Comments on September 13 working group and revised discussion paper

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

A not fully formatted version of DMM's complete set of comments is pasted as a response to this question 1.  For a fully formatted version of DMM's complete set of comments, please see the pdf attached below the final question.

Comments on Greenhouse Gas Coordination 9-13-2023 Working Group

Department of Market Monitoring

September 28, 2023

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Greenhouse Gas Coordination 9-13-2023 Working Group.[1]

During the September 13, 2023 greenhouse gas (GHG) working group, the ISO discussed drafting a problem statement which states “the ISO’s market does not provide the complete reporting metrics desired by all market participants. This undermines the transparency and accuracy desired by market participants”.[2] Some stakeholders have requested metrics focused on energy dispatched in the Western Energy Imbalance Market (WEIM) that is incremental to base schedules. Stakeholders requested these metrics in order to better understand the implications of the current GHG attribution process, including issues with secondary dispatch.[3]

DMM recognizes that the GHG attribution process in the WEIM does not prevent secondary dispatch. However, simply comparing the fuel mix of incremental energy in the WEIM to the fuel mix of GHG attribution may not accurately represent secondary dispatch. WEIM incremental energy is the amount by which the real-time dispatch exceeds resources’ base schedules. However, these base schedules do not provide a reasonable counterfactual for what market outcomes would be in the absence of a GHG attribution process.  This is because base schedules are not optimized and do not account for optimal transfers between non-GHG areas. As a result, in many plausible scenarios, the quantity of energy with a GHG attribution up to a resource’s base schedule would be an inaccurate and misleading measure of secondary dispatch.

Below we illustrate a theoretical example where non-incremental, low emissions energy receives the GHG attribution for the amount of power serving California, while high emissions resources that receive incremental dispatches above their base schedules for the amount of the transfers do not receive GHG attributions.  In this example, there is no secondary dispatch because the low emissions energy only receives a dispatch above zero and up to its base schedule because California assigns costs to GHG emissions and because the WEIM allows GHG attribution to non-incremental real-time dispatches.

Consider three BAAs where each has 10 MW load and each BAA has one generator with a Pmax of 30 MW with a base schedule of 10 MW to serve its own load.

1. BAA A has one coal resource with a $20 energy bid and a $30 GHG adder.
2. BAA B has one hydro resource with a $42 energy bid and a $0 GHG adder.
3. BAA CA (California) has a gas resource with a $45 energy bid (which includes the cost of GHG).

Market outcomes are discussed for four different scenarios:

1. Counterfactual 1 –  No net transfers to CA: Coal = 20 MW, Gas = 10 MW

If there are no transfers in and out of California, the gas generator would provide 10 MW to serve CA’s load. Because coal (without GHG adder) is less expensive than hydro, the coal generator would displace hydro and provide 20 MW to serve both BAA A’s and BAA B’s load.

2. Counterfactual 2– Net transfers allowed to CA, but CA does not assign costs to emissions: Coal = 30 MW

If the market did not consider GHG adders, then coal would be the least expensive resource and would provide 30 MW to serve all load.

3. Current GHG attribution framework - CA transfers (w/ GHG adders): Coal = 20 MW, Hydro = 10 MW

Including GHG adders, hydro is the least expensive generation for California. However, for BAA A and B, coal is still less expensive than hydro.  Therefore, the coal resource would provide 20 MW to serve both BAA A and BAA B’s load. The coal would displace the 10 MW base schedule of BAA A’s hydro.  The WEIM market and its current GHG attribution design allows the zero emissions hydro resource to be dispatched at 10 MW in order to displace the 10 MW of relatively high emissions gas generation that would have served CA’s load in the absence of WEIM transfers to California.

4. Potential alternative GHG attribution framework – CA transfers (w/ GHG adders, and GHG attribution limited to energy incremental to WEIM base schedules): Coal = 20 MW, Gas = 10 MW

This GHG attribution design would prevent the WEIM from dispatching low emissions hydro to displace relatively high emissions California gas generation. Hydro cannot serve CA’s 10 MW load unless the hydro gets dispatched to 20 MW. However, this would entail 10 MW of non-CA load being served by expensive hydro ($42) instead of less expensive coal ($20).  As a result, the extra resource level constraint causes the optimization to view dispatching hydro to serve CA as more expensive than leaving CA’s gas generators dispatched up to serve CA’s load:

                Coal = 10 MW, Hydro = 20 MW, total cost = $1040

                Coal = 20 MW, Gas = 10 MW, total cost = $850

Counterfactual scenarios (1) and (2) are much more reasonable counterfactuals than WEIM base schedules for determining what the dispatch would have been in the absence of transfers to California or in the absence of a GHG program. In both of these counterfactual scenarios, the 10 MW base schedule for hydro in BAA B would be displaced by coal. Therefore, it is appropriate for the WEIM market design to give a GHG attribution to the 10 MW of dispatched hydro because this hydro resource would have been dispatched down to 0 MW had the CA BAA not been willing to pay more for cleaner generation.

The 10 MW of hydro dispatch under the current WEIM GHG attribution market design (scenario 3) is not incremental to WEIM base schedules, but it receives a GHG attribution.  There is 10 MW of coal dispatched that is incremental to WEIM base schedules that does not receive a GHG attribution. However, it would be incorrect and misleading for a metric to imply that the 10 MW of incremental coal represents secondary dispatch.

Metrics requested by some stakeholders for assessing secondary dispatch by comparing the fuel mix of incremental dispatches (10 MW of coal) to the fuel mix of resources receiving GHG attributions (10 MWs of hydro) would incorrectly indicate that there was 10 MW of secondary dispatch of coal in the above scenario.  However, in this scenario the WEIM and its existing GHG attribution design has allowed 10 MW of low emissions hydro to displace 10 MW of higher emissions gas.  Therefore, the GHG attribution is appropriate, and there is no secondary dispatch.

DMM recognizes that the current WEIM GHG attribution process may still allow some secondary dispatch.  However, metrics that simply compare the fuel mix of GHG attribution to the fuel mix of WEIM energy dispatch incremental to base schedules would not accurately measure secondary dispatch. Such metrics would be too simplified to accurately assess secondary dispatch under the current WEIM design because resources’ base schedules are not reasonable counterfactuals from which to measure secondary dispatch.

DMM believes analysis of dispatches incremental to the counterfactual may provide less misleading insights into potential secondary dispatch in EDAM because the EDAM GHG reference pass is a more appropriate counterfactual than WEIM base schedules.  The EDAM GHG reference pass optimizes energy bids and allows for transfers between non-GHG areas.

