Comments on Issue paper

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator (CAISO) Day-Ahead Sufficiency Issue Paper. This initiative will ensure that the CAISO, in its role as an extended day-ahead market (EDAM) balancing authority area (BAA), meets its day-ahead resource sufficiency evaluation (RSE) obligations by identifying potential shortfalls in the advisory timeframe and curing those shortfalls when necessary. When identifying potential shortfalls in the advisory timeframe, the CAISO must properly estimate the amount of resources available to meet the RSE. This is because some resources may make themselves available between when the CAISO must make cure decisions and when it runs the binding RSE. Failure to properly estimate the amount of this supply that will become available could result in curing shortfalls that did not actually exist or failure to cure when shortfalls did exist. Either outcome could be costly.

The CAISO should expand this initiative’s scope to include how the costs of curing shortfalls and the costs of RSE failures will be allocated. As CalCCA understands it, cost allocation has been scoped into the RA Modeling and Program Design initiative. The CAISO should move these scope items into this initiative instead, as the causes of the need for the CAISO to cure, and the causes of RSE failures, extend beyond the RA program.

With these considerations in mind, CalCCA makes the following recommendations:

• The CAISO should pursue its third option to mitigate shortcomings with the 9 a.m. advisory run. That is, the CAISO BAA quantifies volumes expected from RA resources between 9 a.m. and 10 a.m. and uses such estimates to supplement advisory RSE results.
• The CAISO should use the hourly approach to supplement advisory RSE results with expected RA volumes. To determine hourly estimates of energy-limited resources, the CAISO should use the methodologies outlined on Slide 17 of the CAISO’s presentation, including Option A or Option B for energy storage.
• The CAISO should account for unoffered reliability demand response resources (RDRR) in the RSE when the CAISO is expecting energy emergency alert (EEA) conditions in real-time.
• The CAISO should account for short-start strategic reliability reserve (SRR) resources the same way the CAISO proposes to account for RDRR in the RSE, meaning if the CAISO expects an RSE shortfall and the CAISO expects EEA conditions, then the CAISO should adjust the RSE eligible supply to include SSR capacity.  
• The CAISO should revise the scope of this initiative to include cost allocation.

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

As the CAISO notes, the 9 a.m. advisory RSE run is an important run because (1) it uses the final demand forecast, imbalance reserve requirements, and ancillary service requirements, (2) uses final VER forecasts, and (3) still leaves time for the CAISO to address potential shortfalls revealed in the advisory run. Therefore, it is the best run to use to determine whether the CAISO BAA needs to take actions to cure potential shortfalls in the binding RSE run at 10 a.m.

The CAISO also flags potential issues with the 9 a.m. advisory run that may make it challenging for the CAISO to accurately determine whether the CAISO will have a shortfall in the binding run and at what magnitude that shortfall will be. These challenges include (1) the 9 a.m. advisory run does not reflect supply offers submitted between 9 a.m. and 10 a.m., and (2) the 9 a.m. advisory run does not reflect high priority exports submitted between 9 a.m. and 10 a.m. The CAISO should pursue its third option to mitigate these shortcomings with the 9 a.m. advisory run. That is, the CAISO BAA quantifies volumes expected from RA resources between 9 a.m. and 10 a.m. and uses such estimates to supplement advisory RSE results. Options 1 and 2 rely on modifying the timeline scheduling coordinators (SC) have in place for submitting bids or having bids inserted, which may not result in the desired outcome because it involves relying on voluntary actions by SCs or having SCs override CAISO actions.

Other options for mitigating shortcomings with the 9 a.m. advisory run include quantifying supply that has bid in by 9 a.m. plus bids that can be expected from resources subject to bid insertion. The effectiveness of this option depends on what portion of RA resources are subject to bid insertion. The CAISO could alternatively move the advisory RSE run back to 9:30 a.m. as the CAISO data suggests a vast majority of bids are received by 9:30 a.m. The effectiveness of this option will depend on whether half an hour is enough time to take action if a shortfall is identified in the 9:30 a.m. advisory RSE run.

The hourly approach to supplement advisory RSE results with expected RA volumes is the right approach because the RSE is run at hourly granularity. To determine hourly estimates of energy-limited resources, the CAISO should use the methodologies outlined on Slide 17 of the CAISO’s presentation, including Option A or Option B for energy storage. These options best reflect how storage can be expected to dispatch. Option B would minimize RSE deficiencies, and if RSE failures typically happen during the highest price hours, Option A and Option B would effectively be the same.

