based on their 70 MW that did not show up.

This cost allocation framework appears similar to the ISO’s Track B Option 2. DMM recommends that each EDAM balancing area work towards developing and implementing this form of two-tiered cost allocation policy that first assigns costs to unavailable contracted supply as soon as possible.

[1] Extended Day-Ahead Market ISO Balancing Authority Area Participation Rules Issue Paper and Track A1 Straw Proposal, California ISO, May 5, 2023: http://www.caiso.com/InitiativeDocuments/IssuePaper-TrackA1StrawProposal-EDAMISOBAAParticipationRules.pdf

[2] Appendix P to CAISO Tariff, CAISO, April 1, 2017, p. 3: https://www.caiso.com/Documents/AppendixP_CAISODepartmentOfMarketMonitoring_asof_Apr1_2017.pdf

[3] Comments on extended day-ahead market straw proposal, Department of Market Monitoring, June 17, 2022, pp. 4-6: http://www.caiso.com/Documents/DMM-Comments-Extended-Day-Ahead-Market-Straw-Proposal-June-17-2022.pdf   

[4] Comments on extended day-ahead market draft final proposal, Department of Market Monitoring, November 22, 2022, pp. 5-7: http://www.caiso.com/Documents/DMM-Comments-Extended-Day-Ahead-Market-Draft-Final-Proposal-2022-11-22docx.pdf

[5] DMM’s 6-17-2022 comments on EDAM Straw Proposal, pp. 1-3.

[6] Extended Day-Ahead Market – Final Proposal, CAISO, December 7, 2022, p. 67: http://www.caiso.com/InitiativeDocuments/FinalProposal-ExtendedDay-AheadMarket.pdf

[7] Ibid, pp. 67-68.

[8] Memorandum to ISO Board of Governors and WEIM Governing Body, Department of Market Monitoring, January 25, 2023, p. 9: http://www.caiso.com/Documents/DepartmentofMarketMonitoringReport-Feb2023.pdf

[9] EDAM ISO BAA Participation Rules – Straw Proposal, p. 29.

[10] Extended day-ahead market: Final proposal, ISO, December 7, 2022, p. 23: http://www.caiso.com/InitiativeDocuments/FinalProposal-ExtendedDay-AheadMarket.pdf

[11] For example, see the comments on extended day-ahead market draft final proposal by Bay Area Transmission Group, response to Question 3; and comments on the extended day-ahead market draft final proposal by Joint Undersigned Entities, p. 1.  Both are available at: https://stakeholdercenter.caiso.com/Comments/AllComments/d6824007-f3a8-4d3a-8309-9d9af4729ccf#org-1af2a957-4a97-4529-8e72-13b5ad2164fc 

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

Please see the PDF attached below the final question for DMM's complete set of comments.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

Please see the PDF attached below the final question for DMM's complete set of comments.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

Please see the PDF attached below the final question for DMM's complete set of comments.

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

Please see the PDF attached below the final question for DMM's complete set of comments.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

Please see the PDF attached below the final question for DMM's complete set of comments.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

Please see the PDF attached below the final question for DMM's complete set of comments.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

Please see the PDF attached below the final question for DMM's complete set of comments.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

Please see the PDF attached below the final question for DMM's complete set of comments.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

Please see the PDF attached below the final question for DMM's complete set of comments.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

The Public Advocates Office (Cal Advocates) at the California Public Utilities Commission (CPUC) appreciates the opportunity to offer feedback on the May 5, 2023 Issue Paper and Track A1 Straw Proposal (Straw Proposal) and the associated May 10, 2023 stakeholder discussion (May 10^th Workshop).

Cal Advocates offers comments on a number of issues described in the Straw Proposal and May 10^th Workshop, summarized as follows:

• It is imperative to continue development of structural separation of the California Independent System Operator’s (CAISO) dual role as Market Operator and BAA Participant. 
• The CAISO should implement Cal Advocates’ proposal for a Net EDAM Export Transfer Constraint (NETC) Confidence Factor (CF) design that evenly balances reliability risks with additional EDAM supply offers.
• The CAISO should present the results and inputs of its analyses intended to support determination of the CF value.
• Cal Advocates supports the CAISO’s proposed NETC design and implementation that enables efficient adjustments and routine stakeholder re-evaluation.
• Reliability Demand Response Resources (RDRR) should be eligible for use as advisory Resource Sufficiency Evaluation (RSE) supply when Energy Emergency Alert (EEA) Watches are called.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

At the May 10^th Workshop, the CAISO acknowledged April 19 stakeholder comments and Pacific Gas and Electric Company’s (PG&E) April 5^th presentation[1] on the importance of distinguishing between the CAISO’s roles as EDAM Market Operator and as a BAA participant representing load-serving entities (LSEs) at EDAM.[2]  It is imperative that CAISO’s role of EDAM Market Operator and the CAISO’s role as a BAA participant on behalf of LSEs are structurally distinct and do not result in conflicts of interest due to each role’s different objectives and priorities.

[1] PG&E, CISO BAA Participation in the Extended Day-Ahead Market, April 5, 2023.  Available at: http://www.caiso.com/InitiativeDocuments/PG_EPresentation-ExtendedDay-AheadMarketISOBAAParticipationRules-Apr5-2023.pdf.

[2] In these comments, “CISO BAA” refers to the CAISO’s role as a BAA participating in the EDAM and coordinating with its LSEs “EDAM Market Operator” refers to the CAISO’s responsibilities for running the EDAM, and “CAISO” when the distinction is not important or clear. 

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

The NETC is a reliability tool to allow “EDAM BAAs to manage supply in excess of the RSE requirements to respond to reliability concerns between day-ahead and real-time….”[1]  As shown in Table 1, the NETC includes a CF with a value between zero and one.[2]  A higher value CF would enable more non-RSE eligible supply[3] to increase the NETC value, enabling higher volume CISO BAA supply offers and potentially higher EDAM revenues through transfers.  A lower value CF would reduce the NETC, meaning more domestic supply would be retained in the CISO BAA on a day-ahead basis, enhancing reliability within the BAA.  Essentially, a lower, more conservative, CF would help to address reliability risks within the BAA at the cost of less potential revenues from EDAM transactions.  The CAISO proposes to use conservative criteria for the NETC in general, in order to “enhance the ISO BAA’s access to its internal supply to support reliability….”[4]  Initial EDAM implementation may surface unanticipated and unintended impacts to supply in addition to unknown showing requirements for new capacity products.[5]  Given these uncertainties Cal Advocates supports an approach to the NETC that is initially conservative in order to provide additional reliability. 