DMM supports further discussion between stakeholders and the ISO about more sophisticated metrics that could better measure potential secondary dispatch under the current WEIM GHG attribution design. DMM agrees with the ISO that all data analysis should be tied to problem statements and encourages further discussion to refine requested metrics to help ensure that they do not provide potentially misleading or inaccurate insights.[4]

[1] https://stakeholdercenter.caiso.com/RecurringStakeholderProcesses/Greenhouse-gas-coordination-working-group

[2] GHG Coordination Working Group Presentation, slide 38: http://www.caiso.com/InitiativeDocuments/Presentation-GHGCoordination-Sep13-2023.pdf

[3] See Vistra’s public comment in February 2023 EDAM Board Meeting: http://www.caiso.com/Documents/VistraPublicComment-DecisiononExtendedDay-AheadMarket-Jan30-2023.pdf

[4] GHG Coordination Working Group Discussion Paper, p. 16: http://www.caiso.com/InitiativeDocuments/DiscussionPaper-GreenhouseGasCoordination-Sep12-2023.pdf

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

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

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

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

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

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

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

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

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

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

7. Additional comments:

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 feedback on the September 13 working group, and revised discussion paper:

Our comments are focused on draft GHG problem statements. In particular, we provide feedback on a problem statement related to the lack of reporting and transparency that would enable states and voluntary programs to evaluate and manage the effect of GHG attribution in ISO markets on retail GHG claims in different states, load-based (non-GHG pricing) state programs, and other systems for allocating generation and emissions to retail load.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

no further comments at this time

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

no further comments at this time

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

no further comments at this time

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

An initial problem statement that CRS proposed can be restated as: GHG attribution in ISO markets creates a risk of double counting of attributed generation in compliance and voluntary retail GHG programs. The root cause is that GHG attribution mechanisms in the market are divorced from existing systems for allocating generation and associated emissions to retail load. One challenge to addressing this problem is that there is disagreement among states and other stakeholders about whether and how attribution in wholesale markets affects retail GHG claims, load-based state programs, and the systems for allocating generation and associated emissions to retail load. An impact of this problem could be double counting of generation and emissions that damages the integrity of retail programs and instruments, which could also limit market participation and slow grid decarbonization.

To the extent that 1) CAISO has clarified that “the ISO makes no claim to a resource’s environmental attributes, either for itself or on behalf of its market participants, as a result of a dispatch in its markets” (EDAM Final Proposal), and 2) states and voluntary programs must determine whether or not attribution in ISO markets affects their programs and/or RECs, then an appropriate problem statement for CAISO may be that ISO markets do sufficiently report or share attribution data to enable states and voluntary programs to avoid perceived double counting. This is similar to the ISO's "Draft problem statement 2.) Reporting" in the presentation at the Sept 13 working group meeting.

We generally agree with this problem statement: “The ISO’s market does not provide the complete reporting metrics desired by all market participants." The potential root cause or sub-issue that CAISO identified at the working group meeting was: "The ISO does not have a current understanding of all of the data required or desired by participants, the rationale for providing that data, the frequency of providing that data, or the granularity of data desired by market participants.” That may not be the root cause. In fact, there may be other barriers to reporting and data transparency. The challenge that we identify above about disagreement concerning what constitutes double counting resulting from attribution in the market may also be a root cause (at least with respect to the reporting that we have requested).

Acknowledging that it goes beyond feedback on problem statements, below we attempt to address CAISO's root cause by providing more information about the data we require, the ratonale, the frequency, and the granularity.

CRS is primarily concerned with data reporting and transparency that could be useful to states with load-based GHG programs and consumers making retail claims, and that which is necessarily to prevent double counting of generation and associated GHG emissions at the retail level.

There are three general types of ISO market data that we would like to be reported. 

1.    Generation data
What: Resource mix and average emissions from participating generators 
Rationale/use: Stakeholders could use this to understand the impact of incremental generation, conservation, load-shifting, for siting (of load or generation) decisions.
Frequency: Monthly
Temporal Granularity: Hourly 
Geographic Granularity: For the whole market and potentially by injection point/node for some narrower geographies

2.    Attributed generation data 
a.    Total attributed generation
What: All generation attributed in the timeframe
CAISO should disclose that a portion of this is tracked in WREGIS and cannot be used for retail claims or load-based accounting programs.
b.    Attributed non-WREGIS generation
What: Total attributed generation minus attributed WREGIS generation
This could be assumed to be attributed for the purpose of retail claims or load-based programs, barring no other out-of-market allocation/attribution.
c.    Attributed WREGIS generation
What: Generation attributed in the timeframe that is tracked in WREGIS
This is generation tracked in WREGIS and cannot be used for retail claims or load-based programs. 
We have asked the ISO to provide the quantity of electricity in a given period from each generating unit registered in WREGIS that was bid into the market and attributed to certain GHG compliance zones on a resource-specific basis as a result of the GHG optimization method (e.g. a “deemed” import to the California GHG compliance area). We’ve provided detailed comments (on Sept 26, 2022 on the Revised EDAM proposal) explaining the rationale. We’ve also explained the frequency and granularity. WREGIS can “tag” or designate an equivalent quantity of WREGIS Certificates associated with load in that zone. This communication of quantity to WREGIS and WREGIS designation of an equivalent quantity will work with the timing differential between attribution in short-term markets and monthly issuance of WREGIS Certificates, as well as the hourly (vs. monthly) megawatt-hour (MWh) format of the data. Market attribution data would be aggregated by generator and by month on monthly issued certificates.
Rationale/use: Stakeholders could use this to understand the effect of attribution in ISO markets on retail claims and load-based programs; to inform calculations of the resource mix and emissions associated with market imports
Frequency: Monthly
Temporal Granularity: Hourly 
Geographic Granularity: GHG compliance zone or state

3.    Unallocated generation data
a.    Total unallocated generation
What: generation not attributed or transacted on a resource-specific basis in the market 
CAISO should disclose whether this includes generation that is tracked in WREGIS
Rationale/use: Stakeholders could use this to inform calculations of the resource mix and emissions associated with market purchases for retail claims or in load-based programs
b.    Unallocated non-WREGIS generation
What: Total residual generation minus generation that is tracked in WREGIS
Rationale/use: Stakeholders could use this to characterize market purchases for retail claims or in load-based programs

Frequency: Monthly
Temporal Granularity: Hourly 
Geographic Granularity: For the whole market and potentially by injection point/node for some narrower geographies
 

CRS can present on this as you'd like.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

Yes. CRS would be happy to present on the problem statements and information in our response to no. 5 above.

7. Additional comments:

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

LADWP believes the greenhouse gas working group process has highlighted important questions and considerations that need to be addressed, namely:

1. Is the continued use of GHG attribution to individual generating resources the correct path forward? The attribution approach cannot eliminate leakage or double counting of GHG emissions between different state regulatory programs, and issues of “preference” (i.e. which state generators bid to sell energy to) are already surfacing between non-linked GHG regulatory programs. LADWP believes that issues stemming from attribution to individual generating resources could be solved if the electricity importer (also known as the “First Jurisdictional Deliverer” or FJD) into a GHG regulation/Cap and Invest area, could be changed to the electricity purchaser (load-serving entity or “EIM Purchaser”) within the GHG regulation area instead of the outside generating resource that produces and sells the electricity.  The Western Climate Initiative Program Design document defines FJD as “The owner or operator of an electricity source in a Partner jurisdiction, or an electricity importer that is jurisdictional to the program authority or the immediate downstream purchaser or recipient of electricity from a non-jurisdictional electricity importer”. Since the WEIM market does not utilize e-tags, there is no documentation to track the physical delivery/import from the generating resource to the GHG regulation area, or who owns the electricity when it crosses the state border. In the absence of physical delivery documentation, the load-serving entity (LSE) within the GHG regulation area who is essentially “the immediate downstream purchaser or recipient of electricity from a non-jurisdictional electricity importer” should be responsible for GHG emission reporting and compliance since the LSE’s purchase is what’s prompting the electricity to be imported into the state.