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

RDRR have the option but are not required to offer into the day-ahead market. RDRR is required to offer in the real-time market upon the CAISO declaring an EEA. The CAISO should account for unoffered RDRR in the day-ahead RSE when the CAISO is anticipating EEA conditions in real time. The CAISO’s approach outlined on Slide 20 appears to accomplish this objective. Regarding the stated complications associated with accounting for unoffered demand response on Slide 21:

• The CAISO is best equipped with information about available supply and resources in the DA timeframe and can forecast EEA conditions based upon that information.  This is the same basic load and resource data used to perform RUC and should be used for this purpose as well. 
• The CAISO should confirm that the investor-owned utilities, who operate the RDRR programs, still provide the CAISO with daily RDRR availability. This information can inform the quantity of RDRR available and prevent double counting. 
• The CAISO should reflect energy limits allocating RDRR in a manner that minimizes RSE shortfall. For example, if there is an RSE shortfall in five hours (but RDRR can only be used for four hours) and allocating RDRR in the first four hours results in an RSE shortfall of 100 MW and allocating RDRR in the last four hours results in an RSE shortfall of 150 MW, then the CAISO should allocate the RDRR in the first four hours of the shortfall.

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

The Issue Paper contemplates how to account for SRR in the RSE given SRR resources that are long-start will be committed prior to the RSE but short start RSE resources will not. Therefore, it is not known whether short-start SRR resources will actually be available for the CAISO to use.

Long-start SRRs will be committed prior to 10 a.m. day-ahead and, therefore, will submit offers into the day-ahead market. Therefore, long-start SRR resources should count towards the CAISO BAA’s RSE once they are committed.

The CAISO should also account for short-start SRRs in the RSE. Short-start SRRs, while not committed prior to the day-ahead market, is supply that will be available to the CAISO BAA in real-time under emergency conditions. Ignoring short-start SRR resources in the RSE could result in the CAISO failing the RSE when it should have passed. The CAISO should account for short-start SRR resources the same way the CAISO proposes to account for RDRR in the RSE, meaning if the CAISO expects an RSE shortfall and the CAISO expects EEA conditions, then the CAISO should adjust the RSE eligible supply to include SSR capacity.  

5. Provide your organization’s comments on Chapter 4: curing remaining upward RSE shortfalls: *

The CAISO puts forth a potential process for curing the CAISO BAA’s RSE position when the 9 a.m. advisory run identifies an upward RSE shortfall. This process would follow these steps: (1) calculate the 9 a.m. RSE position, (2) if there is an upward RSE shortfall, account for RDRR and SRR capacity where applicable, and (3) if there is still an upward RSE shortfall after accounting for RDRR and SRR, exceptionally dispatch units using the CAISO’s existing authority. CalCCA supports these steps.

The CAISO is missing a step, however, that must be defined to have a complete process. This missing step is cost allocation for allocating costs of curing RSE shortfalls and allocating costs and revenues associated with RSE failures.  The CAISO should revise the scope of this initiative to include cost allocation. This includes cost allocation of the costs to cure forecasted RSE shortfalls and costs and revenues associated with RSE failure penalties. The CAISO includes in the scope of the RA Modeling and Program Design initiative the alignment of cost and benefit allocation with causation associated with the EDAM RSE, as a result of a deficiency or procurement of cure capacity. The CAISO should move this scope item from the RA Modeling and Program Design initiative to this initiative. The causes of EDAM RSE failures are not solely attributable to LSE RA deficiencies, so it makes more sense to include this topic in this initiative that has a broader focus than solely RA. Additionally, opportunities to cure EDAM RSE failures will differ from those used to cure RA deficiencies given the differences in the timeframe for identifying and curing RA deficiencies in the year-ahead and month-ahead and the timeframe for identifying and curing EDAM RSE failures in the days prior to the trade date.

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

CalCCA has no comments at this time.

7. Additional comments:

CalCCA has no additional comments at this time.

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

CDWR overall supports CAISO’s efforts to prepare for its role as an EDAM participating BAA and to properly account for resources to pass its resource sufficiency evaluation (RSE).  As explained further below, CDWR believes the short-start strategic reliability reserve (SRR) resources in the Electricity Supply Strategic Reliability Reserve Program (ESSRRP) can be used to reduce the RSE obligation, but further discussion is needed to clarify which BAA or BAAs will receive the benefit.