Table 1: NETC Design and Components

The CAISO proposes to set the CF based on the volume of non-deliverable economic imports from the previous year with monthly or seasonal granularity.[6]  For example, if the CAISO finds that non-RA economic imports were 98% deliverable in July, 2023, then the CF for July 2024 would be set at 0.98. 

Cal Advocates agrees that historical data can be useful for setting the CF.  However, the historical data alone is not conservative enough given the uncertainty of EDAM’s impacts on domestic supply that could be exported to EDAM entities and unavailable to California during a reliability emergency.  Upon EDAM implementation, the CISO BAA should start with a lower CF value to provide reliability benefits to the CISO BAA until actual operational experience can inform market operating assumptions about supply conditions and risks during supply scarcity events.

Cal Advocates proposes a CF design that balances historical performance of non-RA economic imports with a maximal conservative approach.  This approach would take the average of the previous year’s CF--set at zero for the first year of EDAM--and the historical performance of non-RA economic imports.  The resulting value would be the CF used in NETC for the year and period involved.  The CF would then be updated each year to incorporate the previous year’s observed historical import performance.  Over time, the CF would converge on observed historical import performance.  Table 2 provides example calculations for the first four hypothetical years of the CF calculation (all observed historical import performance values are hypothetical).  The Year 4 calculation demonstrates the outcome for a scenario when Year 3 shows worsening observed historical import performance of 0.80. 

Table 2: Balanced Approach for Setting the CF

Averaging the observed historical import performance with the prior year’s CF balances the most conservative approach preferred by stakeholders[7] with a predictable on-ramp towards greater cooperation with other EDAM entities.  Achieving maximum benefits for California ratepayers through EDAM will require building trust with other EDAM participating entities.  This approach provides the CISO BAA with a predictable method to “ease in” to the EDAM structure without assuming a disproportionate amount of risk while other EDAM entities accrue benefits.  At the same time, this approach fundamentally expects that other EDAM entities will reciprocate in their approach to setting their own NETC.  If other EDAM entities instead set aggressively conservative CFs, then the CISO BAA should reconsider its approach so that the CISO BAA is not assuming excessive risk without commensurate benefits.  Cal Advocates proposes that this structure be used in the interim; however, the structure may prove durable enough to be used indefinitely if stakeholders and the CISO BAA determine that it is net beneficial.

The EDAM Market Operator could face severe reputational costs for cases of shed load, lowering the likelihood that other potential external entities would want to participate in EDAM.  The CISO BAA would also face substantial scrutiny for shed load.  Stakeholder discussion during the May 10^th Workshop broached important questions about whether the extant proposal prioritizes the preferences of the EDAM Market Operator at the expense of the interests of the CISO BAA.  It is unclear, however, that the CISO BAA would benefit from putting its own reliability at risk solely to increase participation in the EDAM by using a historical level of imports to set the CF. 

The Straw Proposal notes that “[t]he specific details such as the period of reference (month versus season, or previous year versus recent period, etc.) and the percentile value will be determined once ISO staff analyze historical data and will be defined in the business practice manual.”[8]  CAISO staff should present their analysis to stakeholders in a public workshop to ensure that the analysis leads to appropriate outcomes.  Several questions stand out regarding the needed analysis, including:

• What period of time does a percentile value apply to?  I.e., does each hour receive its own percentile value?
• How many years of prior performance are considered?
• How is recent performance (e.g., in the preceding weeks) considered to account for very-recent trends?[9]

When the CAISO proposes a calculation of the observed historical import performance, the calculation should not be limited to history that is one year prior but should also incorporate more recent performance of imports.

Lastly, the CISO BAA plans to update the CF on an annual basis prior to each Summer.[10]  The CF design would be defined in business practice manuals instead of the CAISO Tariff, enabling relatively expedient adjustments to the CF.  Cal Advocates supports a routine cadence to update the CF figure and encourages the CISO BAA to discuss a re-evaluation of the CF with stakeholders each year.

[1] Straw Proposal at 9.

[2] Straw Proposal at 9, 11-12.

[3] Non-RSE eligible supply is largely non-RA economic imports/intertie bids.  Staff Proposal at 9.

[4] Straw Proposal at 11.

[5] EDAM BAAs will have hourly showing requirements at the RSE for the Imbalance Reserve and Reliability Capacity products developed in the Day-Ahead Market Enhancements (DAME) initiative.  The showing requirements for those new products have not been estimated or studied at the EDAM or BAA level.  For information on the design of imbalance reserves and reliability capacity, see: Day-Ahead Market Enhancements Revised Final Proposal, May 1, 2023 at 33-34, 44.  Available at: http://www.caiso.com/InitiativeDocuments/RevisedFinalProposal-Day-AheadMarketEnhancements.pdf.

[6] Straw Proposal at 12.

[7] Straw Proposal at 11-12.

[8] Straw Proposal at 12.

[9] For example, the Final Root Cause Analysis Mid-August 2020 Extreme Heat Wave at 48 notes that “a major transmission line in the Pacific Northwest upstream from the CAISO system was forced on outage because of a storm in May 2020 that caused damage and thus derated the California Oregon Intertie (COI) into August.”  Such an event external to the EDAM footprint would not be covered by the other factors of the NETC calculation but could nonetheless reduce the viability on non-specified RA imports.  

[10] Straw Proposal at 12.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

Cal Advocates does not have a comment on this topic at this time.

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

Cal Advocates does not have a comment on this topic at this time.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

The advisory RSE will run from 6am to 9am before the day-ahead market closes at 10am and the final binding RSE pass occurs.[1]  The advisory RSE considers supply bids and availability prior to the binding RSE in order to determine if a shortfall at the binding RSE is likely.[2]  The May 10^th Workshop included discussions on whether RDRR[3] should be considered as supply in the advisory RSE.

Cal Advocates proposes that RDRR should be counted as supply in the advisory RSE if the CAISO has called an EEA Watch for the next day.  An EEA Watch is called when energy deficiencies are expected and may precede an EEA 2 which typically dispatches RDRR.[4]  This change would allow RDRRs to count as supply in the advisory RSE on a day when it is likely that RDRR will be dispatched due to supply and load conditions.

An EEA Watch may be called either in the day-ahead or day-of timeframes.  A day-of EEA Watch would fail to inform the advisory RSE to make use of RDRR supply.  However, in 2022, seven of the eight EEA Watches called were on a day-ahead basis and four of those resulted in an EEA 2.[5]  Emergency Watches, used until the end of 2021 when the EEA system was adopted, were issued thirteen times day-of and once day-ahead from 2015 to 2021.[6]  It is impossible to predict how many future EEA Watches would be called on the day-ahead basis and thus inform the advisory RSE, but this approach still has merit to link expected supply conditions in which RDRR may be dispatched to the use of RDRR as supply in the advisory RSE.  Cal Advocates looks forward to additional discussion of this proposal in the development of Track A2.