2. LADWP welcomes CAISO’s push for a durable GHG design and one that reflects an array of western state climate policies.  However, achieving such an outcome would most likely require stepping back from the existing design rather than continuing to evolve an approach that doesn’t work well now despite improvements, and will work even less effectively as individual state programs develop and compete for a clean electricity supply. The question becomes, is the current market construct and marginal GHG pricing approach sustainable in the long-term if carbon neutral goals are to be met? If an Entity’s goal is to become carbon neutral within a GHG regulation/Cap and Invest program, or even bound by a non-price-based carbon program that is completely carbon neutral, how can that same Entity receive unspecified imports in EDAM or EIM with any emissions attributed to the import?

3. Traditional thinking would suggest a carbon price based GHG program is needed for optimization purposes in the market. A crude approach to meeting GHG needs of both price and non-price based programs would be to apply a uniform carbon price across the entire market footprint for optimization purposes, but only settle GHG in the areas with a carbon pricing program. However, can a constraint-based program or elective based program be fashioned that meets the needs of both price and non-price-based programs?

LADWP encourages the GHG working group to examine/analyze these questions/issues and discuss solutions.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

Topics for further discussion: improving accuracy of market GHG emissions accounting and eliminating leakage.

Recommended solution: explore a load-based approach to market GHG emission reporting and compliance utilizing an actual GHG intensity rate calculated after-the-fact by the market operator that represents the aggregate of generating resources in a non-GHG regulation area dispatched to support an electricity transfer into a GHG regulation area. This would improve accuracy by capturing the actual GHG emissions to the atmosphere associated with the electricity transfer, and eliminate leakage from secondary dispatch.

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

Support adding the principles of accuracy and minimizing leakage:

1. Accurate market GHG emissions accounting is necessary to provide correct emissions inventory and GHG compliance for jurisdictions that regulate GHG emissions.
2. Minimize leakage is necessary to avoid imposing secondary GHG costs on market participants within jurisdictions that regulate GHG emissions.

In addition, LADWP believes a fundamental principle should be to eliminate attribution and in-turn secondary dispatch. Attribution is a CAISO construct that will continue to cause issues in EDAM and WEIM as discussed below.

The attribution approach comes with preference, and this is magnified by the lack of linkage of carbon pricing programs in the optimization run – CAISO can call it economics but it’s not a level playing field. Consider stepping through a reference pass, then attribution based on differing carbon prices. If there are two distinct GHG regulation areas, one with a higher carbon cost and one with a lower carbon cost, the result will be to disadvantage one of the GHG regulation areas with regards to the lower cost electricity supply. On top of that there are pricing impacts from the constraints that are being put in to achieve better attribution results.

Attribution also places unnecessary cost on customers in GHG regulation areas with carbon pricing programs. They pay in their rates for renewable energy projects to supply carbon free electricity. In turn excess renewables are sold to the market and purchases of excess renewables are made from the market. However, attribution distorts the price that is paid by load in a GHG area as renewables receive a GHG attribution but have no carbon tax to pay or allowances to purchase and retire. If CAISO wants to attract renewable imports into a GHG area, then a product should be set-up that does that, rather than using an attribution process and GHG payments to attract renewables.

As such, stepping away from the attribution approach and considering a different approach would be prudent, especially if you can eliminate secondary dispatch at the same time.  

Consideration is needed for how best to handle GHG emission reporting and compliance for electricity imported into the GHG regulation area. Currently, generating resources outside the GHG regulation areas are responsible for GHG reporting and compliance. Rather, that responsibility should be placed on the electricity purchaser or load-serving entity within the GHG regulation area whose demand for electricity is causing the import (i.e. Load Based Accounting), in line with the re-interpretation of the FJD discussed above.

LADWP is proposing a more accurate way to account for GHG emissions for imported electricity, that dynamically changes based on the resources running in the market footprint in non-GHG areas, rather than the 2-step approach that CAISO is utilizing today. LADWP has presented this more accurate approach at meetings and in written comments, and is willing to give another presentation.

Additionally, the load-serving entity within states with a GHG regulation program or carbon neutrality goal needs the ability to indicate to the market how much energy from emitting resources they are willing to accept as they strive towards their carbon free targets. The current construct does not contemplate this issue. This should be a key consideration in the market design.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

The detailed summary of comments/feedback under each topic within the Discussion Paper is helpful.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

Leakage: The current GHG accounting design based on attribution to the lowest cost individual generating resources, allows for emissions leakage. Leakage is caused by not capturing GHG emissions from all the generating resources actually dispatched to support the transfer of electricity from a non-GHG regulation area into a GHG regulation area.

Leakage has a measurable cost impact on EIM market participants within the GHG regulatory area. For example, California’s price-based GHG emission Cap-and-Trade program includes the “EIM Outstanding Emissions” mechanism to account for GHG emissions leakage. EIM Outstanding Emissions is the difference between “deemed delivered” imports from individual generating resources reported at the resource-specific GHG emission rate, and the default GHG emission factor (0.428 MT CO2e/MWh) for unspecified electricity which represents a WECC wide average of marginal generating resources. In effect, California GHG emissions for EIM imported electricity are equivalent to unspecified electricity. Then the EIM Outstanding Emissions are divided among the California EIM market participants based on total Retail Sales in California, and the pro-rata share of the GHG compliance obligation is satisfied by withholding/retiring GHG emission allowances from each participant’s annual allocation under the Cap-and-Trade program, thereby reducing the number of allowances available for sale or compliance.

Leakage results in California EIM market participants paying two different GHG costs for imported EIM electricity: 1) GHG cost in the price ($/MWh) of electricity purchased from the market (this money is distributed to the out-of-state generating resources), and 2) value of GHG emission allowances withheld and retired from the annual allocation to cover the EIM Outstanding Emissions compliance obligation. A California EIM market participant may need to purchase replacement allowances to satisfy the GHG emissions compliance for their own in-state generation and/or imports, at a cost to ratepayers.

Principles applicable to this problem include accuracy and minimizing leakage.  

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

Yes, emissions leakage as discussed in response to question 5 above.

In addition, LADWP is willing to present its load-based GHG emissions accounting proposal.

7. Additional comments:

California Senate Bill 1158 requires California electric utilities to report hourly GHG emissions to serve their load under California’s Power Source Disclosure program. CAISO could facilitate this for California EIM entities by adopting a load-based approach to market GHG emissions accounting, and providing hourly EIM market purchases and sales MWh and GHG emissions data to each market participant in California.