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

CDWR has no comment at this time. 

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

CDWR has no comment at this time. 

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

The CAISO should include in its discussion all programs under the state of California’s Strategic Reliability Reserve.  This includes the ESSRRP overseen by the Statewide Water and Energy Office at CDWR (which is separate and apart from the State Water Project) as well as two additional programs at the California Energy Commission: the Demand Side Grid Support Program and the Distributed Electricity Backup Assets Program.   Currently the Issue Paper only focuses on the ESSRRP and its generation assets (owned and under contract) in Tables 2 and 3.  The ESSRRP is funded through 2030/2031 whereas the contracts for its assets have varying end dates and some may be extended. 

As a state-funded program, the ESSRRP seeks to serve state-wide needs during extreme events balanced by physical capabilities and constraints.  CDWR expects the short-start resources in the ESSRRP to start submitting bids when any of the Balancing Authorities (BA) with significant load in California declare an EEA Watch or higher.  These BAs are: BANC, CAISO, IID, LADWP, and TID.  For example, if CAISO declares an EEA Watch, all short-start resources in the ESSRRP will submit real-time bids into the WEIM regardless if the unit is located in CAISO or not.  The WEIM will then optimize the need for the resources across the system or manual BA to BA transfers may be initiated for a non-market BA.  Therefore, it may be inappropriate to count each ESSRRP short-start unit as “belonging” to any single BA or only its host BA.  (Long-start resources are not similarly situated since each resource can only respond to the operational orders of its host BA.)  As proposed by the Issue Paper, ESSRRP resources share similarities with RDRR and may be accounted for by reducing the RSE obligation.  However, the fact that resources in any of the 5 major California BAs can respond to any EEA Watch or higher declaration from the same BAs, is a complication that requires more discussion.   

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

CDWR has no comments at this time. 

7. Additional comments:

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

The Council appreciates this opportunity to comment on the CAISO Day-Ahead Sufficiency issue paper.  These comments solely address Chapter 2: Accounting for Reliability Demand Response Resources.  As Resource Adequacy (RA) resources, the CAISO should account for Reliability Demand Response Resources (RDRRs) in the RSE; otherwise, the CAISO would be at risk for RSE deficiency penalties despite having no actual shortage of RA capacity.  The Council suggests that RDRRs reduce the RSE when an EEA Watch (or greater) is in effect or when the CAISO anticipates that an EEA event could be called for the following day.

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

The Council reserves comment.

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

As an initial point, Reliability Demand Response Resources (RDRRs), which are the CAISO demand response (DR) market product for the IOUs’ emergency DR programs, Base Interruptible Program (BIP) and Agricultural Pumping – Interruptible (AP-I), are rightfully counted as Resource Adequacy (RA) capacity because they meet the CPUC’s criteria to be counted as such.  As RA resources, they should also be accounted for in some way in the RSE.  Choosing not to account for RDRRs in the RSE would unnecessarily put the CAISO BAA at risk of financial penalties for an RSE deficiency despite having no actual shortage of RA capacity. 

Furthermore, the CAISO has already committed to accounting for RDRRs in the RSE in its Extended Day Ahead Market (EDAM) Final Proposal, which states:

The proposal would allow EDAM BAAs to represent load modification programs, or supply types that can only be utilized during real time emergencies, through a demand forecast adjustment similar to that used in the WEIM; these modifications will be utilized in both the EDAM RSE and the RUC process. [footnote removed] The demand forecast adjustment represents an expectation and a commitment the EDAM BAA will utilize these programs in real time if forecasted conditions materialize; effectively these programs becomes a part of the an EDAM BAA’s day-ahead plan. The market operator will review load modifications made to the EDAM RSE requirement against demand response utilization in the real-time to ensure this functionality is not being used to pass the EDAM RSE erroneously. If this functionality is being misused, the market operator will consider limitations to this functionality and potential load bidding rules in the IFM. The objective of this is to prevent an entity from manipulating the EDAM RSE requirements for purposes of passing the test and avoiding the potential surcharge, while procuring excess supply in the EDAM to avoid using the demand response programs.  