[1] Straw Proposal at 19-20.

[2] Straw Proposal at 19.

[3] RDRR are integrated into the current CAISO market but are only dispatched at very high market prices or when called for by the CAISO, typically during reliability emergencies, making RDRR distinct from typical supply bids since it is unlikely to be dispatched on most days of the year. 

[4] Reliability Coordinator Procedure RC0410, April 1, 2023, at 3, 5.  Available at: http://www.caiso.com/Documents/RC0410.pdf

[5] CAISO Grid Emergencies History Report, March 1, 2023.  Available at: http://www.caiso.com/Documents/Grid-Emergencies-History-Report-1998-Present.pdf

[6] CAISO Grid Emergencies History Report, March 1, 2023.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

Cal Advocates does not have a comment on this topic at this time.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

Cal Advocates does not have a comment on this topic at this time.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

Cal Advocates does not have a comment on this topic at this time.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

Cal Advocates does not have any additional comments at this time.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

NCPA appreciates CAISO’s request for feedback regarding EDAM ISO BAA participation rules. NCPA supports the proposed scope, however we feel the timeline may be too aggressive. NCPA requests moving the Track A1 to a board meeting taking place later in Q4 2023 in order to give stakeholders more time to work through details in transfer resource settlement and transfer revenue distribution, and a process for recovering historical wheeling access charge revenues.

NCPA advises against excessive hold-backs or biasing in the Reliability Margin input of ISO BAA’s net EDAM export transfer constraint. NCPA agrees that EDAM export transfer constraint inputs, reasons for the inputs, and the resulting outputs require transparency.

NCPA believes CAISO should not issue calls for additional offers or procure additional capacity due to advisory RSE failures, unless the scale of the advisory RSE failure exceeds a predetermined amount that is projected to have a material impact on system reliability. Due to the fact that CAISO states that it generally does not have complete information available until the market closes, it seems probable that there would be instances where CAISO could procure additional capacity unnecessarily without such information, so it is important to establish well defined limits and thresholds that would trigger such additional procurement. It would be undesirable for shortfall notices to disrupt the market, especially if CAISO does not have all relevant information it needs to determine the true position of the market. NCPA does not support adjusting market timelines to facilitate this. NCPA does not support CAISO acting as a centralized procurement entity for RSE products; rather, NCPA believes that clear and defined limits should be established prior to CAISO engaging in “out of market” procurement activities.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

Track A1 includes items required for EDAM go-live that entail Tariff changes. These include criteria to set the ISO BAA’s net EDAM export transfer constraint, transfer resource settlement and transfer revenue distribution, recovering historical wheeling access charge revenues, and developing a process to allocate RSE failure surcharges and revenues. Track A2 includes items that are required for EDAM go live that do not require Tariff changes. Track A2 is limited to developing tools to avoid RSE failures. Track 2 includes new tariff authority to procure cure capacity. While NCPA may not support all elements, the scope appears reasonable.

The proposed schedule includes July 2023 Board of Governors approval for Track A1 elements and March 2024 Board approval for Track B approval. NCPA understands the urgency because the changes will take time to develop, implement, and test; however, the schedule may be too aggressive; particularly for sensitive Track A1 elements of Transfer Resource Settlement, Transfer Revenue Distribution, and recovering historical wheeling access charge revenues. NCPA requests for CAISO to extend the Track A1 schedule to later in 2023 in order to provide stakeholders additional time to develop and review proposals for elements in question.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

Track A1 includes items required for EDAM go-live that entail Tariff changes. These include criteria to set the ISO BAA’s net EDAM export transfer constraint, transfer resource settlement and transfer revenue distribution, recovering historical wheeling access charge revenues, and developing a process to allocate RSE failure surcharges and revenues. Track A2 includes items that are required for EDAM go live that do not require Tariff changes. Track A2 is limited to developing tools to avoid RSE failures. Track 2 includes new tariff authority to procure cure capacity. While NCPA may not support all elements, the scope appears reasonable.

The proposed schedule includes July 2023 Board of Governors approval for Track A1 elements and March 2024 Board approval for Track B approval. NCPA understands the urgency because the changes will take time to develop, implement, and test; however, the schedule may be too aggressive; particularly for sensitive Track A1 elements of Transfer Resource Settlement, Transfer Revenue Distribution, and recovering historical wheeling access charge revenues. NCPA requests for CAISO to extend the Track A1 schedule to later in 2023 in order to provide stakeholders additional time to develop and review proposals for elements in question.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

NCPA requests more time to consider these elements.

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

NCPA requests more time to consider these elements.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

NCPA is concerned that too much focus is being placed on avoiding RSE failures at the onset of EDAM. If there are recurring RSE failures, such would be an indicator that further study to determine the cause of the failures and its implications for the EDAM market EDAM Participants may be required.

NCPA does not support adjusting market timelines, which would require substantial software and logistical adjustments by all market participants. NCPA also opposes CAISO sending out notices requesting more offers due advisory RSE failures, unless defined and limited triggers are met that identify significant concerns with system reliability. Frequent notices could create confusion and disrupt market behavior and dynamics. NCPA does not support CAISO acting as a centralized procurement entity for RSE products, unless defined and limited triggers are met that identify significant concerns with system reliability.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

NCPA requests more time to consider these elements.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

No comment at this time.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

NCPA agrees that the initiative does not fall within the scope of the WEIM Governing Body.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

No additional comments at this time.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

PG&E appreciates the hard work that CAISO has put into the Extended Day-Ahead Market and that this continues in this initiative. PG&E offers these constructive comments:

Scope & Schedule

• The scope and schedule continue to be challenging and we support creating track A2.
• We suggest that the net-export limit parameters are moved to Track A2.
• The remaining A1 scope will primarily be BAA settlements issues; and A2 focused on the CISO BAA decisions.

Net-Export Parameters

• We suggest this item also be rescoped to track A2.
• Confidence factor should be zero (0) based on the principle that this supply is non-RSE eligible.
• Reliability Margin’s maximum should not be set based on the three identified risks[1]; there is already an inherent maximum based on the formulation.
• The Reliability Margin’s value should have a minimum value based on a set of identified risks.

Avoiding RSE Failures

• PG&E agrees with rescoping this topic to Track A2.
• RDRR (and other real-time supply options) should be included in the RSE as a reduction in the RSE target.

[1] The three risks identified by CAISO are: (i) replacement reserves based on forecasted Most Severe Single Contingency (MSSC); (ii) protection for a non-credible contingency based on weather conditions (fires); and (iii) Gas OFO/curtailments.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

Track A1 timing is still very tight even given the addition of track A2. Track A1 can be improved by moving the Net-Export Limit parameter discussion to track A2.

• A1 would largely consist of settlements issues;
• A2 would be BAA decisions on avoiding RSE failures and the net-export constraint;
• Track B would be on long-term RSE cost allocation and new tariff authorities for the BAA.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

PG&E suggests this item also be rescoped to track A2 as noted in the previous question.

Confidence Factor

• Confidence factor should be zero (0) based on the principle that this supply is non-RSE eligible.
• A non-zero confidence factor results in other EDAM BAA receiving the benefit of intertie-bids without any of the risks.
• The risk of the intertie bids would be shifted to the CISO BAA.
• If other EDAM BAAs care to allow intertie bids, they are free to do so.

Reliability Margin

• The Reliability Margin’s maximum should not be set as noted in the Straw proposal; there is already an inherent maximum based on the formulation.
• The Reliability margin’s value should have a minimum value based on a set of identified risks including, but not limited to, those identified by CAISO:
  • Replacement reserves based on forecasted Most Severe Single Contingency (MSSC);
  • protection for a non-credible contingency based on weather conditions (fires); and
  • Gas OFO/curtailments.  

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

No comments at this time

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

No comments at this time

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

PG&E supports the rescoping of this item to Track A2.

RDRR (and other real-time supply options) should be included in the RSE as a reduction in the RSE target.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

No comments at this time.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

No comments at this time.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

The WEIM Governing Body should be advisory only. 

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

No comments at this time.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

PSE appreciates the opportunity to comment on the ISO balancing authority area participation rules initiative and agrees it is necessary for the ISO to contemplate its role as a participating balancing authority area (BAA) in EDAM separately from its role as the EDAM market operator. PSE believes there is some level of reliability risk associated with ‘firming up’ non-RSE supply in the integrated forward market (IFM). Given this concern PSE offers the comments below regarding how non-RSE supply may be reflected in the net export constraint calculation.

Additionally, whenever possible, the ISO should be vigilant to ensure non-discriminatory access to information and consistent application of tariff provisions and protocols to all EDAM BAAs.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

PSE believes that the scope of this initiative is appropriate as there are many important clarifications to be made regarding the treatment of non-resource-sufficiency evaluation (RSE) and resource adequacy (RA) supply. PSE appreciates the aggressive nature of the stated timelines.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

PSE recognizes that clearing non-RSE supply in the IFM will lead to greater benefits for the footprint (mostly in and around the CAISO BAA) and that the CAISO believes these intertie bids are sufficiently firm in most intervals. But PSE does not believe the ISO has provided sufficient information at this time to make an informed decision. PSE requests the CAISO provide twelve to twenty-four months of intertie bid performance data on the initiative webpage in order to guide stakeholder input on this matter. PSE believes that for most of the year the confidence factor may be set close to 100%. However, the confidence factor may be set too high during stressed system conditions which may pose a reliability risk to the footprint. PSE proposes that the confidence factor be dynamic, and a protocol be established to adjust the confidence factor within given parameters if the CAISO load were to exceed some predetermined threshold. A view of ISO intertie bid/offer performance during stressed system conditions will help to inform the level at which this threshold should be set and when changes to this level may be necessary. A conservative approach to setting the confidence factor during certain intervals will lower the upper limit of the net export constraint and reduce the probability of shortfalls propagating throughout the footprint.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

no comment

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

PSE agrees that the proposed three-year calculation of historical wheeling access charge recovery for use in the true up calculation is appropriate.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

no comment

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

PSE agrees that allocation of the RSE failure surcharge based on metered demand for each scheduling coordinator as a portion of ISO BAA demand is an appropriate interim solution given the inherent challenges associated with identifying cost causation and various load serving entity contractual arrangements.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

No comment.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

No comment.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

No comment.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

Net Export Transfer Constraint

The confidence factor of the net export transfer constraint should be set equal to the amount of credit that the CAISO BAA gets for the Resource Sufficiency Evaluation (RSE) under EDAM, which is currently 0%.

Historical Wheeling Access Charge (WAC) Revenues

SDG&E believes that the calculation of historical WAC ought to consider the amount of WAC revenues that might have come from selling Available Transmission Capability (ATC) under the newly completed Transmission Services and Market Scheduling Priorities (TSMSP) initiative.

Allocating RSE Failure Surcharges and Revenues

SDG&E believes the failure surcharges and revenues should be allocated to Load Serving Entities (LSEs) by netting their demand against their supply.

CISO BAA EDAM Participant

CAISO needs to create a separate team to represent CAISO’s interests as an EDAM participant to try and mitigate the current conflict of interest that is frustrating CAISO, its stakeholders, and potential future EDAM participants.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

No comment at this time.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

The confidence factor of the net export transfer constraint should be set equal to the amount of credit that CAISO gets for the Resource Sufficiency Evaluation (RSE) under EDAM, which is currently 0%. The confidence factor applies to all supply for which the CAISO BAA (CISO) receives no credit in the EDAM RSE, which are made up of economic imports into CAISO. While these economic imports are generally highly reliable,[1] during the EDAM policy development phase it was decided that these economic imports should not count as supply for meeting the CAISO’s EDAM RSE, despite their being highly reliable. There was good reason for this choice. The RSE is supposed to prevent leaning, which means that the BA has done enough forward procurement to meet its demand needs. Since these economic imports are not locked into forward contracts, some stakeholders raised concern that they should not be counted.

Right or wrong, that policy choice has implications here. While these economic imports are generally highly reliable, they are less than firm. During times of tight system conditions, they may make a rational decision not to show up and pay the penalty. On the other hand, EDAM transfers are considered firm and those schedules will not be cut unless a BA is at the point of curtailing its own load. Therefore, within the context of the net export transfer constraint, if CAISO sets a confidence factor on these economic imports that is higher than the amount of credit that it gets for the economic imports in the EDAM RSE, then it is taking economic imports that are less than firm and offering to turn them into EDAM transfers that are considered firm, and it is doing so at little to no benefit to the CAISO. The CAISO should not firm up these economic imports, potentially risking its own reliability in the process, purely for the benefit of the broader market. The most principled confidence factor is therefore the amount of credit that the CAISO receives for the economic imports in the EDAM RSE, which is currently set at 0%.

If EDAM stakeholders want to revisit the decision to give the CAISO 0% credit for the economic imports in the EDAM RSE, then that may be an appropriate discussion to have. But the confidence factor and the EDAM RSE credit the CAISO receives for economic imports should be linked.

[1] CAISO noted at the EDAM meeting on 5-10-23 that these imports are 99.6% reliable.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

No comment at this time.

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

SDG&E believes that the calculation of historical WAC ought to consider the amount of WAC revenues that might have come from selling Available Transmission Capability (ATC) under the newly completed Transmission Services and Market Scheduling Priorities (TSMSP) initiative. Under TSMSP it is expected that CAISO will sell some amount of transmission capacity (i.e. ATC) to external parties. If those parties join EDAM, then they will no longer need to purchase ATC from CAISO. As such, CAISO will need to estimate the amount of ATC that may be foregone by accepting certain Balancing Authority Areas into EDAM and include that in the total calculation of foregone WAC revenues.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

No comment at this time.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

SDG&E believes the failure surcharges and revenues should be allocated to Load Serving Entities (LSEs) by netting their demand against their supply. This would appropriately allocate the cost of EDAM RSE failures to those LSEs who were responsible for causing the CAISO to fail the RSE. Similarly, by awarding revenues from others’ RSE failures on the basis of each LSE’s demand netted against supply, CAISO would be rewarding LSEs for bringing sufficient supply to market. SDG&E disagrees with the CAISO proposal to allocate failure surcharges to metered demand as this is too simplistic and potentially punishes LSEs who have sufficiently procured enough resources on a forward basis whilst allowing other CAISO LSEs to lean on them.

It may be difficult to determine the amount of supply that each LSE is bringing to market. SDG&E believes that CAISO should be able to use the supply plans submitted by each LSE each month. However, CAISO’s own rules create a problem. Due to the Planned Outage Substitution Obligation (POSO) rules, CAISO LSEs may not declare all of their resources on the supply plan. Specifically, CAISO requires LSEs to provide substitution on any resources that go on outage and as a result, each LSE may only meet the bare minimum on its supply plan in order to satisfy its requirements to serve load and opt to leave additional units off in the event of an unplanned outage. If a unit on the supply plan experiences an unplanned outage, the LSEs now have additional units under RA contract available to provide substitution for the resource on outage. It would be far more sensible if CAISO did an extremely simple accounting whereby LSEs who are long on supply can take outages as needed so long as they are still over their requirements. So for example, if SDG&E has to serve 500 MW of demand and has 1,000 MW of supply, then a 100 MW unit needs to go on forced outage, SDG&E should be able to declare all 1,000 MW of supply on its supply plan and still take the 100 MW forced outage without suffering Resource Adequacy Availability Incentive Mechanism (RAAIM) penalties. In that situation, SDG&E has still overshot its requirement by 400 MW even after the outage, but under CAISO’s current POSO rules, SDG&E would suffer RAAIM penalties for the 100 MW of forced outage that went unsubstituted. This design objectively makes no sense, and now CAISO can see that there are spillover effects of having such a nonsensical design. When evaluating how much supply each LSE has brought to meet the RSE, CAISO should be able to simply look at the supply plans for each LSE. However, because CAISO’s POSO rules put LSEs in a difficult position, the simple solution is not feasible and CAISO will have to figure out a complicated work-around for the EDAM RSE to assess the amount of supply that each LSE is bringing to the EDAM RSE.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

No comment at this time.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

No comment at this time.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

SDG&E reiterates its support for PG&E’s idea that CAISO should create a separate and independent team to represent the interests of California as an EDAM participant, which is referenced as the CISO BAA for clarity. There exists a conflict of interest where CAISO switches roles, or tries to serve both roles simultaneously in some cases, as both the EDAM market operator and as the CISO BAA as an EDAM participant throughout the stakeholder process. This conflict of interest has already caused damage with the way that the Transmission Services and Market Scheduling Priorities initiative was run, and now it is causing similar concerns with regard to deciding on how to set the net export transfer constraint. As the EDAM market operator, CAISO is pushing CAISO stakeholders to adopt a very high confidence factor which threatens the CISO BAA reliability for little to no benefit to the CISO BAA participants. The CISO BAA would likely take a different view in this discussion if its primary focus was protecting its reliability.

The team representing the CISO BAA needs to be separate and distinct from CAISO’s market policy and development organization. Further, that team’s goal should be to advocate for Load Serving Entities within the CISO BAA and their interests, with a focus on safeguarding California’s reliability at the lowest cost.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

As discussed below, the Six Cities either support or do not oppose several of the CAISO’s proposals in the Issue Paper/Straw Proposal, while providing substantive comments opposing the CAISO’s initial proposals for the net Extended Day Ahead Market (“EDAM”) export transfer constraint and Track 1A resource sufficiency evaluation (“RSE”) failure surcharge/revenue allocation methodology.  The Six Cities urge the CAISO to promptly advance discussions regarding the separation of the CAISO’s functions as the market operator versus its other various roles, including as the balancing authority (“BA”) for the current CAISO footprint.  Specifically with respect to the implementation of the net EDAM export transfer constraint, as outlined in response to question no. 3, the Six Cities oppose inclusion of economy energy bids in the calculation of the constraint and request changes to the determination of variables utilized in the constraint’s calculation.  As discussed in response to question no. 6, the Six Cities support, but provide comments regarding, the overall direction of the Issue Paper/Straw Proposal with respect to RSE test curing procedures.  As discussed in response to question no. 7, the Six Cities do not support the CAISO’s Track 1A proposal to allocate RSE failure surcharges and revenues to metered demand and propose instead use of a two-tiered allocation process.  Finally, the Six Cities seek more information and examples regarding other topics in the Issue Paper/Straw Proposal, including aspects of the transmission revenue shortfall recovery mechanism (see response to question no. 5) and how import resource adequacy (“RA”) resources will be addressed (see response to question no. 8). 

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

Subject to consideration of comments submitted by other stakeholders, the Six Cities do not oppose the CAISO’s proposed classification of and timeline for addressing the issues discussed in Chapters 4 through 8 of the Issue Paper/Straw Proposal as summarized at pages 5-6.

However, the Issue Paper/Straw Proposal at page 4 defers to an undefined “subsequent forum” consideration of requests by multiple stakeholders (including the Six Cities) to evaluate measures to increase separation between the CAISO’s role as market operator of the Western Energy Imbalance Market (“EIM”) and the EDAM and its role as operator of the CAISO balancing authority area (“BAA”).  Discussions regarding the EDAM participation rules for the CAISO BAA and criteria for determining whether the CAISO BAA should elect to receive Energy Assistance Transfers have reinforced the Six Cities’ concerns that there is a need to focus on ensuring thorough evaluation of the impacts of EDAM operations on load within the CAISO BAA and appropriate consideration of the interests of load within the CAISO BAA in implementing decisions reserved for BAA operators under the EDAM framework.  It is critical to address such concerns sooner rather than later and, in any event, prior to the implementation of the EDAM.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

Defining the criteria for setting the net EDAM export transfer constraint for the CAISO BAA represents a clear example in which the CAISO’s role as BAA operator is critical.  In considering the factors that should drive the implementation of the net EDAM export transfer constraint within the CAISO, the focus must be on reliability and cost considerations for market participants within the CAISO BAA, just as operators of other BAAs will have authority to implement the net EDAM export transfer constraints based on the interests of participants within their BAAs.  As a general principle, the scope of operational discretion available to BAA operators (including the CAISO in its role as the CAISO BAA operator) should be equivalent.

Based on the discussion that occurred during the May 10^th workshop, the Six Cities agree with representatives of other LSEs within the CAISO BAA that supply reflected in the net EDAM export transfer constraint for the CAISO BAA should not include economic imports to the CAISO BAA that are not considered for purposes of the RSE tests.  Stated differently, the net EDAM export transfer constraint should not be set at a level that results in the CAISO BAA effectively taking on an obligation to firm up economic imports to support EDAM transfers to other BAAs.  There is clearly an incremental risk to the CAISO BAA of assuming such an obligation with no discernible benefit to the CAISO BAA (which is the appropriate focus for a BAA operating decision).  In addition, the CAISO’s observation at pages 11-12 of the Issue Paper/Straw Proposal that the volume and frequency of undeliverable imports may vary based on multiple factors, including regional supply and transmission conditions, season, and time of day, militate in favor of not including such imports in the determination of the net EDAM export transfer constraint or, at a minimum, establishing a dynamic, variable, and discretionary confidence factor for such imports, rather than one based solely on historic performance.

The Six Cities support the concept of an EDAM reliability margin and agree that consideration of the variables identified at pages 10-11 of the Issue Paper/Straw Proposal is appropriate.  However, the Six Cities do not support the CAISO’s proposal at page 10 to limit the EDAM reliability margin to no higher than the maximum of the indicated variables.  First, the variables do not appear to be independent, and there seems to be at least a potential that simultaneous occurrence of two or more of the variables could have a cumulative impact exceeding the maximum amount of any single variable.  Second, it does not seem appropriate to restrict inputs into the determination of the EDAM reliability margin to the three variables identified.  Although the three variables seem likely to capture most conditions that could lead to unusual operating challenges for the CAISO BAA, the CAISO, as operator of the CAISO BAA, should not be subject to limitations on factors that can be considered in establishing net EDAM export transfer constraints that are not equally applicable to other EDAM BAA operators.

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

The Six Cities do not oppose the CAISO’s proposals for transfer resource settlement and transfer revenue distribution. 

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

The Six Cities concur in the overall process for recovery of historical wheeling access charge revenues.  In general, the process proposed by the CAISO appears to align with the policy elements for historical wheeling revenue recovery in the EDAM Final Proposal.  The Six Cities request that the CAISO, in its next proposal in this initiative, include examples of how the proposed procedures in section 6 will work.  In particular, the Six Cities ask the CAISO to include examples of the true-up mechanism that is contemplated as part of the annual transmission revenue balancing account adjustment (“TRBAA”).  Because the TRBAA effects a pass-through of over-and under-collection of transmission revenue credits (positive and negative) to the Transmission Access Charge in addition to the Wheeling Access Charge (“WAC”), it is critical that Participating Transmission Owners are confident in the mechanics of how the TRBAA process will be revised to accommodate historical revenue true-ups consistent with the adopted EDAM policy, which provides that an EDAM Entity (including the CAISO) will not contribute to paying the cost of the historical WAC recovery).  

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

The Six Cities support publication of advisory RSE results and the further development of proactive measures to cure advisory RSE failures so as to avoid, to the extent reasonably possible, failure of binding RSE tests.

With respect to the CAISO’s preliminary proposals for Track A2, the Six Cities generally support the concept of applying the CAISO’s existing tariff authority to avoid RSE failures and consideration of the supply and/or demand response resources identified at pages 21-22 of the Issue Paper/Straw Proposal.  In considering the role of such programs and resources, the CAISO generally should not impose restrictions more limiting than those applied by other EDAM BAAs.  For example, the proposal for consideration of Strategic Electricity Reliability Reserve supply as described at pages 21 and 22 of the Issue Paper/Straw Proposal would require occurrence of triggering conditions for availability of such supply and submission of bids for the strategic reserve resources into the Day-Ahead Market in order to count such supply for purposes of the RSE test.  Will other BAAs be required to submit actual bids into the Day-Ahead Market in order to count demand response or supply reserves for purposes of the RSE tests?  If not, the CAISO should explain why the restrictions it proposes to apply to such resources are appropriate in the context of the EDAM.  Similar considerations apply to potential recognition of reliability demand response resources in the evaluation of RSE test outcomes.

The Six Cities also support the concept of posting notices to Scheduling Coordinators reporting advisory RSE failures and requesting additional offers.  Rather than simply excluding additional RA offers that are expected but have not yet been submitted, the Six Cities recommend that the CAISO expressly identify the volume of RA offers that are expected but not yet submitted in order to highlight the importance of complying with the must-offer obligation under anticipated conditions.

With respect to the discussion of potential Track B topics at pages 24-25 of the Issue Paper/Straw Proposal, the Six Cities would support consideration of a process comparable to Exceptional Dispatch to enable CAISO to cure projected RSE failures.

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

Based on the discussion to date and subject to further consideration of comments, the Six Cities recommend consideration of a two-tier method for allocating RSE failure surcharges, at least at the inception of the EDAM.  To the extent that RA resources fail to comply with their day-ahead must-offer obligation during an hour in which the CAISO fails the RSE test, such resources should bear the cost of RSE failure surcharges up to the level of the capacity that should have been offered.  To the extent that RSE failure surcharges are not recovered under Tier 1, the Six Cities do not oppose recovery of remaining surcharges, at least initially based on MW of metered demand for each Scheduling Coordinator as a portion of total ISO BAA metered demand for the hour in which RSE failure surcharges were imposed.

At this time, the Six Cities take no position on further consideration of an allocation method in Track B based on LSE-specific RSE targets and LSE supply but will evaluate any detailed proposals that may be developed based on such a framework.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

In general, the CAISO’s discussion regarding consideration of RA imports is constructive, and the Six Cities support continued discussion of how RA imports will be addressed in EDAM within this initiative.  In particular, because the discussion in the Issue Paper/Straw Proposal reflects a range of different scenarios for RA imports, further examples of how the different RA import types (resource-specific or non-resource-specific, located in an EDAM BAA or external to the EDAM, etc.) should participate in CAISO markets in order to support the CAISO’s ability to meet its RSE will be helpful to entities that utilize import RA supply. 

Specifically with respect to non-resource specific RA supply, the Six Cities encourage the CAISO to ensure that the rules applicable to such resources are comparable to, and no less restrictive than, those applicable in other EDAM BAAs.  In other words, the CAISO should not limit its ability to rely on non-resource-specific RA resources or create barriers to use of these resources by CAISO LSEs that do not exist within other BAAs, which apparently commonly rely on non-resource-specific supply procured through WSPP Schedule C or comparable agreements.  To the extent that additional steps will need to be taken by CAISO LSEs to enable these types of resources to be included in the CAISO’s RSE, such as revised processes and timelines for completing tagging and requirements to cancel day-ahead schedules, as discussed on page 29 of the Issue Paper/Straw Proposal, then those should be clearly outlined.   

The Six Cities also encourage the CAISO to advance its discussion of whether maximum import capability (“MIC”) continues to be necessary with respect to RA capacity located in an EDAM BAA.  Given that (i) EDAM will result in the transition of existing interfaces between EDAM entities (including the CAISO) to transfer points, (ii) EDAM transfers will have equal priority to load, and (iii) the EDAM optimization will determine whether resources are dispatched, it is unclear what reliability purpose MIC continues to serve, and it does create a barrier to contracting for long-term RA supply with neighboring EDAM entities.  The Six Cities invite the CAISO to discuss what factors and criteria would be relevant to “continu[ing] to evaluate that relationship with MIC at EDAM interfaces” (Issue Paper/Straw Proposal at 30) and the forum in which this evaluation will take place.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

For the reasons described in Section 10 of the Issue Paper/Straw Proposal, the Six Cities agree with the CAISO Staff’s conclusions that this initiative is entirely within the scope of the CAISO Board of Governors and that it does not fall within the WEIM Governing Body’s advisory role.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

The Six Cities have no additional comments at this time.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

SCE thanks CAISO for providing stakeholders with the opportunity to provide comments. As previously mentioned, SCE is pleased that CAISO is initiating efforts to define rules within the CAISO BAA for participating in EDAM.  However, it appears that the CAISO may not be allocating sufficient time for this initiative, given the presented timelines. It seems that the CAISO is rushing to meet the Board of Governors (BOG) deadline in July. SCE strongly urges the CAISO to take the necessary time to carefully consider stakeholders' comments and address concerns before proceeding. By doing so, stakeholders will have confidence that the CAISO BAA is properly represented and that there is a clear distinction between the CAISO BAA and the EDAM Market Operator.

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

SCE generally supports the scope of this initiative.   However, if there are major concerns raised by the stakeholder community that are unresolved, CAISO should consider additional rounds of draft proposals.  See question #1.   

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

SCE continues to support the implementation of the net EDAM export transfer constraint as it ensures sufficient internal capacity within the CAISO BAA for reliability purposes. 

However, SCE opposes the CAISO's proposal of setting a single, annually updated confidence factor that applies to both stressed and non-stressed conditions. SCE also disagrees with how the confidence factor is calculated which is using historical data to calculate a ratio of total tagged imports to total market schedules.  SCE believes this approach does not accurately reflect the delivery of non RSE-eligible supply during stressed condition days, which is when the net EDAM export transfer constraint is crucial for ensuring reliability.  Put another way, it is unreasonable for the CAISO BAA to have to “firm up” imports that will then be “converted” to uncurtailable EDAM transfers.  Thus, the issue during stressed conditions becomes “how much excess capacity does the CAISO BAA have that can be used to firm up imports that become EDAM transfers?”  During stressed conditions the answer is likely “close to 0MW” of excess capacity available for CAISO to "firm up" imports.   As a result, the CAISO needs to use a much more conservative value during stressed conditions.  

SCE recommends that the CAISO calculate separate confidence factors for stressed and non-stressed days. For non-stressed days, historical data specific to non-stressed conditions should be used. For stressed days, the confidence factor should be set significantly lower.  We recommend starting at a value no greater than 20%, at least during the first few years of EDAM as experience is gained. SCE proposes applying these confidence factors systematically throughout the market. 

The "non-stressed" confidence factor would apply on a typical day.  However, there should be thresholds or tests that trigger the use of the lower “stressed condition” factors.  The CAISO should consider it to be a “stressed condition” if any of the following happen: during "EEA Watch," “Restricted Maintenance Operations,” “Transmission Emergency” or "Flex Alert" days declared by the CAISO; during any called "Warning" or "EEA" emergency; using the 8-day look-out period proposed for opting into assistance energy (if the CAISO opts into assistance energy, they should also utilize the “stressed condition” confidence factor.)  Additional criteria may be needed, and stakeholders should discuss other conditions that may trigger the use of the “stressed” confidence factor.   

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

SCE’s comments remain consistent with those submitted on 4/19/2023 under question #6. [1] 

[1] See SCE comments under question #6 at https://stakeholdercenter.caiso.com/Comments/AllComments/b32fe181-4578-416d-9ddf-d52b756fa0d9#org-9932a982-8128-4044-900e-c28b99d23b5c 

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

SCE’s comments remain consistent with those submitted on 4/19/2023 under question #7. [1] 

[1] See SCE comments under question #7 at https://stakeholdercenter.caiso.com/Comments/AllComments/b32fe181-4578-416d-9ddf-d52b756fa0d9#org-9932a982-8128-4044-900e-c28b99d23b5c 

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

SCE supports CAISO's proposal to explore ways to integrate expected RA offers with the advisory RSE for more accurate results. CAISO presents two options for stakeholders to choose from: 1) publishing advisory RSE results based on anticipated RA offers, and 2) moving the RA bidding deadline and bid-insertion to an earlier time in the morning. 

SCE believes that utilizing both options for different advisory RSE tests would yield the best results. SCE recommends applying option number 1 to the 6am advisory RSE results, as the earlier results are considered less accurate and basing them on anticipated offers may seem appropriate. Option number 2, moving the RA bid deadline and bid-insertion time to 9am before publishing the 9am results, could provide the most informative outcomes. This would allow LSEs to better assess if they have submitted sufficient schedules to pass the RSE. Additionally, it would provide enough time for LSEs to remedy any RSE shortfalls before the 10am binding RSE.  However, SCE understands that moving the RA bid-insertion time to 9am could cause some operational challenges/concerns. SCE suggests CAISO further explore option 2 to understand the potential challenges.  

While it would be ideal for CAISO to provide advisory RSE results broken down by LSEs, SCE understands the complexities involved in implementing this.  SCE suggests CAISO continue to explore how this could be accomplished.   

SCE believes that CAISO should consider using RDRR resources as either a load modifier or a supply-side resource for passing the RSE based on certain grid conditions. There seems to be a misconception regarding CAISO RDRR resources under this proposal. To clarify, the majority of RDRR resources are not bid into the day-ahead market but are used in the real-time market during an EEA2 declaration. However, there is a smaller but relevant portion of RDRRs that are used for both economic and reliability purposes. These RDRRs are bid economically into the day-ahead market during anticipated non-stressed conditions. SCE suggests that these resources should be counted as a supply-side resource for passing the RSE since they can be dispatched when an EEA2 is not in effect. During tight conditions, these resources are often reserved for reliability and are not bid into the day-ahead market. The remaining majority of RDRRs that are not used economically are typically more use-limited resources preserved for emergency use during tight supply conditions. These resources should be accounted for as a load modifier (demand forecast adjustment) for the RSE test. CAISO should apply appropriate credits to RDRR resources based on grid conditions, counting them as a supply-side resource during non-stressed conditions, and as a load modifier during tight supply conditions.   

SCE opposes Day-Ahead bid insertion for all RDRRs to cure RSE shortfalls, as it may lead to suboptimal dispatching of these resources in the real-time market during emergencies. 

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

SCE opposes CAISO’s track A1 proposal of allocating RSE revenues and surcharges to metered demand because it does not adhere to cost causation principles.  The A1 proposal of applying surcharges to metered demand does not appropriately apply surcharges to “bad acting” LSEs and will punish “good acting” LSEs that have enough bid in supply to pass their portion of the RSE load obligation. Furthermore, LSEs greater in size would be impacted the most even when they brought sufficient supply to the market.  At minimum, CAISO BAA should implement on day-1, SCE’s proposed two-tiered surcharge and revenue allocation mentioned in SCE comments posted on 4/19/2023 under question #4.[1]  Similarly, CAISO appears to have the same proposal for Track B implementation which SCE does not believe would be difficult to implement for day 1 of EDAM.  

As a track B solution that will be implemented after day 1 of EDAM, SCE believes that allocating surcharges and revenues to LSEs taking into account LSE specific targets and supply will be most ideal.   SCE acknowledges the complexities with implementing this solution, however, the CAISO BAA could take its time to implement an accurate solution while continuing to use the 2-tiered approach that SCE suggests for track A1. 

[1] See SCE comments under question 4 at https://stakeholdercenter.caiso.com/Comments/AllComments/b32fe181-4578-416d-9ddf-d52b756fa0d9#org-9932a982-8128-4044-900e-c28b99d23b5c 

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

SCE agrees with the CAISO proposal for dealing with Resource Adequacy Imports. The CAISO’s proposal seems to be the best way to deal with these varied resources. SCE also agrees that non-resource specific supply may create potential modeling and congestion pricing challenges in EDAM and it will be important to monitor the magnitude and impacts of these types of arrangements in the market. 

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

SCE agrees that the scope of this initiative falls within the Board only.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

SCE does not have any further comments.

1. Please provide a summary of your organization’s comments on the Extended Day-Ahead Market (EDAM) ISO Balancing Authority Area (BAA) Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

Please see responses to questions #3 and #6. 

2. Provide your organization’s comments on the proposed EDAM ISO BAA Participation Rules initiative scope and schedule:

No comment at this time.

3. Provide your organization’s comments on the track A1 proposal related to section 4 - criteria to set the ISO BAA’s net EDAM export transfer constraint:

WPTF believes additional discussion is warranted regarding whether it makes sense to include a value for operating reserves in the Reliability Margin component of the net EDAM export transfer constraint. First, by including this component in the formulation it will guarantee that the reliability margin is always non-zero, which seems counter to the intent of the parameter as discussed in the EDAM design. As stated on page 10 of this straw proposal, per the EDAM design, the Reliability Margin “represents an additional amount of capacity established by the EDAM BAA to reduce the limit on the BAA net export transfer, if necessary, in limited conditions.” Always having a non-zero value based on the operating reserve requirement does not seem to be only “in limited conditions”. Second, it is our understanding that the intent of this component is to ensure there is additional unloaded capacity available to replace operating reserves in the event the CAISO uses the operating reserves due to a contingency event. The RSE obligation already accounts for operating reserve requirements. Thus, this component seems to be double counting operating reserves and will hold back capacity in the day-ahead time frame, so the CAISO has unloaded capacity in real-time to procure additional operating reserves if a contingency occurs. It is important to keep in mind that capacity held back in the day-ahead time frame does not necessarily mean it will be available in real-time. Also, this formulation would be holding back capacity 8,760 hrs/year for emergency system conditions that occur infrequently.

Additionally, WPTF seeks clarification on whether or not the net EDAM export transfer constraint accounts for transfers going out of the CAISO BAA that are backed by resources within the CAISO BAA contracted to serve load in another EDAM BAA. 

4. Provide your organization’s comments on the track A1 proposal related to section 5 - transfer resource settlement and transfer revenue distribution:

No comment at this time.

5. Provide your organization’s comments on the track A1 proposal related to section 6 - process for recovering historical wheeling access charge revenues:

No comment at this time.

6. Provide your organization’s comments on the track A2 proposal and track B initial scoping items related to section 7 – avoiding resource sufficiency evaluation (RSE) failures:

The RSE should only include resources that have offers into the day-ahead market. Thus, before WPTF can opine on this proposal element, we would like to better understand the mechanics the CAISO is considering. Specifically, by including resources such as RDRR and SRR in the RSE does this also mean the CAISO is planning to insert bids for them into the day-ahead market whenever they are included in the RSE?

7. Provide your organization’s comments on the track A1 proposal and track B potential solutions related to section 8 - process to allocate RSE failure surcharges and revenues:

No comment at this time.

8. Provide your organization’s comments on section 9 – resource adequacy imports in EDAM:

No comment at this time.

9. Provide your organization’s comments on the proposed WEIM Governing Body role, described in section 10:

No comment at this time.

10. Provide any additional comments on the EDAM ISO BAA Participation Rules issue paper and track A1 straw proposal, and May 10, 2023 stakeholder meeting discussion:

No comment at this time.