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

The Oregon Public Utility Commission (OPUC) respectfully offers these comments on the questions posed in the CAISO Extended Day-ahead Market (EDAM) GHG Coordination Working Group Discussion Paper dated August 3, 2023. The OPUC is responsible for protecting the public interest and helping to ensure the effective implementation of Oregon’s GHG emissions reduction mandate. Our comments prioritize developing market solutions for non-price GHG programs.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

The OPUC found value in the Overview of GHG Accounting in the WEIM and EDAM presented at the September 13, 2023, working group meeting. We suggest the following topics for further discussion:

• Transfer limits imposed in the EDAM design
• How non-price-based GHG policies can be reflected in the EDAM design

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

The following comments relate to the principles and their descriptions included in the presentation dated September 13, 2023. The OPUC supports the principles of Efficiency, Transparency, Feasibility, Non-discrimination, and Jurisdictional Roles and Responsibilities as described in the presentation.

Simplicity (eliminate): We suggest eliminating the Simplicity principle. Some amount of complexity may be necessary to achieve desired outcomes. Complexity should be considered as an element of feasibility, and there is already captured under the Feasibility principle. Additionally, the descriptions in the two bullets under the Simplicity principle would fit better under different principles. The description in the first bullet (“Design should be broadly applicable, scalable, and accommodate many participants”) does not describe “simplicity”. This concept of broad applicability might be a better fit as an element of the Non-discrimination principle. The description in the second bullet (“Design should use existing systems and instruments for tracking generation and emissions when possible”) is a better fit as an element of the Feasibility principle.

Non-discrimination (do not rename): The principle of Non-discrimination should not be renamed to “Competitive participation of resources inside and outside a GHG Zone.” The Non-discrimination principle is, and should remain, more broadly applicable than competitive market participation. The concept of competitive market participation is already captured in the descriptions in the third and fourth bullets under the Non-discrimination principle (“Participants within GHG and non-GHG areas should have equal access to residual supply” and “Non-prohibitive; states selling output of GHG pricing to those without GHG costs should not be hindered.”)

Minimize Leakage (do not add): A principle of Minimize Leakage should not be added. State agencies implementing clean energy policies strive for fidelity to the intention of the policy in their state, including addressing leakage. These policies differ across the states in balancing cost and leakage. Additionally, air regulatory agencies may continue to take steps outside the market to quantify and address leakage as they individually deem is appropriate. The Feasibility principle already captures the ongoing need to balance cost and leakages. An element could be added to the Transparency principle that explicitly addresses leakage, such as “Sufficient information exists to quantify emissions leakage in order to determine if efforts to reduce leakage are warranted.”

Accuracy (do not add): A principle of Accuracy should not be added as it is already captured in the Transparency principle. The costs of increasing accuracy must be weighed against the benefits received by that additional accuracy.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

The revision and action item logs included in the discussion paper accurately reflect the conversation from the last working group meeting and the written stakeholder comments.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

The OPUC offers two problem statements related to the ability of market participants subject to non-price GHG regulation to comply with the regulation while participating in the market. These two problem statements are related to the first three of the four categories for draft problem statements presented in the last working group meeting: 1) Attribution, 2) Reporting, and 3) Reflecting non-price-based policies.

1. Problem statement: Load serving entities (LSEs) subject to a state GHG reduction mandate do not have the ability to affect dispatch to ensure that the emissions of energy deemed to serve their load is within their regulatory limits.
   • Market outcome: LSEs can’t effectively compete against LSEs subject to GHG pricing programs for low-cost clean energy from the market.
   • Relevant market function: The dispatch algorithm
   • Relevant principle: Jurisdictional Roles and Responsibilities. The current market design does not support compliance with GHG reduction mandates that have been adopted in four states.
   • Root cause: The dispatch algorithm lacks a price signal that LSEs subject a GHG reduction mandate can use to indicate their preference for clean electricity.

2. Problem statement: LSEs subject to GHG reduction mandates do not receive data about market imports indicating which resources were deemed to have served their load.
   • Market outcome: Without this data, it will be challenging for the LSE to demonstrate compliance with the state GHG regulation.
   • Relevant market functions: GHG attribution; data reporting
   • Relevant principle: Jurisdictional Roles and Responsibilities. The current market design does not support compliance with GHG reduction mandates that have been adopted in four states.
   • Root cause: To date, GHG attribution has been designed solely around GHG pricing programs that require generators to retire allowances.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

The OPUC asks that Doug Howe, a consultant to the PUCs in western states with GHG regulations, be invited to present for discussion a concept for introducing an emissions constraint into the market dispatch algorithm that could be a potential solution to our first problem statement described above.

7. Additional comments:

None.

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

PacifiCorp commends the CAISO on their dedication in crafting problem statements and aligning stakeholders on guiding principles before heading into a full policy initiative. As PacifiCorp continues its engagement with the GHG Coordination Working Group, one central PacifiCorp priority is ensuring it can satisfy the requirements set by each compliance framework its subject to as a retail provider in six states. These frameworks include priced-based (California, Washington) GHG programs and non-price-based (Oregon) emission standards, as well as renewable energy procurement and delivery standards. Therefore, PacifiCorp’s comments are largely within the “jurisdictional roles and responsibilities” and “beyond GHG pricing policies” problem statements. As part of the discussion of “jurisdictional roles and responsibilities,” PacifiCorp would like to see the CAISO further refine stakeholder understanding by explicitly naming the roles and responsibilities to be expected from each entity (CAISO, state regulators, and complying utilities) as they pertain to utility compliance reporting of EDAM market transactions under different regulatory frameworks – including both price-based and non-price based jurisdictions.  

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

PacifiCorp found the Overview of GHG Accounting in the WEIM and EDAM insightful and appreciates the CAISO refreshing stakeholders on the current WEIM design and what’s to come from the enhanced EDAM GHG design. As mentioned above, PacifiCorp would like more discussion on how the market and regulators intend to handle non-price-based frameworks within the market to ensure participating utilities’ compliance at the onset of EDAM.  

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

PacifiCorp does not support the removal of the simplicity principle as noted in the September 13th, 2023, GHG Coordination Working Group session. PacifiCorp believes the simplicity guiding principle does not entirely fold into the feasibility guiding principle seamlessly. In PacifiCorp’s assessment, simplicity can be used in the context of CAISO’s and regulators’ ability to leverage existing accounting methods without creating a new accounting framework and is not solely based on operational constructs that the feasibility guiding principle alludes to.  

PacifiCorp agrees that renaming the “jurisdictional roles and responsibility” principle to “congruency with state policy” would be a more appropriate fit. In addition, PacifiCorp agrees that “coordination with state regulators and stakeholders to identify design and reporting needs required to support state policies and programs” is fundamental. Under the principle of “congruency with state policy”, focus should continue to be placed on refining stakeholder understanding of the roles and responsibilities of each entity (CAISO, state regulators, and complying utilities) as they pertain to utility compliance reporting of EDAM market transactions. PacifiCorp would like to see jurisdictional roles and responsibilities prioritized as a topic of discussion going forward in the working group. PacifiCorp generally supports the revisions to the remaining guiding principles.  

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

PacifiCorp requests the CAISO include?in the jurisdictional roles and responsibilities principle a description of who (whether it be CAISO, regulators, or the entity) is responsible for reporting what data, and at what frequency, under the “reporting needs” as conveyed in the proposed descriptions of each principle within the discussion paper. This request could be reflected as “coordination with state regulators and stakeholders to identify design and reporting elements – and which entity is responsible for those design and reporting elements – required to support state policies and programs.” 