The existing rules regarding use of the ISO’s reliability demand response resource (RDRR) limits these resources’ ability to participate in the day-ahead market. If advisory EDAM RSE results indicate a potential inability for the ISO BAA to meet its next day obligations, the ISO could modify its forecast in the extended day-ahead market and the RUC. This will result in the market not procuring energy, imbalance reserves, or reliability capacity up to its full, unmodified, day-ahead forecast, but it would allow the ISO BAA to pass the EDAM RSE and fully participate in the day-ahead market. The ISO BAA would then have RDRR bids enabled into the real-time market for the same intervals ensuring the supply is available for the real-time market’s optimal use. (EDAM Final Proposal, at pp. 69-70)

The question, therefore, is to determine the most appropriate way for RDRRs to be accounted for in the RSE when they are primarily only activated under emergency conditions. 

Pursuant to CPUC Decision 23-06-029, the CAISO may activate RDRRs under an EEA Watch which is typically triggered when the Residual Unit Commitment (RUC) process indicates that one or more hours in the day-ahead may be energy deficient, but can also be triggered in the day-of if a sudden onset event occurs.[1]  When there is no CAISO emergency in effect, RDRRs are not needed to reduce the RSE because other Resource Adequacy resources should be sufficient to meet the RSE.  However, when an EEA Watch (or greater) is in effect or when the CAISO anticipates that an EEA event could be called for the following day, the CAISO should reduce the RSE by the available amount of RDRR.  The CAISO can exceptionally dispatch RDRRs once they are activated, so even if the real-time CAISO market does not reach $950/MWh, they can still be utilized. 

Should there be any concern that RDRRs would be counted in the RSE only part of the time, it should be noted that not every other RA resource will be needed to meet the RSE when load forecasts are lower than normal.  Alternatively, the CAISO could reduce the RSE with RDRRs during all hours when these resources are available but there would be no guarantee that the necessary EEA event would occur to activate them. 

The CAISO has requested feedback on four specific details.  The Council attempts to address some of them here:

The ISO BAA will need information each morning to calculate the quantity of available RDRR capacity that has not voluntarily submitted a day-ahead offer as of 9 a.m.

The CAISO could perform this calculation by subtracting the amount of energy during which there is a day-ahead offer (perhaps averaged across the hours bid) from the amount of credited RDRR capacity for the same hours. 

The ISO would like to confirm that RDRR scheduling coordinators, when voluntarily submitting day-ahead offers, will continue to do so before 9 a.m. This will prevent RDRR capacity from being inadvertently double-counted as both RSE supply and a reduction to the RSE obligation.

To the Council’s knowledge, only IOUs are RDRR scheduling coordinators.

The ISO would like to discuss how energy limits to RDRR capacity (i.e., max run times) should be reflected in the RSE adjustment. More specifically, if the ISO BAA at 9 a.m. expects upward RSE shortfalls in multiple intervals, for which intervals should the RSE be reduced?

Referring to the PG&E tariff for its Base Interruptible Program as an example, events are limited to six hours each day, capped at 10 events per calendar month.  As an initial proposal, the Council suggests that the CAISO have some flexibility in how it applies the six hours of RDRR availability in the RSE in order to maximize the benefits in conjunction with other resources.  For instance, if there are shortfalls in multiple intervals of a day, the optimal allocation of the six hours may be to center them around the largest shortfall if the six-hour availability cannot straddle both intervals.  Otherwise, if the two intervals are short enough and are close enough in the day, then it may be optimal to overlay the RDRR availability over both. Even then, the CAISO’s hands should not be tied in the event that unforeseen circumstances dictate that the RSE adjustment should be applied in a different manner. 

Another factor the CAISO may need to consider is how the IOUs apply the RA credit associated with their RDRRs under the Slice-of-Day framework.  Using the PG&E BIP example above, it’s likely that the RA credit will be applied during the Availability Assessment Hours (AAH) in order to compliance with CPUC RA availability requirements for DR resources.  This does not necessarily prevent the CAISO from counting RDRRs outside of the AAH because the BIP is available throughout the day, but if the hourly slices of credited RA will play a role in the CAISO’s consideration of the broader issue of accounting for RDRRs in the RSE, this may be a factor.   

The ISO would like to discuss the implications of any RSE reductions on the residual unit commitment (RUC) process.17 More specifically, the ISO would like to discuss whether it should reduce its RUC procurement target by an amount equal to the RSE reduction quantity.

As explained above, the RUC is needed to identify when an EEA event is warranted, so it would not be appropriate to reduce the CAISO Forecast of CAISO Demand by the amount of available RDRR because doing so would risk suppressing the calling of these events which could, in turn, have detrimental reliability impacts.     

[1] Operating Procedure 4410, Section 3.6.1.