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

To contextualize PacifiCorp’s problem statements: PacifiCorp’s BAAs overlap states with price based GHG reduction policies (WA, CA), non-price based GHG reduction policies (OR), and no GHG policies (UT, ID, WY). Additionally, PacifiCorp is subject to a clean energy delivery standard, CETA (WA), and renewable procurement obligations (renewable portfolio standards in CA, OR, WA, UT). Regulations, including those that govern the GHG pricing policies, addressed the complexity posed by PacifiCorp’s multi-state footprint by basing compliance on resources paid for by retail customers in each of its states, and reflected in the interjurisdictional cost-sharing agreements agreed to and approved by utility commissions in all six of its states. PacifiCorp’s problem statements are as follows: 

• Problem statement 1: If the methodology for PacifiCorp’s compliance reporting of EDAM transactions with the CCA is not congruent with existing regulations and guidance for imports for bilateral transactions and retail, then the GHG regulation area’s reporting will be incomplete or inaccurate. 

• Problem statement 2: Under the WEIM, there are known instances of double counting of emissions between Washington and California GHG regulation areas for emitting resources physically located in Washington and deemed delivered to California, in the absence of program linkage. 

• Problem statement 3:  If policies (such as CETA's delivery-based renewable compliance paradigm, and prohibitions on coal) base compliance on data from the market operator [data intended to inform market settlements] -- and use that data to represent energy flow serving retail load -- a number of adverse effects would result. These effects include (a) a disconnect would appear between costs and benefits of the resources paid for by retail customers in retail rates and their compliance benefits; (b) it would discount long range clean energy plans developed by utilities to comply with state policies, and (c) it would ultimately disincentivize market participation.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

Yes, PacifiCorp is keenly interested in presenting and bringing to light the challenges faced as being a multijurisdictional entity at a future working group and will frame the content based off previous answers provided above.  

7. Additional comments:

No additional comments. 

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

PGE appreciates CAISO’s efforts in leading these workshops to identify and address the needs of stakeholders related to greenhouse gas reporting. As discussed further below, PGE emphasizes the importance of addressing problem statement #3, Reflecting non-price based policies.  Oregon law requires Portland General Electric to reduce the greenhouse gas emissions associated with serving retail load 80 percent by 2030, 90 percent by 2035, and 100 percent by 2040, all from an average 2010-2012 baseline. This statutory Oregon GHG limit necessitates that PGE source increasingly clean imported power to demonstrate compliance through the allocation of emissions-free power to PGE load.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

We appreciate CAISO’s efforts to provide an overview for the group to have a shared understanding of existing practice. We suggest that CAISO adjust explanatory slides like those presented in the overview about GHG accounting to reflect the as yet unaddressed issue that some jurisdictions do not have a carbon price, rather than omitting those jurisdictions from examples.

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

PGE agrees with the ‘transparency’ principle and emphasizes the need for sufficient information to be available for use by market participants to maintain market compliance with state GHG regulations and programs. CAISO could consider the principle of accuracy to be included within the transparency principle given that accuracy is needed in order for information to be truly transparent and usable. 

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

NA

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

Problem statement: There is no market mechanism to reflect state climate policies that are not structured around a cost of carbon or an emissions price. Participating in the ISO’s market could undermine efforts to decarbonize as the unspecified emissions rate assigned to energy imbalance purchases under state rules may not accurately reflect the emissions profile of generation. Under current practices, the lack of transparency into the actual emissions profile of the market necessitates use of the unspecified rate. This could result in affected entities reducing market participation in order to comply with the emissions targets set by state law.

PGE is in agreement with Oregon state agencies in their comments from Workshop 1 that “it is appropriate that CAISO has focused early EDAM design efforts on accommodating California and Washington’s price-based GHG regulations. It is now appropriate for CAISO and prospective EDAM participants to explore how EDAM can accommodate non-price-based GHG regulation in the near future.”

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

PGE would like to present our perspective as a utility and market participant based in a state with a GHG cap but no price per ton of emissions.  We would discuss Oregon’s clean electricity law HB 2021, Oregon’s Greenhouse Gas Reporting Program, and the need for more specific data about emissions from market transfers and the need for the market to account for GHG policies without a price.

7. Additional comments:

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

The Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to comment on the September 13 working group (WG) and revised discussion paper.  As discussed in question #2, SRP is very supportive of educational presentations on the current market design within WEIM and future design within the Extended Day-Ahead Market (EDAM). When paired with collected data and analysis, this will lead to effective meetings and meaningful problem statements. SRP believes additional analysis may be appropriate to support the identified problem but appreciates the CAISO drafting potential statements for discussion.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

SRP generally supports the overview presented at the September 13 WG meeting and agrees that it is critical for participants to start with a solid background of the WEIM/EDAM GHG design before finalizing problem statements. There are several topics that SRP recommends reviewing in upcoming WG meetings, which include:

• Leakage: The working group discussion paper and the meeting both mentioned leakage as a major concern with the current market design. SRP recommends that the CAISO dedicate time to showing an example of redesignation and how that impacts resources and/or prices both inside and outside of a GHG zone If there is an example with real data available from EIM, that could be a starting point for a broader discussion on how much leakage is occurring now, what is acceptable, and what are the alternatives.

• Surplus: SRP also recommends a deeper look at how resource surplus is determined.  Within the EIM design, it would be possible for resources that are not incrementally dispatched to receive a GHG award. SRP would like to better understand the GHG allocation limit (BPM for WEIM, pg. 83) and alternatives to this approach.

• Resource Dispatch: Finally, SRP recommends exploring some examples of the WEIM energy optimization and how that compares to the GHG accounting to better understand the algorithms used to determine resource dispatch and how that could differ from GHG attribution.

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

SRP agrees with the proposed principals, recognizing it is unlikely any no single design will meet all of the principals perfectly. The suggested principles that were added in [9] may fall within one of the original principles. SRP suggests the CAISO consider adding “minimizing leakage” to “non-discrimination”. SRP requests more information that clearly defines “environmental justice”. 

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

SRP appreciates the continuous updates that are added and tracked as the WG progresses and has the following comments with respect to the labeled updates:

[1]--SRP strongly agrees with spending the time up front for education, data collection, and analysis before finalizing problem statements.

[4]--SRP is in favor of pre-recorded webinars or documented analysis to support high priority topics 1 and 3 to ensure time is being utilized efficiently.

[10]--SRP agrees that Review of the CAISO Market Operations and GHG Design is a high priority topic.

[12]--SRP agrees that Emission Tracking and Accounting is a high priority topic and would like to also explore the bulleted concepts suggested by other stakeholders.

[14]--SRP is interested in reviewing examples or analysis of the leakage under the current GHG design.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

As stated in question 1, SRP believes that more analysis may need to be done prior to drafting useful problem statements. At this time, SRP’s problem statements reflect our desire to better understand the current design before drawing conclusions on what problems exist.

1. It is unclear if the CAISO’s market has correctly balanced minimizing leakage and costs.
   • Note that this is the same problem statement (4) the CAISO proposed.
2. It is unclear if the CAISO’s market correctly identifies available surplus on resources that may be attributed to a GHG zone.
   • SRP recommends that the method of determining surplus be reviewed for accuracy and non-discrimination.
3. The CAISO’s market may not provide the complete reporting and analysis desired by all market participants.
   • Note that this is a similar problem statement to (2). SRP recommends that additional time in a WG be dedicated to exploring what information may be available to share with participants and what analysis can be done to improve transparency.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

No comment at this time.

7. Additional comments:

No additional comments at this time.

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

SCE appreciates that the September 13 working group meeting provided a detailed review of the proposed GHG design in EDAM, especially as compared to WEIM today.  It may be helpful for CAISO to devote additional time to further explain and discuss certain aspects of the prospective EDAM GHG design.  Specifically, SCE would appreciate further discussion of the construction and use of the counterfactual (GHG Reference Pass) optimization in establishing a dispatch (and therefore, cost and emissions) benchmark.  Additional discussion on the formulation and implications of the GHG Net Export Constraint, as well as details on how the optimization determines the least cost solution, and then how specific units are “deemed” to provide power to California (and Washington) would also be helpful.  This level of detailed discussion would likely benefit from the participation of a CAISO technical expert on this topic, such as George Angelidis.  

As noted on page 10 of the Sept 12^th version of the Discussion Paper, there were original comments to the Aug 16 working group requesting “discussion of the benefits and drawbacks of the ISO’s current GHG emissions counterfactual method,” but it did not appear that the Sept 13 working group devoted much time, if any, to these benefits and drawbacks.

Additionally, SCE would appreciate further explanation of determination of the attribution of non-committed resources between GHG regulation areas. SCE suggests that CAISO provide additional examples of provided and awarded bids where a resource offers GHG bid adders for multiple GHG regulation areas.

With regards to the revised Discussion Paper, SCE supports the continued use of a living document to capture the evolution of the working groups efforts in GHG design; the Revision Tracking appendix was particularly helpful.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

As mentioned above, SCE supports further explanation and discussion about the Reference Pass counterfactual along with the attribution of non-committed resources to competing GHG regulation areas.  To further these conversations, more detailed examples of bids and awarded transactions would be helpful, especially if provided in advance of the scheduled working group meeting.

SCE also recommends that regional and state GHG regulators, such as CARB, be invited to a working group meeting(s) to engage with stakeholders to further understand stakeholder compliance obligations within the context of the EDAM GHG design and design proposals. 

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

SCE generally agrees with the revisions to the principles, including the subsuming of the Simplicity principle within the Feasibility principle.  It is not clear that the description of Efficiency contained in the presentation as “[o]ptimizing dispatch to minimize cost” is sufficient. SCE encourages CAISO and other stakeholders to contemplate additional metrics of efficiency for the GHG market design.  One additional metric that could be considered is the cost impact per emissions unit for the total system along with GHG regulation areas.

With regards to the suggestions for renaming the principles “Non-discrimination” and “Jurisdictional roles and responsibilities,” SCE does not believe that renaming is necessary but that the sentiments should be captured as additional description of those principles.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

 SCE finds the revision and action item logs helpful and supports their continued usage.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

A problem statement that SCE would like to be discussed in the working group concerns the discovery and transparency of all-in costs of GHG-tagged energy.  We suggest a problem statement of “How accurately does the treatment of GHG used in the optimization reflect actual costs of GHG to end-use customers?”

For example, if CARB reduces GHG allowances allocated to CA load because CARB believes the optimization results in secondary dispatch, then the actual cost of GHG to customers is higher than the cost determined by the optimization.  If the optimization does not accurately model costs to customers, it will not provide a truly optimal/cost minimized result.      

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

SCE is willing to present at future working groups in areas of its expertise.  This could include presenting on attribution and interactions with CARB compliance requirements.

In addition, SCE is interested in exploring alternative GHG implementations, such as the Load-based proposal from LADWP.   SCE would be willing to present ideas on how a Load-based approach could be implemented.

7. Additional comments:

SCE is concerned that the Problem Statements 1 and 2 presume the market to be “inequitable and inefficient” and that market “transparency and accuracy” is undermined by incomplete reporting.  These are unsupported conclusions and should be further refined such that they can be addressed.

SCE also supports the addition of certain identified topics to the agenda of future meetings, including the Los Angeles Department of Water and Power load-based accounting proposal.

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

The presentation at the September 13, 2023 working group meeting describing the GHG design applied in the Western Energy Imbalance Market (“WEIM”) and proposed for the Extended Day-Ahead Market (“EDAM”) provided a useful overview of the current and (for EDAM) proposed methodology for GHG accounting and attribution.  The Six Cities continue to support a phased approach to further activities of the GHG Coordination working group process and support the request for submission of specific problem statements by participants that have identified needs for near-term consideration of revisions to GHG design.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

As noted above, the Six Cities found the presentation at the September 13^th working group meeting describing the elements of the current design for GHG accounting and attribution to be useful. 

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

As noted in the Six Cities’ comments submitted on August 30, 2023, the six suggested principles listed at pages 7-8 of the September 12, 2023 revised Discussion Paper adequately identify high level metrics for evaluating any proposed market design changes that may emerge from the GHG Coordination initiative.  The Six Cities continue to believe that further efforts to define, fine tune, or prioritize overarching principles are not worthwhile at this time, as their application to as yet undeveloped proposals for market design changes would be entirely speculative and premature.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

The Six Cities continue to support a phased approach to further GHG Coordination working group activities, with the initial phase focused on the development of problem statements and, to the extent necessary to flesh out the problem statements, collection and analysis of relevant data.  The second phase should evaluate the potential impact of any identified problems and develop priorities for addressing those problems.  The Six Cities support the request for submission of specific, detailed problem statements, with the elements indicated in the revised Discussion Paper, as the foundation for evaluating the appropriateness of further working group activities in the near-term (i.e., prior to implementation of and analysis of experience under the EDAM).

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

At this time, the Six Cities have not identified any issues with the current GHG accounting methodology for which they consider a problem statement to be necessary.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

At this time, the Six Cities have not identified any topics for presentations to offer to the working group.

7. Additional comments:

The Six Cities have no additional comments at this time.

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

The Washington Utilities and Transportation Commission (UTC), Washington Department of Ecology (Ecology), and Washington State Energy Office (Energy Office), collectively known as the Washington Agencies, appreciate the opportunity to comment on questions posed in the Sept. 27 comment survey.

The Washington Agencies offer these comments as the state agencies responsible for protecting the public interest and ensuring the effective implementation of Washington’s climate and clean energy laws.

These laws include the state’s comprehensive cap-and-invest program, the Climate Commitment Act (CCA), and 100 percent clean electricity law, the Clean Energy Transformation Act (CETA). Individually, the UTC regulates Washington’s three investor-owned electric utilities and ensures that rates and services are fair, just, and reasonable for Washington households and businesses served by those utilities. Ecology regulates the greenhouse gas emissions of electricity generation and imports under the CCA. The Energy Office, within the Department of Commerce, is responsible for developing and monitoring energy policy. It authored Washington’s 2021 State Energy Strategy, which calls for the development of regional wholesale energy markets. Additionally, the Energy Office developed the rules for, and monitors the implementation of, CETA by Washington’s consumer-owned utilities.