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

The Council reserves comment. 

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

The Council reserves comment. 

7. Additional comments:

N/A

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

Please see the linked comments from the Department of Market Monitoring.

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

Please see the linked comments from the Department of Market Monitoring.

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

Please see the linked comments from the Department of Market Monitoring.

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

Please see the linked comments from the Department of Market Monitoring.

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

Please see the linked comments from the Department of Market Monitoring.

7. Additional comments:

Please see the linked comments from the Department of Market Monitoring.

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

Please see NCPA’s comments in response to question 2. 

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

NCPA understands that without updates to bidding processes and timelines, 9AM advisory RSE results may only factor in approximately 75% of total bid-in capacity. One suggestion, if 75% is consistent, is for CAISO to set advisory runs at 75% of need, similar to how annual system RA requirements are only set to 90%.

Another suggestion is to run the advisory RSE closer to 10AM, say 9:30 AM. NCPA believes good utility practice would prevent SCs from submitting bids at the very last minute. There must be some buffer and NCPA would like CAISO to better gauge what that is while recognizing there must be a minimum buffer to run the advisory RSE. How long is that? Can the RSE process be accelerated?

Of CAISO’s three proposals:

1. RA resource SCs submit day-ahead offers by 9AM with ability to make updates until 10AM
2. CAISO BAA inserts bids for RA resources at 9AM with ability for SC to overwrite until 10AM
3. CAISO BAA quantifies volumes expected from RA resources between 9AM and 10AM, and uses such estimates to supplement advisory RSE results

NCPA supports proposal three (3). Timelines are already too tight to require SC to submit bids by 9AM and SCs don’t have time to submit multiple versions of bid sets if they can avoid it. NCPA does not support advance bid insertion by CAISO without further clarification of what assumptions will be used to develop inserted bids[1]. There could be significant financial and operational consequences if an SC can’t overwrite inserted bids with its preferred bids for whatever reason.

CAISO’s quantification performed in its proposal 3 should use best case scenarios in order to ensure it is not triggering invalid deficiencies and procurement. For example, if an RA resource isn’t materializing then CAISO must look for and account for any resource that may be replacing it such as non-RA port or bids in excess of RA obligations from another resource in the SC’s portfolio.

[1] For example, a Load-Following Metered Subsystem is not subject to certain generated bid requirements, and NCPA would like to ensure such existing practices are not negatively impacted by the proposal to insert bids prior to the close of the DAM process.

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

No comment at this time.  

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

No comment at this time.  

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

No comment at this time.  

7. Additional comments:

No comment at this time.  

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

PG&E appreciates the opportunity to offer its comments on the Day-Ahead (DA) Sufficiency issue paper. PG&E’s comments can be summarized as follows:

Frequency of EDAM RSE Failures

PG&E questions the extent of the 9:00 a.m. problem. CAISO presents data that implies a substantial problem, that by 9:00 a.m. CAISO will still be missing 25% of the bids it can expect to receive by 10:00 a.m., but it stops short of proving it. To get a more realistic picture of the significance of the missing supply at the 9:00 a.m. DA timeframe, PG&E requests an estimate of RSE failures based only on the bids received by 9:00 a.m. and 10:00 a.m. PG&E is not opposed to discussing possible solutions, it just wants to ensure this is a real problem that needs solving first.

Solving the Missing Supply Problem

Assuming EDAM RSE failures are a frequent enough problem that it needs to be solved, PG&E appreciates CAISO identifying existing tools (i.e. bid insertion) to address the challenge and would like to understand more about how that is implemented.[1]

RDRR and SRR

PG&E appreciates the CAISO developing ideas on how to incorporate Reliability Demand Response Resources (RDRRs) and Strategic Reliability Reserves (SRR) into the RSE, which PG&E agrees is important.

Tagging DA Imports

PG&E is concerned that the failure to tag DA imports could, by itself, cause an EDAM RSE failure. An EDAM RSE failure should only occur if the untagged MWs would cause CAISO to fall below the RSE obligation.

LSE-Specific RSE

PG&E encourages the CAISO to develop the processes necessary to perform an EDAM RSE specific to each Load Serving Entity (LSE) within CAISO thereby providing an understanding of the challenges faced and ways to address them in the future. CAISOs ability to pass the RSE is the top priority, but a close second is the individual LSE contributions to that effort and how to drive appropriate incentives and behaviors within the market.

[1] DA Sufficiency Issue Paper p. 7

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

Frequency of EDAM RSE Failures

PG&E questions the extent of the 9:00 a.m. problem. CAISO presents data that implies a substantial problem, that by 9:00 a.m. CAISO will still be missing 25% of the bids it can expect to receive by 10:00 a.m., but it stops short of proving it. To get a more realistic picture of the significance of the missing supply at the 9:00 a.m. DA timeframe, PG&E requests an estimate of RSE failures based only on the bids received by 9:00 a.m. PG&E is not opposed to discussing possible solutions, it just wants to ensure this is a real problem that needs solving first.

PG&E suspects the CPUCs RA Program requirements (1 in 2 load forecast, plus an additional 15% Planning Reserve Margin (PRM)) as well as other program requirements potentially provides sufficient capacity to meet the RSE obligation, even when 25% is missing at the 9am advisory RSE timeframe. PG&E would like to understand how large and when this may rise to a problem before designing a change in practice.

Solving the Missing Supply Problem

PG&E acknowledges a potential issue outlined in the DA Sufficiency Issue Paper, that CAISO might lack sufficient supply bids to evaluate its RSE position at the 9:00 a.m. advisory RSE timeframe. PG&E appreciates CAISO identifying existing tools (i.e. bid insertion) to address the challenge and would like to understand more about how that is implemented.[1] We look forward to future discussions on this topic to understand how an idea like bid insertion might work.

[1] Id.

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

PG&E appreciates the CAISO developing ideas on how to incorporate RDRRs into the RSE. Without taking a firm position at this point on exactly how that ought to be done, PG&E agrees that RDRR needs to be counted.

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

PG&E believes it is important to count both the long-start and the short-start Strategic Reliability Reserve (SRR) resources. As the CAISO notes, short-start resources are not required to bid into the DAM and will only submit bids into the RTM if the CAISO declares an EEA Watch or worse. Nevertheless, PG&E believes it is appropriate and important to account for these resources in some way. The RSE is intended to check that each BAA is coming into EDAM with sufficient capacity under forward contract to ensure that no one BAA is “leaning” on the market. Short-start SRRs are resources that have been contracted for on a forward basis, and therefore ought to be included, in some way, in the EDAM RSE.

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

PG&E would like clarification on a potential problem having to do with DA import tagging. It is PG&E’s understanding, based on follow up discussions with CAISO staff, that a failure to tag DA imports can, by itself, cause an RSE failure.

Suppose a given EDAM BAA has 100 MW of total RSE obligation (load forecast + Imbalance Reserves (IR) + Ancillary Services (AS) + high priority exports) and 120 MWs of RSE eligible supply. Suppose 12 MWs fails to tag. The EDAM BAA is still clearing its RSE obligation by 8 MWs, and yet the BAA would still lose its Western Energy Imbalance Market (WEIM) diversity benefit, making it more difficult for it to pass the WEIM RSE and possibly subjecting it to unnecessary WEIM RSE failure penalties.[1] Here’s an illustration of the problem:

Is this understanding accurate? In PG&E’s view, an EDAM RSE failure should only result if the MW amount that failed to receive a tag would actually put the BAA below the total RSE obligation. Otherwise, EDAM is issuing potentially unnecessary penalties.

[1] This may take the form of WEIM RSE surcharges in the form of assistance energy, or worse, if the BAA has not signed up for assistance energy or if there is no additional assistance energy available, then the BAA may have its imports physically capped, which could cause blackouts.

7. Additional comments:

PG&E believes that CAISO needs to develop the processes necessary to perform an EDAM RSE specific to each LSE within CAISO so that it can identify which LSEs are responsible for an RSE failure. If CAISO faces an RSE shortfall for reasons that are outside of our control, then there is not much to be done about that. For example, the load forecast may exceed California’s planning standards. Or an excessive number of resources may be on outage. But there may be instances where CAISO faces an RSE shortfall for reasons that are within our control. For example, there may be an RSE shortfall because different LSEs are adhering to different planning standards, or because some LSEs may have had trouble procuring up to their given planning standards. If either of those is the case, then that may warrant further policy discussions about how California ensures resource sufficiency. CAISO developing processes to evaluate each LSE’s load forecast and supply could potentially provide valuable insights into systemic problems with how California ensures resource sufficiency. What is more, as the market operator, CAISO is optimally situated to do this kind of level-setting analysis for all LSEs within the EDAM context.

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

The most straightforward approach for enhancing accuracy of the 9:00 a.m. advisory Resource Sufficiency Evaluation (“RSE”) results for the CAISO balancing authority area (“BAA”) would be to require Scheduling Coordinators (“SCs”) for resource adequacy (“RA”) resources to submit bids for all RA capacity included in any load serving entity’s (“LSE”) monthly showing for the relevant month by 9:00 a.m., with the opportunity to update the bid prices until 10:00 a.m.  The Six Cities also recommend implementing a requirement that bids for high priority exports be submitted by 9:00 a.m., subject to modification of the bid price or reduction in volume of the export by 10:00 a.m.  The Six Cities would not oppose allowing the CAISO to insert bids for shown RA resources at 9:00 a.m., subject to modification of the bid price (but not the capacity volume) until 10:00 a.m.

At this time, the Six Cities do not have detailed suggestions for how Reliability Demand Response Resources (“RDRRs”) or Strategic Reliability Reserve (“SRR”) resources should be accounted for in the Day-Ahead (“DA”) RSE test.  In considering the appropriate treatment of RDRR and SRR capacity, however, the CAISO should adhere to a principle of comparable treatment of the different types of demand response and reserved capacity resources relied upon by BAAs participating in the EDAM for RSE purposes.

The Six Cities do not oppose the concept of developing appropriate incentives for timely adherence to tagging requirements for DA import awards.  For multiple reasons, however, the Six Cities strongly oppose the suggested approach of quantifying the cost to the CAISO BAA of being removed from the Western Energy Imbalance Market (“WEIM”) RSE pool (i.e., the lost diversity benefits) arising from a failure to tag and allocating such costs to SCs that fail to tag or replace imports by the five hour ahead deadline. 

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

In the Six Cities’ view, the most straightforward approach for enhancing accuracy of the 9:00 a.m. advisory RSE results for the CAISO BAA would be to require SCs for RA resources to submit bids for all RA capacity included in any LSE’s monthly showing for the relevant month by 9:00 a.m., with the opportunity to update the bid prices until 10:00 a.m.  Such a requirement would not appear to impose any hardship on SCs in light of the obligation to submit bids for all shown RA capacity, especially if the bid price can be modified until the generally applicable deadline for DA bids at 10:00 a.m.

In addition, in view of the impact of high priority exports on the CAISO BAA’s ability to pass the DA RSE test, the Six Cities recommend implementing a requirement that bids for high priority exports be submitted by 9:00 a.m.  The Six Cities would support allowing high priority export bids submitted by 9:00 a.m. to be modified until 10:00 a.m. either by changing the bid price or by reducing (but not increasing) the volume of the export.

The Six Cities would not oppose adoption of the second potential approach identified on slide 13 of the December 18, 2023 stakeholder call presentation, allowing the CAISO to insert bids for shown RA resources at 9:00 a.m., subject to modification of the bid price (but not the capacity volume) until 10:00 a.m.  Again, such an approach does not appear to represent an unreasonable expansion of the must-offer requirement applicable to designated RA resources.

Other approaches for estimating additional volumes from RA resources between 9:00 a.m. and 10:00 a.m. discussed during the December 18^th stakeholder call seem unnecessarily complex and unlikely to lead to a significantly more accurate estimate of RA capacity available to the CAISO BAA at the time of the binding 10:00 a.m. RSE test.

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

At this time, the Six Cities do not have detailed suggestions for how RDRRs should be accounted for in the DA RSE test.  In considering the appropriate treatment of RDRR capacity, however, the CAISO should adhere to a principle of comparable treatment of the different types of demand response resources relied upon by BAAs participating in the EDAM for RSE purposes.  RDRR capacity should not be subject to more stringent eligibility or market participation requirements than demand response resources counted for DA resource sufficiency by other BAAs participating in the EDAM.

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

At this time, the Six Cities do not have detailed suggestions for how SRR resources should be accounted for in the DA RSE test.  Again, however, RSE counting rules should adhere to a principle of comparable treatment, for RSE purposes, of reserved capacity relied upon by BAAs participating in the EDAM.  SRR capacity should not be subject to more stringent eligibility or market participation requirements than types of reserve capacity counted for DA resource sufficiency by other BAAs participating in the EDAM (for example, Available Balancing Capacity or capacity made available through the Western Resource Adequacy Program).

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

In light of the potential adverse consequences to the CAISO BAA of failures to tag or replace DA import awards by five hours prior to scheduled delivery, the Six Cities do not oppose the concept of developing appropriate incentives for timely adherence to tagging requirements.  For multiple reasons, however, the Six Cities strongly oppose the suggestion, discussed at pages 15-16 of the Day-Ahead Sufficiency Issues Paper and summarized at slide 29 of the December 18^th stakeholder call presentation, to quantify the cost to the CAISO BAA of being removed from the WEIM RSE pool (i.e., the lost diversity benefits) and allocate such costs to SCs that fail to tag or replace imports by the five hour ahead deadline.

A consequence or outcome intended to provide an incentive for desired behavior should be predictable, consistently applied, and applied to actions within the reasonable control of entities the incentive seeks to motivate.  The suggested allocation of incremental costs incurred by the CAISO BAA for failures to tag or replace DA import awards does not satisfy the foregoing criteria for an effective incentive.  It is not possible to predict within a reasonable range what incremental costs the CAISO would incur as a result of a failure to tag or replace an import award, because the incremental costs would depend on overall CAISO and WEIM conditions.  The suggested allocation of incremental costs would not be consistently applied if, as appears to be the case, the CAISO proposes to apply the allocation of incremental costs only when an SC representing an internal LSE Purchasing Selling Entity fails to submit a timely E-Tag for an import designated to serve identifiable load.  It is not clear if or how the CAISO would apply the allocation of incremental costs to tagging failures by external sellers bidding generally into the DA Market.  Further, internal LSEs may have no control over submission of E-Tags when an external entity is the responsible Purchasing Selling Entity.

Allocating costs arising from lost diversity benefits to some SC(s) that failed to tag or replace DA import awards by the five hour ahead deadline, thereby leading to CAISO BAA exclusion from the passing pool for the WEIM RSE, would not operate as an effective incentive.  Rather, it would constitute a penalty imposed on some, but not necessarily all, SCs that failed to meet tagging responsibilities.    Moreover, the suggested design of the penalty could result in extremely high costs being imposed on an SC for a mistaken failure to tag or replace a modest DA import award.  In discussion during the December 18^th stakeholder conference, CAISO staff confirmed that a failure to tag or replace even a small volume DA import award likely would lead to very large increases in CAISO WEIM RSE requirements (hundreds of megawatts or more).  Depending on the overall volume of resources available to the CAISO and the level of incremental costs to the CAISO BAA of meeting the increased RSE requirements, application of the penalty could impose costs on an SC that would be wildly disproportionate to the volume of untagged capacity and unduly burdensome for a small LSE.

For the same reasons, the CAISO should reconsider, through an additional stakeholder process, the appropriateness of the provision in the EDAM design excluding a sink BAA from the passing pool for the WEIM RSE as a result of any failure to tag or replace a DA import award by the five hour ahead deadline, without any regard to the volume of untagged capacity or the circumstances leading to the tagging failure (e.g., good faith error).  There should be serious consequences for intentional failures to tag DA awards, especially for significant volumes, but it is not appropriate to exclude a BAA from the WEIM passing pool for a tagging failure resulting from unintentional error or affecting insignificant volume. 

7. Additional comments:

The Six Cities have no additional comments at this time.

1. Please provide a summary of your organization’s comments on the Day-Ahead Sufficiency issue paper and December 18, 2023 stakeholder call discussion:

SCE was not aware that there's been modifications made to the questions in the comments template.  SCE's comments are in response to the questions included in the old comments template.  See SCE's comments attached.   

2. Provide your organization’s comments on Chapter 1: advisory RSE results and complementary information. Please include your organization’s perspective on the three ideas presented on slide 13 of the stakeholder call presentation:

See attachment. 

3. Provide your organization’s comments on Chapter 2: accounting for reliability demand response resources (RDRRs). If your organization recommends trying to account for unoffered RDRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

See attachment. 

4. Provide your organization’s comments on Chapter 3: accounting for strategic reliability reserve (SRR) resources. If your organization recommends trying to account for short-start SRRs in the day-ahead RSE, please include ideas on how this might be done and how the RSE adjustment should be reflected in the integrated forward market and residual unit commitment (RUC) process:

See attachment. 

6. Provide your organization’s comments on Chapter 5: incentives for tagging day-ahead imports. More specifically, please comment on whether additional tagging incentives, beyond the ability to re-supply, are needed for the CAISO BAA on EDAM Day 1:

See attachment. 

7. Additional comments:

See attachment.