The Washington Agencies commend the California Independent System Operator (CAISO) for its recent efforts to work collaboratively with stakeholders and regulatory agencies to explore how GHG accounting functionality could evolve after the ISO gains experience with the Extended Day Ahead Market (EDAM). Given the state and regional imperatives to decarbonize the electricity sector, the Washington Agencies appreciate CAISO’s collaborative efforts to focus on a future GHG policy initiative to support GHG design(s) that are durable and can reflect an array of western climate policies. It is our hope the GHG Coordination Working Group process yields a GHG plan that prioritizes efficient market outcomes for Washington households and meets the data requirements needed for Washington utilities to participate in the market and comply with Washington’s GHG laws and regulations.

CAISO’s Sept 13 working group meeting and revised discussion paper are a testament to hearing the voices of meeting participants and dedication to a thorough and transparent working group process. The Washington Agencies are supportive of this approach.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

The Washington agencies appreciates the Overview of GHG Accounting in the WEIM and EDAM. We found it very helpful and encourage CAISO to maintain the same caliber of presentations at future workshop topics.

The Washington agencies support the following topics to discuss further:

• The role of the ISO in facilitating consistency between GHG emissions reporting programs
• The role of the ISO in addressing the double counting of GHG emissions between state programs
• How non-price based policies should be reflected in the market design

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

The Washington Agencies support an efficiency principle that establishes an objective to minimize total costs, where costs include both direct production costs (such as fuel and variable O&M costs) of power generation and the costs incurred for allowances in GHG zones. The efficiency principle should not be defined as minimizing production costs alone. Reducing overall costs paid by electricity customers is a priority for the Washington Utilities and Transportation Commission and State Energy Office.

The Washington Agencies support folding the simplicity principle into the feasibility one. Complexity should be considered as an element of feasibility.

The Washington Agencies are supportive of the non-discrimination principles that there be no inappropriate or unacceptable GHG or cost impact on a non-GHG regulation area or resource and no penalty under a GHG pricing requirement through unreasonable uplift charges or any dispatch decision that unreasonably increases costs to customers in states with price-based programs.

The Washington Agencies do not support renaming the principle of non-discrimination “competitive participation of resources inside and outside a GHG zone,” because the revised principle does encompass other market design features beyond resource participation, such as decisions about how those resources are dispatched and whether those dispatch decisions lead to unreasonable costs to customers.

The Washington Agencies understand CAISO to provide a level playing field for all resources with all fossil fuel resources bearing a greenhouse gas price, and that surplus that is not contracted is equally accessible to participants within GHG and non-GHG areas based on price and merit order optimization.

The Washington Agencies believe the proposed accuracy and minimizing leakage principles are already captured in the transparency, non-discrimination, and feasibility principles. Accuracy and leakage will be based on:

• Having sufficient information about market prices, design, and performance (transparency)
• Ensuring no inappropriate or unacceptable GHG or cost impact on a non-GHG regulation area or resource (non-discrimination)
• No penalty under a GHG pricing requirement through any dispatch decision that  unreasonably increases costs to customers in states with price-based programs (non-discrimination)
• The market is operationally feasible and can solve within prescribed timelines (feasibility)

The Washington Agencies are unclear on the definition of the proposed “durability” principle. The Washington Agencies believe CAISO should work to resolve issues not addressed in the EDAM tariff, namely issues of reporting, double counting, and reducing burdens on impacted communities. However, it is inherent within markets that new issues will arise that will need to be addressed and that the market design will need to be updated.

In addition, the Washington Agencies are unclear of the definition used for the “environmental justice” principle. We would suggest that it be defined as reducing the burdens, primarily pollution, of the power system on overburdened communities.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

The Washington Agencies support ISO’s suggestion that all data analysis be tied to problem statements. Any data analysis should be comprehensively addressed through the problem statement and supporting analysis discussion.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

The Washington Agencies support the draft policy statements proposed by CAISO related to transparency in the attribution process and reporting. The Washington Agencies believe these issues are the most important issues to address through the GHG Coordination Working Group. In addition, the Washington Agencies believe the GHG Coordination Working Group should tackle other issues not addressed in the EDAM tariff, including reflecting non-price based policies in the market design. This latter problem statement should address how the market can handle both priced and non-price GHG programs and within a state simultaneously.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

The Washington Utilities and Transportation Commission and Energy Office would be open to discussing the above problem statements at a future workshop. The Department of Ecology is currently undergoing a markets rulemaking for the state’s cap-and-invest law, the Climate Commitment Act, and has limits to its participation until the rulemaking has concluded.

7. Additional comments:

The Washington Agencies believe this GHG Coordination Working Group should be focused on issues not addressed in the EDAM tariff.

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

WRA appreciates the September 13 presentation and updated whitepaper as helpful background to guide the working group. Overall, as described in our following comments, we especially urge thorough discussion and identification of potential solutions for proposed topics #3 Emissions Tracking and Accounting and #4 Beyond GHG Pricing Policies. Both are essential to support a well-functioning market that facilitates compliance with the variety of Western state greenhouse gas policies.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

The September 13 presentation provides a helpful refresher on WEIM and EDAM accounting. WRA recommends the working group further discuss GHG design to support regulatory compliance with both CA and WA carbon pricing programs and other states’ non-pricing GHG reduction requirements. We recommend a conversation with the "Western Climate PUC Group" and RAP, who have identified a potential “emissions constraint” solution to support non-pricing state compliance. WRA also recommends thorough discussion of the post-market reporting metrics that CAISO can provide and market participants, regulators, energy buyers, and other stakeholders may need for compliance or to measure market performance.

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

WRA supports the six listed GHG coordination working group principles. For #5 “jurisdictional roles and responsibilities,” we support keeping this and adding, or combining with, the stakeholder-suggested “congruency with state policy.” Any greenhouse gas design must support policy compliance in each state. Simultaneously, the work group should identify the roles of CAISO, market participants, state regulators, and any other entities in various aspects of design or reporting.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

WRA supports the addition of the revision, action item, and topic logs. In the next iteration, we recommend the group identify a timeline with action item steps for continued examination of emissions tracking and accounting, including identifying the needs of states with GHG reduction requirements.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

The group should address the challenges associated with tracking emissions with the diversity of GHG emission requirements and targets across Western states. EDAM emissions tracking and accounting should demonstrate the impact of the market on decarbonization and renewable curtailment, as well as provide requisite data at the greatest feasible granularity for market participants, state regulatory compliance programs, and energy buyers. 

The group should also discuss how to incorporate the needs of non-pricing GHG reduction states into EDAM design to facilitate compliance with those state regulatory programs.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

Yes, WRA has requested to present during the October meeting of the working group on identifying metrics for robust post-market GHG emissions reporting and pathways to West-wide emissions tracking. Our presentation is intended to address the challenges associated with tracking emissions with the diversity of GHG emission requirements and targets across Western states. EDAM emissions tracking and accounting should demonstrate the impact of the market on decarbonization and renewable curtailment, as well as provide requisite data at the greatest feasible granularity for market participants, state regulatory compliance programs, and energy buyers.

7. Additional comments:

1. Please provide a summary of your organization’s feedback on the September 13 working group, and revised discussion paper:

WPTF appreciates the CAISO taking the time to develop and gain consensus on well-defined problem statements at the beginning of this stakeholder process. This will allow for a more robust and productive policy process as it enables the stakeholder community to effectively be able to evaluate potential solutions against the ability to address the identified problems while aligning with the overall goal/purpose of the program and principles.

WPTF has some concerns with the way a few of the principles are currently reading or being interpreted and questions if they align with the goal or purpose of the overall GHG program. We also offer a few ways in which to enhance the current draft problem statements as well as offer a new one for consideration.

We are looking forward to continued discussions and finalization of well-defined principles and problem statements that will facilitate a productive and robust stakeholder process.

2. Provide your organization’s feedback on the Overview of GHG Accounting in the WEIM and EDAM. Please also share if there are topics within GHG design that you recommend the working group discuss further:

WPTF appreciates the detailed discussion around the current and proposed GHG accounting and market design in the WEIM and EDAM respectively. We do believe the discussions would benefit from an example that would walk through how resources (internal and external to GHG regulation areas) reflect GHG costs, are attributed, prices generated, and revenues received.  

3. Provide your organization’s feedback on the initial revisions to the GHG Coordination working group principles, and the suggested additional principles:

The principles will continue to evolve and be developed throughout the working groups, but serve as a reference for initial problem statement development.

WPTF is extremely concerned with the latest revision to the efficiency principle. While we recognize the CAISO’s market software objective function is a cost minimizing function, that does not mean that a principle for the market is to minimize cost. In fact, the secondary dispatch issue exists primarily because the objective function is a cost minimizing formula and selects the cheapest and cleanest resources for GHG attribution. This results in suppressed GHG prices that are not accurately reflecting the GHG cost. There seems to be consensus that reducing secondary dispatch and ensuring proper price formation is a goal of the overall GHG design, therefore one of the principles used in this process should not increase secondary dispatch.

WPTF therefore requests that the CAISO reconsider how the principle efficiency is being applied in this context and consider reframing it as “efficient dispatch of resources that accurately capture emissions and result in accurate GHG price formation.”

WPTF appreciates the discussion under the transparency principle. We would like to take this opportunity and note that part of price transparency includes transparency as to the true marginal GHG cost component of each energy LMP. Due to the way resources within a GHG regulated area embed the GHG cost of serving load within its GHG regulation area in its energy offer, the GHG component of the LMP does not fully capture the true GHG marginal cost. Part of the GHG cost is embedded in the SMEC and the other part included in the GHG component.  

During the workshop it was also noted that one principle should be related to the ability of the market to also support clean energy policies/standards that are not cost-based. This topic was discussed at length during the EDAM GHG workshops and it was our understanding there was consensus that it is not appropriate for the GHG design to accommodate non-priced based policies. If that topic is being revisited here then we first ask that the CAISO hold a discussion around what has changed since the EDAM GHG workshops that warrant continued discussions. It could be that the CAISO’s vision of the goal of the GHG design has shifted and if that is the case then we as a stakeholder community should be able to engage in such discussions. Furthermore, if the overall goal of the GHG design has shifted, then that conversation should take place prior to finalizing any principles.

4. Provide your organization's comments on the initial feedback reflected in the revision and action item logs in the discussion paper, along with any outstanding comments or action items that should be captured in the next iteration:

No comment at this time.

5. Provide your organization’s draft GHG problem statements for working group discussion. These problem statements will help identify the root cause of market design and facilitate analysis and assessment. As discussed, effective problem statements include a root cause in terms of policy/process, reflect possible tradeoffs with principles, and illustrate how the problem has a measurable impact on market outcomes.

Would you be willing to briefly present to your problem statement during the working groups for group consideration?

WPTF would like to take this opportunity to provide feedback on some of the draft problem statements as presented during the workshop. First, we really appreciate the CAISO taking the time to refine the problem statements such that they are rooted in facts, identify issue as it relates to the overall goal or purpose of the program, and are neutral (i.e., do not reflect any policy position at this point). Gaining consensus on these statements upfront will help facilitate a more robust and productive stakeholder process.

Problem Statement #1: The market lacks transparency into the attribution process which results in stakeholder feedback that the market is inequitable and inefficient

Improved transparency is always beneficial to the overall market. However, WPTF wonders if this statement is also trying to get at the issue that the current attribution still results in secondary dispatch and thus inequitable and inefficient. The attribution process is part of the CAISO market optimization and based on the constraints as described in the EDAM process, so WPTF wonders if this problem statement is trying to instead capture that there lacks transparency into the degree of secondary dispatch that is occurring as a result of the attribution process.

Problem Statement #2: The CAISO’s market does not provide complete reporting metrics desired by all market participants. This undermines the transparency and accuracy desired by market participants.

As stated under problem statement #1, WPTF is supportive of additional data transparency where feasible.

Problem Statement #3: There is not a market mechanism to reflect state climate policies that are not based on the cost of carbon. Participating in the CAISO’s market could undermine efforts to decarbonize as the unspecified emissions rate used by states fails to reflect the accuracy of generation and consumption at a local level.

As noted in response to question #3, it’s imperative that as we continue down this path, all problem statements identify issues within the current market design that is intended to support the overall goal or purpose of the market design. It is WPTF’s understanding, which was also iterated by others during the EDAM discussions, that the goal or purpose of the CAISO’s GHG market design is to ensure the market captures the additional GHG cost of serving load in GHG regulation areas. Thus, this problem statement seems to question the overall goal or purpose of the program. If all stakeholders agree this is an issue, then we as a stakeholder community need to go back and reevaluate (and agree upon) the goal and purpose of a GHG market design. Again, based on our understanding of where this discussion ended during the EDAM phase, incorporating non-priced based policies into the optimization was not part of the goal or purpose of the GHG design. To the extent this view has changed, we need to have that open stakeholder discussion.

Problem Statement #4: It is unclear if the ISO’s market has correctly balanced minimizing leakage and costs.

WPTF believes this problem statement could use a little rewording such that it reads more factual based. For example, the CAISO could consider something along the lines of “The CAISO’s least-cost dispatch optimization results in secondary dispatch which does not capture the full emissions and leads to inaccurate price signals”

Then through the evaluation of potential solutions to address the problem, stakeholders can begin having the trade-off discussions that we believe the original problem statement is trying to get at. Those conversations will naturally take place as we start to weigh the potential solutions against the ability to address the problem statement while aligning with the principles.

WPTF Proposed Problem Statement: The current price formation does not provide full transparency into the total marginal GHG cost, leading to inaccurate price signals and reduce price transparency.

This is a new problem statement WPTF believes should be considered. The issue being that due to the way resources within a GHG regulation area embed the cost of serving load in their own area in the energy offers, the total marginal GHG cost is the GHG component plus some portion of the SMEC. This results in a lack of transparency of the true marginal GHG cost to serve load.

6. Is your organization interested in presenting its experience or area of expertise at a future working group? If yes, what problem statement will your presentation address or support?

Please frame your presentation to include or highlight the following problem statement elements: a root cause in terms of policy/process, possible tradeoffs with principles, or how the problem has a measurable impact on market outcomes.

No comment at this time.

7. Additional comments: