Comments on Revised draft final proposal and Sept. 2, 2022 stakeholder call discussion

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

Bonneville appreciate the CAISO’s continued efforts to enhance the Resource Sufficiency Evaluation and be responsive to stakeholder feedback. Bonneville supports the proposed changes with caveats. Bonneville continues to have concerns regarding the treatment of lower priority exports cleared by the HASP. While recognizing that there is not a perfect solution to the current issue, Bonneville would like to see the CAISO address the underlying structure and timing of its market processes that create the challenges with timing that rendered the approach proposed in the straw proposal infeasible.

Bonneville supports the proposal to provide energy assistance through the WEIM and requests specific metrics be reported in the ongoing monitoring for misuse.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

See responses to questions below 

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

Bonneville supports the proposal to not include load forecast adjustments as an obligation of the WEIM RSE. Regarding Load conformance, Bonneville appreciates the analysis conducted as part of Phase 1B to evaluate the impacts of load conformance in the CAISO. Bonneville recognizes the potential for the FRP enhancements to address some of the CAISO’s need for load conformance and looks forward to future analysis on long-term solutions for efficient market outcomes.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

Bonneville recognizes the interaction as described by CAISO’s analysis. Bonneville appreciates the inclusion of a numeric example of the interaction and resulting impact on the CAISO BAA’s incremental transfers. However, Bonneville continues to encourage the CAISO to examine and improve the interaction of its market processes.

Further, Bonneville is concerned that the CAISO BAA is removing all HASP LPT exports from HASP from its RS test, not just those relying on WEIM advisory imports or untagged HASP output (or other supply side sources that are not included in RS for CAISO). Bonneville recommends that the ISO differentiate between LPTs supported by CAISO non-RA capacity resources (should count towards CAISO’s RSE) and LPTs that are supported by advisory EIM imports (should not count in CAISO’s RSE). The approach proposed in the Draft Final Proposal potentially double-counts non-RA capacity resources assumed to support the export by counting it once for the CAISO BAA in its RSE and once for the sink WEIM BAA counting the energy.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

Bonneville appreciates CAISO staff’s efforts to find an alternate approach to that proposed in the Phase 2 Straw Proposal. Although both proposals present potential issues, Bonneville prefers the proposal presented in the Draft Final proposal as it works by reducing the likelihood of RS failure due to discounted LPT exports, this would allow the EIM (market) the opportunity to resolve the issue and make LPT export curtailments less likely.

As CAISO stated in the proposal “This issue is unique to the CAISO BAA because the HASP schedules hourly exports at the CAISO BAA intertie based on economic bids and self-schedules clearing in the market optimization process. The optimization can choose to meet this demand with either internal CAISO BAA resources, or with imports or WEIM transfers. Because of this, the CAISO BAA cannot ensure it has sufficient internal supply and imports to support LPT exports as the supply for the exports is coming from WEIM transfers.” Bonneville is concerned that the approach is made in an attempt to work around the issues created by CAISO’s market processes as described in the proposal.

Bonneville’s support for the proposed approach is predicated on a request that CAISO examine the issues in its market processes in a subsequent phase. Until the root of the issue is resolved in the market processes, the solutions will continue to be sub-optimal.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

Bonneville supports the proposal to change the E-TAG designation of the lower priority exports described in the proposal. Bonneville appreciate that this designation will provide visibility to other BAAs of the reduced firmness of the LPT exports. Bonneville looks forward to more details on implementation in the Draft Tariff language.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

Bonneville is supportive of the proposal to defer implementing the quantile regression approach in the capacity test until after the implementation of the quantile regression methodology has occurred in the flex ramp test as part of the FRP Refinements. Bonneville requests that the evaluation of the quantile regression in the flex ramp test and FRP be shared publicly prior to initiating a decision regarding implementing it in the capacity test.

Bonneville supports removing the intertie uncertainty adder permanently from the capacity test.  

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

Bonneville is supportive of the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfer cost in the deficient BAA’s LMPs. Bonneville encourages CAISO to implement this proposal prior to summer 2023 and evaluate the program following Summer 2023.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

Bonneville is supportive of the proposal. It is critical that this election remain optional to WEIM entities.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

Bonneville is supportive of the proposal to allocate assistance energy revenue pro-rata by net WEIM export transfer amount. Bonneville requests that CAISO let entities know what charge code the revenue and cost would be assigned. This information is essential to assessing sub-allocation of the revenue or expense through the OATT.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

Bonneville requests consideration of an escalation of the incremental transfer cost as a potential penalty for entities that utilize the WEIM assistance energy transfers excessively. Bonneville requests that the monitoring be regularly shared and reported on publicly and that CAISO commit to establishing rules around excessive use be developed in a future phase. The monitoring should include how frequently individual BAAs utilized the WEIM assistance energy transfers, the magnitude of assistance provided, and other actions to remedy the situation, e.g. the entity deployed ABC before use of assistance, the entity called an EEA, etc.  

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

Bonneville does have concerns about excluding element 4 “a change to the rules for tagging exports from the CAISO balancing authority area” from joint authority. Although this change only has immediate application to the CAISO BAA, it has the potential to impact the market more broadly.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

No comment

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

California Community Choice Association’s (CalCCA’s) comments on the WEIM RSE Phase 2 revised draft final proposal (Revised Draft Final Proposal) are limited to Section 5, Energy Assistance (EA). Specifically, the CAISO should clarify several aspects of the EA proposal to address: (1) how the CAISO will decide whether to opt in to the EA program, (2) whether EA properly incentivizes load-serving entities (LSEs) within CAISO to procure sufficient capacity; and (3) the mechanisms, cost allocation and relevant cost causation, incentives, and decision-making by Balancing Authority Areas (BAAs) where the BAA is composed of multiple LSEs like in the CAISO. 

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

Support with caveats, as set forth below.

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

No comments at this time.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

No comments at this time.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

No comments at this time.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

No comments at this time.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

No comments at this time.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

Section 5.1 does not sufficiently explain mechanisms, cost allocation and relevant cost causation, incentives, and decision making by BAAs where the BAA is composed of multiple LSEs such as in the CAISO. First, Section 5.1 is not clear on all of the locational marginal prices (LMPs) in the scenario depicted. The example in Section 5.1 appears to depict two nodes where there is a generation node from outside of the BAA, and what appears to be an aggregated node to serve the load inside of the emergency energy receiving BAA. While the example is clear on what happens to the LMP within the energy receiving BAA, it is not clear what happens to the price at the node where the generator was dispatched to provide emergency assistance. Only the Marginal Cost of Energy (MCE) is included, along with an indication of a $1,000 incremental transfer cost which appears to be accounted for as a Marginal Cost of Congestion (MCC). It would appear then in total that the LMP for the generator providing emergency assistance that the total LMP will also be $1,175. The example says nothing of what this LMP will mean to other generation providing energy that is serving local load and not providing emergency energy. Section 5.1 likewise does not indicate how the price at this LMP will enter into calculating the price paid by load in its DLAP pricing when a single node in the area is provided a transfer payment that is incorporated in the MCC of its node. Without answers to these questions, it is not clear what the total impact of this emergency energy is to the providing entity and what costs will need to be recovered.

In the case of a BAA where the BAA is the only LSE, decisions to use or not use emergency assistance are clear since the costs and alternatives are known to that entity who can make rational choices and for whom the costs will be incurred by all BAA customers. In the case of the CAISO where there are multiple LSEs and any single or combination of LSEs may be the cause of an RSE insufficiency, however, it is not clear that the costs to procure emergency energy follow cost causation principles. Since the example in Section 5.1 does not provide clarity about how the Default Load Aggregation Point (DLAP) costs will be calculated, one can only assume that the LMP will be factored into the costs and all LSEs in the DLAP will be charged for the emergency energy. It is therefore not clear how all load in the BAA will pay equally for this failure of the RSE, since it is not clear that the LMP at the import node will impact all of the DLAPs equally. Not accounted for is which entity caused the emergency energy to be necessary in the first place. In the CAISO, the resource adequacy (RA) process should provide sufficient energy from the RA capacity to pass the RSE. A failure of the RSE then is either: (1) the failure of an LSE to meet its RA requirements; (2) an outage of a resource shown as RA that is then unavailable to provide energy to the CAISO market; or 3) an unanticipated condition (forecast error, transmission outage, etc.) that causes the RA to be insufficient. It is not clear that each of these conditions mean that all load in the DLAP was the cause of the need for emergency energy, and therefore it is not clear that charging all load in the DLAP is consistent with cost causation principles. Further, when cost causation principles are not followed, it is unclear whether any entity will have an incentive to ensure that sufficient energy is made available to the CAISO to meet an RSE test. 

Finally, where the BAA is composed of multiple LSEs, Section 5.1 appears to leave the decision to participate in emergency energy provision up to the BAA. This means that LSEs who will pay the costs will not have an ability to choose whether to participate – rather, the decision to opt in or out  will be left up to the BAA. Combined with unclear cost allocation based upon cost causation principles, this leaves LSEs with insufficient ability to find and obtain alternative energy to provide to the market to make least cost decisions.

The CAISO should provide further information in Section 5.1 including how settlements will work for both the generator providing emergency energy, as well as the settlements for other generation at the same node as the generator providing emergency energy. In addition, the CAISO should clarify the cost allocation to all load receiving energy assistance including BAAs for which there are multiple DLAPs impacting LSEs within those DLAPs differently. The CAISO should also explain how these settlements are consistent with cost causation principles and provide sufficient incentive to all parties to find least cost solutions to curing an RSE insufficiency. Finally, the CAISO should describe how it  will make its own decision to participate in receipt of emergency energy on behalf of multiple LSEs who will be impacted by the costs of this decision. 

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

The logistics of opting in or out of the EA should be clarified by the CAISO. The Revised Draft Final Proposal provides that the election to utilize EA will be made in the CAISO Master File and any changes to that election will occur through the existing Master File process. However, the CAISO fails to explain its internal processes for deciding whether to opt in or out of the EA. For example, who makes the decision for the CAISO to opt in or out, and what are the parameters for making that decision? CAISO’s decision may subject all LSEs within the CAISO to the potentially high penalty prices. Therefore, the CAISO risks disincentivizing LSEs from procuring sufficient capacity to serve their load as they may face the penalty pricing if the CAISO opts in and fails the RSE, regardless of whether particular LSEs procured sufficient capacity.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

 No comments at this time.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

 No comments at this time.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

 No comments at this time.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

 No comments at this time.

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

Please see attached comments.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

Please see attached comments.

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

Please see attached comments.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

Please see attached comments.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

Please see attached comments.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

Please see attached comments.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

Please see attached comments.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

Please see attached comments.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

Please see attached comments.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

Please see attached comments.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

Please see attached comments.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

Please see attached comments.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

Please see attached comments.

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

See below

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

Support with caveats

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

 No objection

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

LADWP recognizes at times the CAISO BAA can have sufficient supply to meet its own obligations over the upcoming hour, but fail the WEIM RSE due to insufficient capacity to support the block hourly export transfers cleared through access to WEIM transfers. However, LADWP notes there was not a strong correlation between the volumes of WEIM import transfers and HASP exports in the analysis that was undertaken. As such, we do not think just counting high priority block hourly export transfers, day-ahead cleared lower priority exports as well as CAISO’s own demand in determining the CAISO BAA obligation in the WEIM RSE is appropriate, and would ask CAISO to explore other solutions, albeit more complex ones to address the problem. 

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

LADWP would ask CAISO to explore alternative solutions to the problem rather than simply excluding LPT. Furthermore, it is not clear to LADWP how it can be determined that a CAISO export is a result of WEIM transfers from some other EIM BAA versus internal generation. If that export is result of dispatching up CAISO internal generators, are those exports classed as HPT? Could CAISO clarify that point.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

Support

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

LADWP agrees with the treatment of uncertainty

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

No additional comments

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

No additional comments

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

No additional comments

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

LADWP believes if there is persistent misuse of WEIM to cure Real-time resource inefficiencies some form of administrative penalty similar to what is being contemplated in EDAM should apply

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

Agree with the classification

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

LADWP would ask CAISO to explain further how they will handle significant oversupply if there is no consequence.

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

NV Energy appreciates the opportunity to comment on the phase 2 draft final proposal. In particular, we support the inclusion of financial consequences for failure of the resource sufficiency evaluation (“RSE”) in this phase of the resource sufficiency (“RS”) enhancements for a proposed implementation date of June 1, 2023.  

FERC has stated that a tariff provision implementing a particular rate or practice that was found reasonable at one time does not preclude later reviewing the provision to determine whether it continues to be just and reasonable.[1] At the time Section 29.34(m) of the CAISO Tariff was adopted, establishing the freeze as a consequence for failing the RSE, PacifiCorp was the only participating EIM Entity. With the tremendous success of the EIM, currently 79% of the Western Interconnection load is now participating in the market. The expansion of the EIM has had a significant effect on the liquidity of the intra-day bilateral market as participating EIM Entities utilize excess capacity to participate within the EIM. This restricts the ability of a distressed EIM Entity to respond to a reliability challenge as available capacity in the bilateral market has been greatly reduced or taken to zero on the most critical of days.

In addition, events such as the 2021 Bootleg fire have demonstrated that an EIM Entity can go into a day expecting it is fully capable of meeting its forecasted load and passing the RSE only to have an event, or a series of events, pose a sudden and severe reliability challenge. As recognized by the Market Surveillance Committee (“MSC”), “the Western EIM FMM and RTD are potentially powerful tools for balancing load across the WECC to maintain reliability in uncertain operating conditions. In contrast, placing restrictions on the use of EIM transfers during unexpected operating conditions has the potential for problematic outcomes.”[2]  We agree with the MSC.

Having identified a significant reliability concern with the current CAISO Tariff and the failure consequences of the RSE, it is incumbent on the CAISO, the EIM Entities, and other stakeholders to implement a solution at the earliest possible date. If an EIM Entity has an EEA event and any resulting rolling blackouts could have been prevented by allowing access to available EIM supply at a scarcity price, our customers will have been greatly disserved. 

CAISO has proposed to implement changes to the resource sufficiency test consequences on June 1, 2023. The implementation date is of paramount importance to NV Energy and should be extremely important to all other EIM Entities in the West considering the implications that locked transfers could have on the reliability of the grid.

[1] See e.g., Maryland PSC v. PJM Interconnection, L.L.C., 123 FERC ¶ 61,169 at P 31 (2008), citing Ameren Services Co. v. Midwest Indep. Transmission Sys. Operator, Inc., 121 FERC ¶ 61,205 at P 33 (2007).

[2] See, Opinion on Energy Imbalance Market (EIM Resource Sufficiency Enhancements dated February 2, 2022 at 29. The report can be found at:  MSCFinalOpiniononEIMResourceSufficiencyEvaluationEnhancements-Phase1.pdf (caiso.com).

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

No additional comment. 

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

During the resource sufficiency enhancements phase 1 and phase 1B, CAISO conducted analysis on the relationship between the CAISO load conformance and the EIM transfers to determine if the load conformance increased the EIM imports into the CAISO BAA. The results of this analysis found that there was not a 1-to-1 relationship between the use of the load conformance and the EIM transfers. Therefore, CAISO does not propose any changes to the resource sufficiency test to incorporate the load conformance adjustments. NV Energy agrees with CAISO’s determination that the load conformance may increase internal generation along with increasing EIM imports and supports the proposal to not make any adjustments to the resource sufficiency tests.  

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

Currently, the hour ahead scheduling process (“HASP”) market awards exports based on supply bids, intertie bids, and advisory EIM market transfers. Currently, the resource sufficiency test does not count the advisory EIM market transfers that the HASP run utilizes to award market exports but does count the awarded exports against the CAISO BAA. CAISO proposes to not count the low priority transfers (“LPT”) HASP awarded exports in the resource sufficiency test. NV Energy understands this complicated issue that arises only for the CAISO BAA. Therefore, NV Energy supports the proposal to exclude the exports that are awarded from the HASP market when backed by EIM advisory transfers for the CAISO BAA.

CAISO has proposed to count the LPT exports that have cleared the day ahead process because these exports have cleared the day ahead market process and are more similar in nature to the bilateral market transfers that are counted for other EIM Entities. NV Energy also supports the proposal to count LPT exports that have been awarded following the day ahead process.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

CAISO proposes to not count the LPT exports that are awarded from the HASP market for their flexible ramping up test, because these exports could be awarded with EIM advisory transfers that are not included in the test on the supply side.  Additionally, CAISO proposes to include the LPT exports that are awarded from the HASP market for their flexible ramping down test, because these exports are awarded to market participants that are willing to take that supply.  NV Energy supports the proposal to exclude the LPT exports for the flexible ramping up test and the proposal to include the LPT exports for the flexible ramping down test.

CAISO is no longer proposing new rules that would discount the LPT exports that are counted as imports for EIM Entities in the resource sufficiency tests when receiving the HASP awarded LPT exports. NV Energy supports this change in the CAISO’s revised draft final proposal, because the resource sufficiency tests count all import capacity whether it is on firm or non-firm transmission. Therefore, counting the LPT import would be an equivalent treatment to a base schedule that is scheduled on non-firm transmission. Additionally, there is not enough time to update the base schedules in the proposed timeframe which would have made the ability to pass the resource sufficiency tests more difficult and confusing for the EIM Entity to determine what is needed in order to meet the resource sufficiency requirements. Furthermore, the previous discounting proposal could have caused or contributed to reliability issues within the receiving BAA.  Therefore, NV Energy supports the current proposal to continue counting HASP awarded LPT imports in the resource sufficiency tests.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

In the draft final proposal, CAISO states that all LPT exports be tagged as firm provisional and all high priority exports (“PT”) be tagged as firm. Additionally, CAISO proposes to treat LPT exports that are awarded in the day ahead market as a slightly higher priority than LPT exports that are awarded in the HASP market through a manual curtailment process. This would extend the market curtailment priorities in the CAISO tariff to manual curtailments. NV Energy supports the distinction that day ahead LPT exports be treated with a higher priority than LPT exports that are awarded in HASP.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

This fall the CAISO will implement changes to the Flexible Ramping Product (“FRP”) that will determine this uncertainty by using a quantile regression approach that is based on actual conditions rather than the current histogram approach. However, currently the net load uncertainty requirement for the resource sufficiency test is calculated by using a histogram approach that uses the last 40 week days and 20 weekend days of historical data to determine the requirement. Prior to carrying the FRP changes into the resource sufficiency test requirements, CAISO proposes to assess the performance of the quantile regression approach. Then at a later date, CAISO and stakeholders will consider whether or not to move forward with these changes to the resource sufficiency test net load uncertainty. NV Energy supports this approach and additionally proposes that stakeholders consider the possibility of using a planning reserve margin (“PRM”) for uncertainty that is used in the resource sufficiency tests rather than a precisely calculated requirement.  A planning reserve margin would reduce the accuracy of the test but would allow market participants the ability to be able to plan and procure the needed supply to pass the tests. This counter proposal is not meant to deter anything in this stakeholder process but should be considered at some future date.

As part of phase 1 of the resource sufficiency enhancements, CAISO removed the intertie uncertainty adder from the capacity test due to analysis that showed inaccuracies of this uncertainty component. During phase 2, CAISO proposes to permanently remove the intertie uncertainty adder from the capacity test because analysis showed that this uncertainty component was not a good predictor of future intertie uncertainty. NV Energy appreciates the analysis that CAISO performed to gain a better understanding of the intertie uncertainty component and supports CAISO’s proposal to permanently remove the intertie uncertainty component from the capacity test.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

CAISO proposes to give a BAA the optionality to import in additional EIM transfers during intervals that the BAA failed a resource sufficiency up test at a hurdle rate that is at the current bid caps. This proposal would ensure that all supply within the BAA has been exhausted prior to receiving any additional imports at the bid cap. In order to accomplish this result, CAISO has stated that any EIM Entity that elects this option would have their power balance constraint (“PBC”) prices doubled. Meaning that any market infeasibility that occurred for undersupply would result in prices that were at $2,000/MWh or $4,000/MWh depending on which price cap was effective at the time of the infeasibility. Additionally, CAISO has explained that there is a current market constraint that protects EIM Entities from exporting when a power balance constraint has been relaxed or if that Entity is dispatching available balancing capacity. This market constraint would protect EIM Entities from cascading reliability issues that could have otherwise resulted from other EIM Entities receiving additional market transfers. NV Energy strongly supports CAISO’s proposal to enhance the markets RS failure consequences during undersupply conditions and appreciates the additional information that CAISO provided to explain market protections that already exist.

CAISO proposes to defer their proposal for resource sufficiency down failure or oversupply conditions to a later date due to resource constraints needed to implement the undersupply proposal prior to Summer 2023. NV Energy appreciates CAISO for teeing up this topic and supports their determination to defer this for a future date.  This proposal should have a significant impact to the benefits of the EIM and NV Energy would support the removal of the test failure consequences at a later date.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

CAISO has proposed to provide EIM Entities with an option to elect to receive market transfers above the current capped amount when that EIM Entity fails the resource sufficiency up test. The optionality that CAISO proposed would be available to market participants through the Masterfile process. NV Energy supports the proposal to provide EIM Entities the option to elect financial consequences and supports the proposal to utilize the Masterfile to make this election. Additionally, NV Energy notes that it would be preferrable to have a real-time flag in BAAOP as an additional acknowledgment in electing to utilize this functionality. A real-time tool would be preferrable because errors or mistakes occasionally happen and this energy is not always needed, therefore, it would be preferrable to have a tool that would provide an extra layer to elect this option.  CAISO has stated that providing a real-time tool would delay the implementation of this important market feature. Therefore, NV Energy supports the Masterfile election process, but urges CAISO to consider at a future date an enhancement to add in a real-time market tool.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

CAISO has proposed to allocate the revenue pro-rata to the EIM Entities that are net exporters that have passed the resource sufficiency test. NV Energy is supportive of this proposal because it incentives a competitive outcome by incentivizing EIM Entities to pass the resource sufficiency tests by bidding in additional supply at the marginal cost of energy.  Furthermore, NV Energy supports the proposal to settle any assistance revenue through the BAA’s OATT. 

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

CAISO has not provided any proposal to penalize EIM Entities that frequently fail the resource sufficiency tests but proposes to monitor for misuse. NV Energy does not believe it is necessary to develop either the metrics for what constitutes frequent failure or the additional consequences at this time. Therefore, NV Energy supports CAISO’s proposal to monitor for misuse and develop administrative penalties at a later date if needed.   

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

No comment

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

No comment

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

Pacific Gas & Electric (PG&E) appreciates the opportunity to provide comments on the CAISO’s revised draft final proposal for the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 initiative.  A summary of PG&E’s comments on key issues is provided below.

• Excluding real-time LPT exports from CAISO BAA’s RSE obligations: PG&E supports the CAISO’s proposal to exclude real-time LPT exports from the CAISO’s upward RSE obligations.  This proposal appropriately corrects a RSE inaccuracy caused by the interaction of advisory EIM transfers and HASP-cleared exports that can lead to erroneous RSE failures for the CAISO BAA.  PG&E also requests that CAISO provide more transparency on the volume of cleared LPT exports as a data set on OASIS and in DMM’s monthly RSE reports.

• “Firm-provisional” tag for LPT exports: PG&E appreciates the CAISO’s intent to clarify the lower firmness of LPT exports through the new tagging rules.  PG&E requests clarification and consideration of several concerns related to the treatment of these exports:

• • PG&E agrees with CAISO that retaining operator discretion on LPT export curtailment is appropriate.  However, it is critical that CAISO also develop clear rules and operator procedures that allow market participants to better understand when certain exports may be curtailed.    
  • PG&E requests CAISO to confirm the proposal that LPT exports may be manually curtailed during an EEA2 (instead of an EEA3) and prior to arming CAISO load.
  • PG&E requests clarification of whether the proposal to carry reserves for LPT exports is consistent with the practices of other BAAs.
  • Lessons learned and analysis from the recent heatwave should inform the proposals affecting the treatment LPT exports.
  • CAISO should address the apparent inconsistency between the Tariff and BPM regarding the priority of HASP-cleared exports.

• Development of the EIM Assistance Energy product:  PG&E appreciates the concept of a market option to provide energy assistance through the EIM when excess supply is available.  However, PG&E is concerned that implementation of the current design would not achieve the desired end result of providing Assistance Energy after an RSE failure in an equitable and effective manner.  PG&E requests that CAISO consider different approaches on multiple design details, including embedding the cost of the Assistance Energy in LMPs, the optionality of BAAs to participate as suppliers of Assistance Energy, and the distribution of revenue to willing providers of Assistance Energy.  PG&E provides additional comments on this issue in response to question 8.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

                                                                                                                                                                                                                                  .

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

PG&E supports the CAISO’s proposal to not include load forecast adjustments in the RSE and appreciates its extensive analysis on this issue.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

CAISO’s analysis shows the potential for HASP-cleared exports to cause the CAISO BAA to inappropriately fail the RSE when it is actually resource sufficient.  PG&E supports the CAISO’s proposal to resolve this issue by excluding real-time LPT exports from the CAISO’s upward RSE requirements.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

PG&E supports the proposal to exclude real-time LPT exports from the CAISO BAA’s RSE requirements and asks for more transparency into the cleared volumes of LPT exports.

PG&E supports CAISO’s proposal to exclude real-time low-priority exports from the CAISO BAA’s RSE obligation.  This ensures that the CAISO BAA will not erroneously fail the RSE due to hourly low priority exports that are cleared by the market but may have been supported by advisory EIM supply (which does not count in the RSE and may never materialize). 

CAISO also proposes to retain existing rules for EIM entities to count LPT exports from CAISO as imports in their base schedule supply, despite recognizing the asymmetry in this approach.  PG&E believes greater transparency of the magnitude of LPT exports that are cleared by the markets and counted in EIM base schedules is appropriate.  CAISO should provide data on LPT exports in OASIS and DMM’s monthly RSE reports.  

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

PG&E requests CAISO to confirm the proposal that LPT exports would be manually curtailed during an EEA 2.

The intent of the “firm-provisional” tag for LPT exports is to clarify the lower priority of these exports relative to load and PT exports and increase the awareness of importing BAAs of the potential curtailment of these lower quality exports.  PG&E understands that the tagging requirement does not represent a change in curtailment priorities, but clarifies and raises the visibility of the existing priorities that operators would implement after HASP.   

CAISO also proposes to retain operator discretion to ultimately make manual curtailments when needed to preserve native load reliability.  On the September 2 stakeholder call, CAISO clarified that operators may curtail LPT exports when the CAISO BAA is in an EEA 2, instead of an EEA 3 as indicated in the revised draft final proposal.^[1]  PG&E asks CAISO to confirm this change and agrees that LPT exports should be curtailed prior to an EEA 3 and any arming of load. 

CAISO should have clear rules for market participants to understand when certain exports will be cut or honored.

PG&E understands the need for operators to have discretion and flexibility to preserve native load reliability and curtail low priority exports that cannot be supported.  At the same time, it is critical that CAISO has clear rules and operating procedures that will allow market participants to understand when certain exports may be curtailed.  This increased clarity is the intent of the “firm-provisional” e-tag.  To the extent that additional rules are needed to clarify curtailment priorities and operating procedures during emergencies[2], CAISO should look to align its treatment of different classes of CAISO exports with the practices of other BAAs to curtail exports depending on their firmness.

The proposal to carry reserves for LPT exports should be consistent with the practices of other BAAs.

PG&E would appreciate further discussion and justification for the CAISO’s proposal to carry reserves for all LPT exports.  CAISO customers would bear the costs of carrying additional reserves for LPT exports, and PG&E would appreciate additional information on whether this would be consistent with the practices of other BAAs.

Lessons learned and analysis from the recent heatwave should inform proposals affecting LPT exports and manual curtailments.

Before this proposal is finalized, it seems prudent to consider analysis and lessons learned from the recent heatwave and emergency conditions in CAISO.  While CAISO was able to maintain system reliability, PG&E would like to better understand the impact of low-priority exports on system reliability and any operator actions that were needed to curtail LPT exports.  CAISO should take the time to consider any improvements to its operating procedures or market rules based on any lessons learned on the impact of high volumes of LPT exports on system reliability during emergencies. 

CAISO should address the apparent inconsistency between the Tariff and BPM regarding the priority of HASP-cleared exports.

PG&E supports the comments made by the DMM^[3] and CPUC^[4] calling for clarification of an apparent discrepancy between the Tariff and the BPM for Market Operations, which gives HASP-cleared exports higher priority than CAISO load in the real-time market runs after HASP.  Implementation of the priorities in the BPM appear to conflict with the current and proposed rules in the Tariff to prioritize load over low priority exports cleared by HASP. 

[1] “EIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal.” September 6, 2022. Pg. 19 at http://www.caiso.com/InitiativeDocuments/RevisedDraftFinalProposal-WEIMResourceSufficiencyEvaluationEnhancementsPhase2.pdf  

[2] CAISO Operating Procedure 4420.  https://www.caiso.com/Documents/4420.pdf

[3] CAISO Department of Market Monitoring (DMM) comments on WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Straw Proposal.  July 28, 2022.  Pg. 3 at https://stakeholdercenter.caiso.com/Common/DownloadFile/fa860680-5897-445b-b9d9-090c293add8c

[4] California Public Utilities Commission – Energy Division comments on WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Straw Proposal.   August 09, 2022.  https://stakeholdercenter.caiso.com/Comments/AllComments/9f291a0f-3874-4627-b3f7-9ffe8ff51338#org-26e116f2-97b9-4ffd-89c8-1293c9193100

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

PG&E supports CAISO’s proposed treatment of uncertainty as interim measures and encourages CAISO to consider a simpler approach to uncertainty adders.

CAISO proposes to permanently remove the intertie deviation uncertainty adder and delay re-introducing the net load uncertainty adder until after CAISO has implemented and assessed the performance of the new quantile regression method for calculating net load uncertainty.  PG&E supports this approach as an interim measure.   PG&E also sees merit in DMM’s recommendation to consider simpler and more transparent uncertainty adders, as described in their comments on the Phase 2 straw proposal.[1]

[1] CAISO Department of Market Monitoring (DMM) comments on WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Straw Proposal.  July 28, 2022.  Pg. 1-2 at https://stakeholdercenter.caiso.com/Common/DownloadFile/fa860680-5897-445b-b9d9-090c293add8c

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

PG&E appreciates the concept of the Assistance Energy product but believes there are several implementation details in the current design that must be addressed.

PG&E appreciates the concept of leveraging the efficiency of the EIM to provide Assistance Energy when excess supply is available.  For the Assistance Energy product, CAISO proposes to apply a hurdle rate at an additional cost of $1,000 to $2,000 (equal to the prevalent bid cap) to the marginal cost of the incremental EIM transfers needed to cure an RSE undersupply failure.  PG&E understands that the higher LMPs resulting from this hurdle rate (reflected in the congestion component) are intended to reflect the scarcity conditions in the deficient BAA and help preserve an important incentive against inappropriate leaning in the EIM.

PG&E has several concerns with the current design and suggestions for improvement:

• Embedding the incremental transfer cost in the deficient area’s LMPs distorts market prices:
  • The additional transfer cost set at the prevailing bid cap of $1,000-$2,000 is an administrative cost that does not represent the marginal cost of supply.  PG&E requests consideration of an approach consistent with the EDAM RSE proposal to apply an after-the-market charge to cure RSE failures.

• The option to participate in the EIM Assistance Energy product should apply to both the importing and exporting BAAs:
  • PG&E is concerned that the current proposal does not allow EIM areas to elect whether to supply Assistance Energy – the proposal only considers whether BAAs elect to receive it.  PG&E believes additional attention should be paid to the reliability risks that may occur if export transfers of Assistance Energy push the exporting area into a deficiency or a power balance violation.  While PG&E understands this risk may be mitigated by an existing constraint in the EIM, [1] EIM areas should be able to opt out of supplying Assistance Energy to eliminate this risk entirely. 

• The proposal does not provide adequate flexibility for BAAs to opt in and out of this product in response to changing system conditions:
  • CAISO has proposed that EIM BAAs would elect the Assistance Energy option through the Master File process.  The straw proposal also indicated that the CAISO BAA would receive Assistance Energy by default, but does not lay out the decision-making process or guidelines by which the CAISO BAAs would opt in or out[2].  PG&E believes that all EIM BAAs, including the CAISO, should have more flexibility in determining when to participate in EIM Assistance Energy, as both a buyer and a seller.
  • The Master File process does not provide adequate flexibility to allow BAAs to respond to changing conditions.  PG&E requests that CAISO consider alternatives for BAAs to more quickly update their willingness to participate.  If the Master File designation is the only option, it should allow BAAs to specify detailed conditions and parameters (such as specific load forecasts level) under which that area is willing to participate, rather than a binary choice. 

CAISO should coordinate other scarcity pricing enhancements with the Assistance Energy proposal.

PG&E believes that CAISO should coordinate and consolidate all efforts related to scarcity pricing. The CAISO has recently developed or is currently developing several efforts to amplify price signals, including the scarcity pricing enhancements following the August 2020 summer heatwaves, increasing RDRR bid floor, and the scarcity pricing and fast start pricing in the ongoing Price Formation initiative, all of which will elevate market prices. The CAISO should clearly describe the interplay among those efforts, define their implementation time, and coordinate the various changes under consideration.      

[1] CAISO’s revised draft final proposal notes: “In order to ensure reliability of BAAs that are the source of WEIM transfer energy, the existing WEIM implementation enforces a constraint that does not allow a WEIM BAA to have simultaneously have a net export transfer above its base net transfer, and also have a power balance constraint relaxation or available balancing capacity dispatched. This constraint will ensure BAAs will not provide assistance energy at the risk to their own reliability.”  Pg. 26 at http://www.caiso.com/InitiativeDocuments/RevisedDraftFinalProposal-WEIMResourceSufficiencyEvaluationEnhancementsPhase2.pdf  

[2] WEIM Resource Sufficiency Evaluation Enhancements – Phase 2 Straw Proposal presentation. July 11, 2022.  Pg. 22 at http://www.caiso.com/InitiativeDocuments/Presentation-WEIMResouceSufficiencyEvaluationEnhancementsPhase2-Jul11-2022.pdf

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

The Master File process does not provide BAAs with adequate flexibility to elect to use Assistance Energy.

As stated in response to question 8, PG&E is concerned that the proposal to use the Master File process to elect the Assistance Energy product would not provide EIM BAAs with adequate opportunities to respond to changing conditions.  PG&E also requests that CAISO further elaborate on the proposal for the CAISO BAA to elect Assistance Energy by default.  The CAISO BAA should be able to exercise similar flexibility as other EIM BAAs to opt out of this product.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

Revenue from Assistance Energy should be allocated to willing BAAs that elected to supply Assistance Energy transfers.

As stated in question 7, PG&E believes the CAISO’s proposal should be updated to allow EIM BAAs to elect both whether to supply Assistance Energy and whether to receive it.  Under this framework, the revenue from Assistance Energy would be distributed pro rata to the next exporters who elected to provide Assistance Energy.  This option would reward the EIM BAAs that elected to offer excess supply as Assistance Energy in a targeted and equitable manner.   

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

Monitoring for the misuse of the Assistance Energy should also include monitoring for market manipulation.

PG&E supports monitoring for the misuse of the Energy Assistance product.  Manipulation or gaming behavior by suppliers and other market participants should also be monitored. 

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

PG&E supports the CAISO’s proposed decisional classifications.  

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

PG&E has no additional comments.

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

Portland General Electric Company (PGE) appreciates the CAISO’s continued efforts in preparing and presenting the additional analyses that have informed (and supplemented) the various phases of this initiative and offers the following summary comments: 

PGE supports many of the RSE-E Phase 2 proposal elements and appreciates the CAISO’s recognition of both the challenges and risks associated with a proposal not to allow entities outside the CAISO BAA to count LPT exports from the CAISO BAA toward meeting the importing BAA’s RSE obligations.  However, PGE continues to have concerns about the CAISO’s continued exclusion of counting LPT exports in real-time in the CAISO BAA’s RSE obligations and the potential this could create for the CAISO BAA to pass the RSE at times when the CAISO is experiencing energy emergencies.  This potential seems at odds with the primary objective of the RSEE Initiative, which was to, “ensure that BAAs do not inappropriately lean on the real-time capacity, flexibility, and transmission of other BAAs in the WEIM footprint.”  Given the recent heat wave events and the volume of WEIM transfers that the CAISO continued to rely on during declared EEAs, PGE encourages the CAISO to provide more data on the CAISO BAA’s RSE results before implementing the LPT element of its proposal.  

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

PGE is generally supportive of the proposal, with the noted exception as detailed in question 5.  

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

PGE supports the CAISO’s proposal not to include load conformance in the WEIM RSE test obligations for the CAISO BAA as part of Phase 2 but supports requests that have been made by other stakeholders for the CAISO to look at additional enhancements to test for the real-time market needs that drive a BAA operator’s decision to use load conformance as a potential trigger for identifying resource insufficiency at the BAA level. 

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

Please see PGE’s response under Question 5.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

PGE appreciates the CAISO’s recognition of the critical importance for entities outside the CAISO BAA to count LPT exports toward an importing BAA’s RSE obligations and supports the CAISO’s decision to revise the previous proposal and include LPT exports that have cleared its day-ahead process (including RUC) in the CAISO’s RSE obligations.  However, based on recent record breaking heat wave events and an initial review of data that has been circulated by Gridwell Consulting, PGE encourages the CAISO to provide additional data that would support its decision not to also count real-time LPT exports in the WEIM RSE obligations for the CAISO BAA.  As noted in Figure 1 and Figure 2 below, the CAISO BAA has experienced an increased number of energy emergency alerts since 2020 and that increase has also coincided with an increased reliance on imports.  Given the volume of EIM transfers that still appeared to be occurring while CAISO was experiencing recent EEA conditions (see Figure 3), PGE has broader concerns with the CAISO BAA’s potential to (erroneously) pass the RSE under extraordinarily tight system conditions.  As such, more evaluation on this topic would be appreciated before PGE would support a proposal that would further reduce CAISO’s RSE obligations. 

Figure 1:

Source:  Carrie Bentley, Gridwell Consulting (2022) “Impact of heat wave on grid reliability and initial reflections” Presentation, September 2022. 

Figure 2:

Source:  Carrie Bentley, Gridwell Consulting (2022) “Impact of heat wave on grid reliability and initial reflections” Presentation, September 2022. 

Figure 3:

Source:  Carrie Bentley, Gridwell Consulting (2022) “Impact of heat wave on grid reliability and initial reflections” Presentation, September 2022. 

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

PGE has no additional comment.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

As noted in PGE’s previous comments on this topic, PGE supports the CAISO’s proposal to utilize the quantile regression methodology in the RSE but recognizes that the expected improvement in accuracy that this methodology represents is largely theoretical at this point.  As such, PGE appreciates the CAISO’s willingness to work offline with entities to prepare for and shadow its functionality and looks forward to reviewing additional analysis regarding test performance.  Additionally, PGE supports the CAISO’s proposal to permanently remove the intertie uncertainty requirement based on the CAISO’s analysis that external drivers could not be used to reasonably inform an increased risk of intertie uncertainty and the requirement for e-tags to show transmission paths for an import to count in the RSE are sufficient to affirm expectations of delivery. 

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

PGE is supportive of the CAISO’s proposal.  

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

PGE is supportive of the CAISO’s proposal for entities to leverage the Masterfile to receive assistance energy transfers but agrees with other stakeholders that entities should be able to change their election more frequently when experiencing under-supply conditions or whether to be subject to existing RSE physical failure consequences.  In the absence of a more dynamic election, the usefulness of electing assistance energy is likely to be limited.  However, given the technological constraints the CAISO has identified in implementing additional tools by Summer 2023 PGE encourages the CAISO to continue to explore additional refinements that can be added in subsequent enhancements. 

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

 PGE is supportive of the CAISO’s proposal. 

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

 PGE is supportive of the CAISO’s proposal. 

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

PGE has no additional comment.    

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

PGE has no additional comment.

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

Powerex appreciates the opportunity to submit comments on CAISO’s September 7, 2022 EIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal (“Draft Final Proposal”), and the discussion at the September 2 workshop on this topic.

1. The September Heat Wave Once Again Demonstrated The Current EIM RSE Is Not Working For The CAISO BAA

This stakeholder initiative is the result of longstanding stakeholder concerns that the EIM resource sufficiency evaluation (“RSE”) is not being accurately applied to the CAISO BAA, resulting in the CAISO BAA passing the RSE when it is clearly not, in fact, resource sufficient.  These concerns—as well as the highly inequitable RSE failure consequences that enable the CAISO BAA to extensively capacity lean even when it fails the RSE—were once again laid bare during the extended heat event of early September. During this event, the CAISO BAA was in a declared Energy Emergency Alert 3 (EEA3)—clear evidence that its resources were not “sufficient” under any reasonable interpretation of the term.  The CAISO BAA was in this EEA3 state even though it was receiving between 1,700MW and 4,500 MW of FMM imports from the rest of the EIM.  Nevertheless, the current RSE determined that the CAISO BAA was fully resource sufficient in all but 2 of the 15-minute intervals of this EEA3 event:

EIM Transfers (FMM) to CAISO BAA During September 2022 Heatwave (HE 17 – 22)

Theses outcomes will be familiar to stakeholders that voiced significant concerns with the CAISO BAA’s extensive capacity leaning during the summer of 2020, as illustrated in the chart presented by Powerex at a “Summer Readiness” workshop in January 2021:

EIM Transfers (FMM) to CAISO BAA During August 2020 Heatwave

http://www.caiso.com/InitiativeDocuments/PowerexPresentation-MarketEnhancements-Summer2021ReadinessJan13,2021Workshop.pdf.pdf

The data above illustrate that despite the concerns raised by Powerex in written comments in September 2019, and despite widespread industry concerns voiced following the CAISO BAA’s extensive capacity leaning during the summer of 2020, the CAISO has not made the necessary comprehensive reforms—or committed to making the comprehensive reforms—to address these problems.  In fact, the CAISO BAA’s capacity leaning during the summer of 2022 was as large as it’s ever been, with the inaccuracies in applying the RSE to the CAISO BAA growing to thousands of MWs.

To be clear, Powerex fully supports the ability of all BAAs experiencing reliability challenges to receive supply, including through the Western EIM, provided it does not create reliability challenges for other entities.  But Powerex believes it is highly problematic that the Western EIM continues to employ an RSE that enables extensive, ongoing capacity leaning by its largest BAA, without any meaningful financial consequences to deter such behavior.  It has long been recognized that absent the adoption of a common forward resource adequacy framework applied to all organized market participants, organized markets must be designed to “bridge” different resource adequacy approaches in order to:

1. ensure sufficient aggregate resources are available to maintain reliability across the entire market footprint; and
2. ensure that each participating entity brings their “fair share” of those resources. 

The RSE was intended to provide that “bridging” mechanism in the Western EIM, but its design and application to the CAISO BAA clearly does not—and never has—fulfilled this objective.  This has enabled CAISO LSEs to avoid the costs of building or procuring sufficient capacity—costs which the ratepayers of other EIM entities must incur.  If and when tight conditions arise, the CAISO BAA—unique among EIM entities—is able to fill its sizeable summer capacity deficit by leaning on the capacity and firm energy supply procured by other EIM entities. As shown below, the vast majority of EIM entities provided exports—but the CAISO BAA received virtually all of the imports—throughout the critical hours of the September heatwave:

EIM Exports Transfers to CAISO BAA During September 2022 Heatwave

These sizeable and persistent transfers into the CAISO BAA during the September 2022 heatwave’s critical hours occurred despite the challenging weather conditions being widespread throughout much of the western grid, and despite multiple EIM entities experiencing their own resulting emergency conditions.

From an economic perspective, each of the EIM entities supplying these exports incurred significant costs related to one or more of the following:

1. building sufficient capacity resources;
2. bilaterally purchasing yearly, seasonal, and/or monthly capacity (and/or firm energy); and/or
3. bilaterally purchasing 16-hour on-peak blocks of daily firm energy at elevated short-term bilateral market prices.

Such efforts were necessary for each EIM entity to ensure their own reliability, and to pass the EIM RSE as calculated and applied to each EIM entity.

The CAISO BAA, in contrast, was uniquely enabled to instead meet its summer capacity needs through the Western EIM, paying for energy imports only in the hours and intervals they were actually needed. And when those imports do occur, the CAISO pays only the energy price that is determined in the Western EIM, which, as a result of the CAISO’s unique price formation practices, is well below the price of firm energy in the bilateral markets. This result produces highly inequitable outcomes in which CAISO LSEs save hundreds of millions of dollars at the expense external EIM entities and their ratepayers, as illustrated below:

1. 3,000 MW capacity deficiency based on CAISO’s September 1, 2022 Request for Emergency Order to U.S. Department of Energy, at p. 3; $135/kW-yr. cost is based on DMM’s estimate of the total fixed cost revenue requirement, less energy market net revenues, for a hypothetical combustion turbine, as explained in DMM’s 2021 Annual Report on Market Issues and Performance, at pp. 83-84.
2. Daily calculation for September 1-7, 2022, of the maximum FMM EIM Transfer into the CAISO BAA multiplied by the difference between (1) the ICE Day-Ahead On-Peak Index Price at Palo Verde for that day; minus (2) the average FMM price at SP-15 across the 16 on-peak hours for that day.  September 4 and 5 are excluded from this calculation since there is no on-peak index for Sundays and NERC holidays.

2. The CAISO’s Track Record on the EIM RSE Undermines EDAM

Three years have elapsed since RSE concerns were first raised.  Given that the CAISO intends to tackle a far more ambitious challenge—launching a regional day ahead market (EDAM)—in the same amount of time, implementing an RSE that genuinely requires all EIM entities to bring a fair share of supply could undoubtedly have been achieved.  The fact that it has not, and that the RSE continues to enable extensive leaning by the BAA that is operated by the market operator in charge of designing and implementing the RSE, raises serious concerns. 

The track record on this issue also undermines any confidence that a future EDAM will prevent similar widespread and inequitable leaning by the CAISO BAA, but on a larger scale.  An EDAM RSE that is largely an extension of the Western EIM RSE has the potential to result in entities outside of the CAISO incurring significant costs to build or contract for supply to meet their share of a regional resource adequacy requirements (e.g., under WRAP), while LSEs in the CAISO BAA avoid incurring such costs, with the CAISO BAA extensively leaning on other entities’ resources through the EDAM, purchasing energy during critical hours for a fraction of the full cost. Chronic CAISO BAA resource insufficiency in an EDAM would expose all other participating entities to increased reliability risk, and to increased price volatility. Nothing in the experience of the Western EIM points to a different outcome.

Powerex believes that an extensive re-design of the RSE is necessary in order to ensure that all entities participating in the Western EIM and EDAM genuinely and equitably contribute to the physical supply resources required to maintain reliability.  Only a market design with such a requirement can provide potential participants with the credible expectation of equitably sharing in the diversity benefits that a regional organized market can unlock.  If the EDAM design moves forward without this necessary reform, however, potential EDAM entities may reasonably be required by their regulators and ratepayers to explicitly quantify the costs of procuring capacity and/or firm energy supply that is then sold to the CAISO BAA at a loss, as a result of the CAISO BAA leaning on the EDAM (i.e., as part of any cost-benefit analysis).

3. The Draft Final Proposal Includes Conceptual Improvements, But Requires Considerable Refinement To Be Effective

While Powerex is supportive of several of the concepts put forward in the Draft Final Proposal, these modifications will not lead to the comprehensive reform that would be necessary to address the significant inaccuracies of the Western EIM RSE discussed above. Furthermore, as summarized further below, Powerex believes that the specific design elements in the Draft Final Proposal will require considerable refinement to ensure that the proposal improves on the current EIM RSE and produces more equitable outcomes in the EIM. 

1. While Powerex Supports The Proposed Energy Assistance Framework, It Must Not Be An Option To Maintain The Status Quo

The Draft Final Proposal contains a straightforward and workable framework for EIM entities that fail the RSE to nevertheless receive EIM transfers for “energy assistance” at a price of $1,000/MWh (or $2,000/MWh under certain conditions).  This proposal strikes a balance between making supply in the EIM available to entities experiencing reliability challenges, while strengthening the financial incentives for entities to procure sufficient supply ahead of the EIM so that they pass the RSE.

But this proposal would be rendered largely irrelevant by the proposal to continue to allow EIM entities to operate under the status quo:

The CAISO proposes that BAAs be able to elect whether they want to utilize energy assistance as part of their participation in the WEIM. If a BAA does not elect to utilize energy assistance, the CAISO market would limit its WEIM energy transfers when it fails the RSE as under the current rules.[1]

The Draft Final Proposal, in effect, will only curb capacity leaning if the BAAs that benefit from leaning voluntarily elect whether they “want” to stop doing so.  This is not a credible approach to deterring ongoing capacity leaning.

Powerex does not object to EIM entities having the ability, upon failing the RSE, to decline to receive EIM transfers at a price $1,000/MWh (or $2,000/MWh under certain conditions).  But that choice must be to decline to receive EIM transfers at all, not merely to decline to accept the price implications but continue to receive the transfers as occurs today.  The Draft Final Proposal should be revised as follows:

• An EIM entity that fails the capacity test of the RSE should have an EIM transfer import limit equal to the greater of 0 MW or the base scheduled transfers; and
• An EIM entity may elect, via the Master File, whether to allow this limit to be relaxed, at a penalty price equal to the offer price cap of $1,000/MWh or $2,000/MWh, as the case may be.

2. Lower-Priority Exports (However Defined) Should Be Clearly Communicated To All Entities, And Should Be Excluded From the RSE Of Both the Source And The Sink BAAs

Powerex agrees that the design of the CAISO’s HASP may lead to hourly intertie export schedules clearing the market that are effectively supported by non-binding advisory EIM transfers into the CAISO BAA.  Powerex has also been supportive of the CAISO’s proposals to view these hourly intertie export schedules as lower-priority and subject to curtailment.  And because such exports would be subject to curtailment ahead of CAISO load, Powerex has also supported the exclusion of these exports from the RSE for the CAISO BAA.

Transparency and consistency in communicating interchange is a bedrock requirement for ensuring reliable operation in real-time.  For this reason, Powerex objects to the Draft Final Proposal stopping short of providing for full transparency and consistent treatment of these interruptible imports.  Powerex believes that these exports—like any interchange transaction that is subject to interruption—should be clearly identified as “Non-Firm Energy.”  The proposed use of “Firm-Provisional” does not, in Powerex’s opinion, accurately convey the interruptible nature of the schedule, as is not meaningfully different from the “Non-Firm Energy” designation that is standard in the industry.

Powerex also objects to the Draft Final Proposal calling for the exclusion of interruptible export from the RSE obligations of the CAISO BAA, but not symmetrically requiring them to be excluded from the RSE supply of EIM entities on the receiving end of the same schedule.  It is plainly inconsistent for a 100 MW interruptible export to not be included as an obligation of the CAISO BAA, but for a receiving EIM entity to include it as “supply” that can be relied upon to pass the RSE.  The Draft Final Proposal not only enables intermediaries to re-sell non-firm CAISO energy as firm (by not requiring it to be identified as “Non-Firm Energy”), it also raises self-evident reliability concerns if the EIM footprint relies on supply that nobody is accountable for.

3. The Large And Growing Use Of Load Biasing By CAISO Operators Reflects A Capacity and Flexibility Need That is Not Reflected in the RSE

The use of load biasing by CAISO operators continues to grow.  During the September heat event, CAISO operators consistently increased the CAISO BAA load forecast in the FMM by 5,000 MW during peak hours: 

As has been previously described by the CAISO, load biasing is used by CAISO operators to force the market software to procure additional supply.  In other words, a market solution that procures only the supply to meet the load forecast (without load bias) would fall short of the supply that CAISO operators believe is necessary to maintain reliability.

The Draft Final Proposal declines to include any measure of load bias in the RSE, arguing that load biasing “does not regularly benefit any BAA in passing the WEIM RSE.”  In Powerex’s view, this misses the point.  If CAISO operators believe that simply procuring supply to meet the load forecast does not result in resource sufficiency, then an RSE that only tests for sufficient supply to meet the load forecast must similarly fall short of the mark.  Powerex recognizes that the best solution may not be to simply add the load bias quantity into the RSE requirements for the BAA, but an RSE that only tests for a quantity of supply that is known to fall well short of the actual amount of supply needed by CAISO operators to maintain reliability is incomplete. At a minimum, the RSE must test each BAA for a quantity of supply that includes a reasonable measure of net load uncertainty, as discussed further below.

4. The Draft Final Proposal Should Include A Commitment To Include Net Load Uncertainty Prior To Summer 2023

Reliable operation requires sufficient resources to not only meet the forecasted level of load, but to cover the potential error in that forecast.  The RSE previously included net load uncertainty in the quantity of supply required to pass the RSE.  As explained in the Draft Final Proposal, “Based on concerns with the existing calculation of net load uncertainty that were causing spurious RSE failures, the CAISO proposed and FERC approved suspending net load uncertainty as a component of each BAA’s RSE obligation.”[2]

While the Draft Final Proposal does not claim that net load uncertainty is irrelevant to the quantity of supply that a resource sufficient entity should be required to demonstrate, it proposes to “defer this topic until after it has implemented the quantile regression methodology in conjunction with the FRP Refinements implementation and has had the opportunity to assess its performance.”[3]  The Draft Final Proposal stops short of committing to actually re-introduce the net load uncertainty requirement in the RSE.  Powerex does not believe this is appropriate or acceptable for any length of time.  At a minimum, the CAISO should commit to re-introducing a net load uncertainty requirement into the RSE prior to summer 2023.

[1] Revised Draft Straw Proposal, at 23.

[2] Revised Draft Final Proposal, at 22.

[3] Id.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

Powerex's position is reflected in its comments above. 

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

Please see Powerex's comments above.  

Powerex’s comments are also available at WEIM Resource Sufficiency Evaluation Enhancements Phase 2 Revised Draft Final Proposal Comments

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

The Public Power Council (PPC) thanks the CAISO team for working to identify and implement improvements to the RSE in a timely manner.  We understand that the CAISO implementation team is already working under a compressed timeline to institute proposed enhancements quickly and we appreciate the efforts to implement those improvements.  Aspects of the draft final proposal will improve the Resource Sufficiency test and we look forward to seeing those changes implemented in summer of 2023.  There are other areas of the RSE where PPC would like to see additional changes to further enhance the transparency and equity of the test.

We understand there are some limitations on the improvements that can be achieved prior to summer 2023.  We appreciate that this may mean that some desired enhancements may need to be pursued on a different timeline.  While this may be the case, PPC encourages CAISO to identify desired future improvements now, along with those to be implemented by summer 2023, to provide additional certainty that these modifications will be pursued in the future. In particular we have remaining concerns with the default RSE failure consequence (absent opting into assistance energy transfers) and the accuracy of the RSE – as discussed in more detail in response to question #13.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

PPC supports elements of the proposal, particularly the development of assistance energy transfers, but continues to have equity concerns about the consequences of failing the RSE (discussed in question #13) and how the RSE would be applied under the proposal (discussed in question #5).  Additionally, there needs to be further evaluation about whether the enhancements from Phase 1 of this initiative have succeeded in improving the accuracy of the test (discussed in question #13).

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

PPC appreciates the analysis produced by CAISO to date to evaluate the impact of load conformance on the application of the RSE.  In the draft final proposal, CAISO notes that the analysis does not observe a one-to-one increase in WEIM import transfers and that “this transfer increase is often less than the increase in output levels of resources internal to the CAISO BAA, resulting in a net reduction of flexibility for the CAISO BAA.”[1]  PPC notes that a one-to-one relationship between load conformance and WEIM transfers is not required to indicate that load conformance results in imports to the CAISO BAA through the EIM, which allows more ramping capacity on CAISO’s internal generation to be available to pass the RSE.  Additionally, it is not clear to us that the additional loading of generation internal to the CAISO “disadvantages” the CAISO BAA in passing the RSE, as that additional loading may be required to meet expected needs (depending on why conformance was used).  The conversations with CAISO on load conformance have been helpful.  While we understand that inclusion of load conformance in the RSE is not a perfect solution we continue to be concerned that exclusion of load conformance from the test, when one participant uses the tool systematically and in much greater quantities than any other participant, could potentially result in inequitable outcomes.  We would request that as part of its regular monitoring of the effectiveness of the RSE, that DMM continue to track the relationship between the use of load conformance and the impacts that load conformance has on an BAA’s ability to pass the RSE. 

[1] CAISO RSE Enhancements Phase 2 – Draft Final Proposal, page 10

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

In addressing the interaction between WEIM transfers, intertie import offers, and lower priority exports cleared by HASP – CAISO will need to make sure the approach creates transparency on the confidence that entities can have in transfers being made through that market, that supply is not double counted in the RSE, and that treatment is applied as consistently as possible among all EIM participants, including the CAISO.  Further thoughts are provided in response to the questions below.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

PPC is concerned that eliminating LPT exports from the RSE requirements of the CAISO is inconsistent with the application of the test to other EIM participants.  If LPTs are excluded from the RSE requirements because they are “provisional” and can be curtailed, then non-firm transactions in EIM entity BAAs should also be excluded.  To ensure there is no double counting of supply, this also means that any import on non-firm transmission should not be counted towards the RSE supply.  These changes are necessary to ensure equitable application of the RSE and to avoid the potential double counting of supply.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

Based on CAISO’s proposed treatment of LPT exports, labeling them as “provisional” is appropriate and provides additional transparency to those relying on those exports.  This statement is not to be construed as support for the scheduling priority of LPT exports under CAISO’s rules, but instead agrees that it is appropriate to acknowledge CAISO’s treatment of those exports to ensure that entities are aware of the risk of delivery for those transfers.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

PPC supports the proposed treatment of uncertainty within the RSE.  We appreciate CAISO’s cautious approach to further evaluating the quantile regression methodology before using it develop the net-load uncertainty included in the RSE.  We look forward to the additional analysis CAISO has identified in the proposal.

We also support the continued suspension of the intertie uncertainty adder at this time.  We would request that a future analysis be conducted to determine if the changes requiring an e-tag showing the transmission path for an import to the CAISO BAA to count in the WEIM RSE result in similar amounts of intertie uncertainty for all participants, as is expected.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

PPC supports the concept of assistance energy transfers as described in the draft final proposal.  Generally, we agree with the approach described in the proposal for pricing these transfers, and particularly appreciate the considerations made by the CAISO to ensure that these transfers will never occur in a manner that could negatively impact the reliability of an entity supplying assistance energy transfers.  We anticipate that some additional tweaks may be required to refine this proposal after participants gain experience with the design.  To that end we request that regular monitoring of the use of assistance energy transfers, the pricing of those transfers, the allocation of assistance energy transfer revenues, and any potential impact to the reliability of individual participants or the market as a whole be evaluated as part of the ongoing reporting done on the RSE.

We would note that we continue to have concerns about the failure consequences included in the proposal if an entity opts out of assistance energy transfers.  These concerns are discussed in more detail in response to question #13.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

PPC supports the proposal to provide assistance energy transfers as an option.  Relying on these transfers could result in significant expenses for EIM participants (consistent with the objective of the design).  Entities concerned with incurring such costs should be able to opt out of using this tool.  We understand that in order to implement this tool by summer 2023 there will be limited opportunities for entities to update their selection of whether they are “opting in” to this product and we support CAISO’s proposed approach in order to accommodate the summer 2023 release.  We request that CAISO continue to work with stakeholders in future iterations to determine if there is value in allowing entities to change their participation in assistance energy transfers on a more granular basis. 

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

At this time PPC is supportive of CAISO’s proposal to allocate assistance energy revenue to EIM entities who have passed the RSE and are exporting during the period those revenues are collected.  Based on our understanding of the program it appears to be a reasonably equitable approach to allocating these revenues which will also be implementable by 2023.  This is an area where further improvements may be necessary once additional experience is gained with assistance energy transfers – either to ensure that those that are providing relief are receiving revenues or to encourage additional supply of assistance energy.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

PPC supports monitoring for misuse of the WEIM assistance energy transfers.  We are somewhat concerned that there is no general definition of “misuse” and no repercussions for misuse at this time.  Without consequences for “misuse,” some entities may choose to rely on assistance energy transfers as a regular source of supply – particularly in times of tight system conditions when the high costs of assistance energy transfers are not necessarily punitive in comparison with other market options.  One potential approach is to flag entities whose use of assistance energy transfers occurs regularly in the tight system conditions, signaling that the entity may be making an economic choice to avoid procurement of other reserves.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

PPC acknowledges that CAISO staff’s explanation of the WEIM decisional classification is consistent with the current governance structure.  We are hopeful that any impacts identified by EIM entities related to item (4) - the change to the rules for tagging exports from the CAISO balancing authority area – be seriously considered in the CAISO Board of Governors’ decision, even if those impacts are not occurring as impacts in utilities’ capacities as EIM Entities.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

PPC continues to be concerned with the consequences of RSE failure is an entity does not choose to use assistance energy transfers.  CAISO is proposing to maintain the current penalty, which includes “freezing” of imports or exports for those entities failing the flex ramp test, if those entities have not opted into the use of assistance energy transfers.  As PPC and other stakeholders have explained previously, this does not result in a failure consequence which impacts all participants equitably.  For entities who regularly import through the WEIM, they would be able to continue to rely on energy supplied by the WEIM, even when they fail the RSE, since they are only capped at what they were importing in the prior interval.  Entities that are typically exporters or small importers from the EIM would essentially be cut off from WEIM supply when they fail.  This is an inequitable outcome that is not addressed in this proposal.  We understand that CAISO is concerned about reliability impacts from cutting off EIM supply all together, but those concerns only highlight the amount of potential “leaning” that is going on in these instances – that entities could not maintain reliability without EIM supply – the RSE is specifically intended to ensure that entities are not relying on WEIM in this manner.

In addition to these concerns regarding the failure consequences of the RSE, PPC continues to be concerned about the accuracy of the RSE.  During recent scarcity events, it appears that the CAISO BAA continued to pass the RSE in periods where it was under an EEA event.  We request additional review and discussion of how the RSE was implemented during those times and an evaluation of how CAISO was able to continue to pass the RSE when it was in an emergency condition.

While PPC has outstanding concerns with the RSE, we are very appreciative of the work of CAISO staff.  We understand the challenges of balancing stakeholder feedback, being realistic about implementation constraints, and completing this work among other priority stakeholder initiatives.  We are understanding of these challenges and appreciative of the improvements identified in this proposal.  At the same time, we believe future refinements are needed to satisfactorily meet the objectives of the RSE.  Thank you for the opportunity to comment. 

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

Salt River Project Agricultural Improvement and Power District (SRP) appreciates the CAISO’s efforts to enhance the WEIM resource sufficiency evaluation (RSE). The CAISO WEIM RSE Enhancements Phase 2 revised draft final proposal and stakeholder call captured key issues pertaining to the accuracy of the RSE.

SRP understands that the CAISO wants to deliver the solution to most of the key issues highlighted in the proposal by Summer 2023; however, the proposal includes issues that the CAISO has not fully addressed in the stakeholder process. One example is policy implications related to the WEIM energy assistance allowing WEIM Entities to lean on the long-term capacity investments of other entities. Expediting processes to implement a solution that is not fully vetted may create setbacks in market performance.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

SRP’s overall position on the RSE Phase 2 revised draft final proposal is “Support with caveats.”

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

SRP supports the exclusion of load conformance in the Balancing Authority Area (BAA) RSE, and the CAISO’s decision to not propose changes in the WEIM RSE to account for load conformance.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

SRP concurs with the analysis published by the CAISO on June 21, 2022, that showed the interaction of the hour-ahead scheduling process (HASP) awarded export and WEIM transfer. With the current design the HASP exports are added to increase the obligation from the CAISO BAA, which can result in unintended outcomes. SRP supports the CAISO’s proposal to exclude such HASP awarded low-priority (LPT) exports in the WEIM RSE capacity test and Flexible Ramping Sufficiency test as obligations for the CAISO BAA.

In relation to WEIM BAA treatment of HASP exports, SRP concurs that until an optimal solution is found that can integrate the curtailment of such exports into the WEIM BAA RSE test reliably and in a timely manner, the WEIM BAAs should not be burdened with manual intervention to discount for such LPT export. SRP realizes that it may seem asymmetrical to include such LPT export in the WEIM BAA RSE, but SRP supports such a design until a better market solution is proposed.

SRP also believes that the CAISO has not addressed the issue of an LPT export that could be a wheel through the CAISO BAA and its treatment during stressed system conditions.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

See response in comment 4.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

SRP continues to have concerns with the CAISO’s proposal to require LPT exports to be e-tagged as “Firm Provisional Energy (G-FP).” This term is not commonly used by the entities in the west and may cause confusion for the receiving BAAs.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

SRP supports the CAISO’s approach to using quantile regression to incorporate weather information in estimating flexible ramping product for a BAA. The analysis provided by the CAISO showed that SRP is one of the WEIM BAAs that will have an average increase in net load uncertainty requirement leading to more flex up failures with the new methodology.

SRP met with CAISO staff and requested that they investigate what is causing the greater increase in net load uncertainty for SRP in comparison to neighboring BAAs that are similarly situated. SRP has not received any feedback from the CAISO yet.

SRP suggests the CAISO monitor the performance of the net load uncertainty calculation with the newly proposed quantile regression method. The currently proposed method still has the rolling historical component that can skew the threshold calculations. For example, if the rolling historical net load uncertainty is higher due to an active monsoon season, it may lead to an increase in the requirement for the fall season, which would cause a BAA to experience unintended failures.

SRP supports permanent removal of the intertie uncertainty adder from the capacity test.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

SRP continues to have concerns that a WEIM energy assistance program is inconsistent with the WEIM market principle that each entity must come to the market fully prepared to serve its own load. However, SRP recognizes that there is strong support for this type of program. SRP supports a voluntary participation framework should the CAISO implement a WEIM energy assistance program.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

SRP requests that the CAISO consider providing a real-time mechanism for participation in the voluntary assistance energy transfers program. An offline tool such as master file does not provide reliability and flexibility to a WEIM BAA; stressed system conditions may occur anytime. The offline tool also places the burden on the WEIM BAA to default to financial penalties when the BAA may elect to fail the RSE but is still capable of serving its load through resources that are not bid in WEIM.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

SRP supports pro-rata allocation of energy revenue by net WEIM export transfer amounts to BAAs that have passed the WEIM RSE.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

SRP requests that the CAISO provide a mechanism to define a misuse of the WEIM assistance energy transfers instead of leaving it open for interpretation. The mechanism should measure each WEIM BAA’s performance in the assistance energy transfer in parity, based on a defined set of parameters.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

SRP agrees that the WEIM Governing Body should have joint authority for elements 1 through 3 described in Section 6 of this proposal; however, SRP disagrees with the CAISO’s proposed decisional classification of advisory for element 4, which involves a change to the rules for tagging exports from the CAISO BAA. SRP recommends that the WEIM Governing Body also have joint authority for element 4 because:

1. The CAISO BAA would only be making these tagging changes because the CAISO BAA is a WEIM Entity.
2. The proposed changes include tariff rules that would affect the curtailment priority for energy that the CAISO is exporting to WEIM Entity BAAs.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

The enhancements proposed for the WEIM Resource Sufficiency Evaluation will require complex changes to software. SRP requests that the CAISO conduct robust testing of these changes with WEIM Entities and not implement changes until market simulation is complete and any deficiencies identified are fully corrected. 

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

At this time, the Six Cities oppose adoption of the Revised Draft Final Proposal.  Although the Cities support some elements of the Revised Draft Final Proposal, key aspects of the Draft Final Proposal, as they have been described to date, raise serious concerns regarding potential adverse consequences.  In particular, the Six Cities are concerned that the proposal for WEIM assistance energy transfers as currently envisioned will expose CAISO BAA customers (and perhaps customers of other BAAs) to risk of excessive prices under non-scarcity conditions.

Accordingly, and for the reasons discussed in detail in these comments, the only element of the Revised Draft Final Proposal that should move forward for near-term implementation is the exclusion of Real-Time LPT exports from CAISO obligations in applying the RSE tests.  To improve (while not necessarily fully achieving) consistency in the treatment of import and export transfers in the HASP, that aspect of the CAISO’s proposals should be implemented as promptly as possible.

Remaining elements of the Revised Draft Final Proposal require further discussion, clarification, or (particularly in the case of the WEIM assistance energy proposal) substantial revision.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

See comments below.

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

The Six Cities support the CAISO’s proposal to not include load conformance adjustments as obligations for purposes of applying the RSE tests.  The CAISO has explained that load conformance adjustments can occur to address a variety of operational conditions, and analyses presented by the CAISO have demonstrated that load conformance impacts on resource dispatch and WEIM transfers are complex and not generally predictable.  In light of such complex interactions, there is no reason to expect that including load conformance adjustments as obligations for RSE purposes would lead to more accurate conclusions regarding a BAA’s resource sufficiency.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

The Six Cities appreciate and strongly support the CAISO’s effort to address the asymmetry that occurs when HASP exports are supported by advisory WEIM HASP imports but only the export schedules are counted (as CAISO obligations) in the RSE tests.  For the reasons described in Section 4.2.1 of the Revised Draft Final Proposal, it is unreasonable that the CAISO BAA should fail an RSE test due to the asymmetric treatment of interchange transactions included in the output from HASP.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

The Six Cities strongly support the CAISO’s proposal to exclude Real-Time LPT exports as obligations of the CAISO BAA in applying the RSE tests, and that change in the application of the RSE tests should be implemented as soon as possible. 

However, the Six Cities do not support, at this time, the CAISO’s last-minute revision to the Draft Final Proposal to include as obligations for RSE purposes Day-Ahead LPT exports that clear the RUC process.  The Revised Draft Final Proposal asserts at page 16 that Day-Ahead LPT exports “would be required to re-bid into the real-time market to potentially address any changes to the supply that cleared the exports in the day-ahead process.”  The Six Cities request that the CAISO identify the tariff reference for the re-bidding requirement and, to the extent not expressly included in the tariff language, explain how the re-bidding requirement would prevent an unsupported Day-Ahead LPT export from exposing the CAISO to RSE failure.

In addition, the Six Cities’ July 25, 2022 comments in this initiative requested that the CAISO provide more detailed explanation with regard to how LPT (or, under the Revised Draft Final Proposal, Real-Time LPT) exports would be identified and under what circumstances they would be excluded from the RSE tests.  The Six Cities renew their request that the CAISO provide additional detail on the process and timeline for identifying the LPT exports to be excluded from the CAISO’s RSE obligations.

The Six Cities support the CAISO’s proposal to include all LPT exports in the derivations of the CAISO BAA downward flexible ramping sufficiency requirements.

As the Six Cities read the CAISO’s proposal in Section 4.2.2.3 of the Revised Draft Final Proposal regarding the treatment of LPT exports from the CAISO in the base schedules of WEIM entities, it appears there would be asymmetric treatment of at least Real-Time LPT exports (i.e., not treated as an obligation of the CAISO for RSE purposes but treated as supply for the receiving BAA).  The Six Cities are concerned that this asymmetry may create a potential for adverse reliability impacts but understand the timing concerns identified in the CAISO’s recommendation.  The Six Cities do not oppose at this time the proposed treatment of LPT exports by receiving WEIM BAAs subject to monitoring for development of significant adverse reliability impacts.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

The Six Cities do not object to the CAISO’s proposal to require that LPT exports be e-tagged as “Firm Provisional Energy (G-FP).”

However, the Six Cities do not support, at this time, all elements of the manual process for curtailing LPT exports as described in Section 4.2.3 of the Revised Draft Final Proposal.  It does not appear reasonable for the CAISO to establish a “practice” of maintaining reserves for LPT exports, or at least all LPT exports.  Section 4.2.1 of the Revised Draft Final Proposal demonstrates that a substantial volume of LPT exports clear in HASP based on advisory WEIM transfers that are “unrealized . . . in the real-time dispatch (RTD).”  (Revised Draft Final Proposal at page 16).  There is no apparent justification for requiring load in the CAISO BAA to bear the costs of carrying reserves for LPT transfers triggered by advisory WEIM imports that do not materialize.  Although it may be reasonable for the CAISO to carry reserves for some LPT exports that are similar in nature to the types of exports for which WEIM Entities consistently provide reserves, the Six Cities request additional explanation and documentation regarding the reserve carrying practices of other WEIM BAAs, including specification of the types of non-firm exports for which other WEIM BAAs carry reserves.  Establishing a “practice” of carrying reserves for all LPT exports clearly is over-broad and imposes an undue burden on CAISO load.

Section 4.2.3 of the Revised Draft Final Proposal also indicates that the CAISO does not plan to initiate curtailment of LPT exports until CAISO is in an Energy Emergency Alert (EEA) 3.  The Six Cities question the appropriateness of delaying curtailment of LPT exports until the EEA 3 stage.  LPT exports should be curtailed prior to arming any firm load to meet reserve obligations, not simultaneously with (or after) arming firm load.  LPT exports should be “armed” for curtailment (and the receiving BAA notified of the potential for curtailment) at the EEA 1 or EEA 2 stage, and curtailment of LPT exports should occur prior to arming of firm load to supply reserves.  The Six Cities do not oppose the CAISO’s proposal to provide a higher priority to LPT exports that clear the Day-Ahead Market processes over LPT exports that appear in Real-Time in implementing the manual curtailment process.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

The Six Cities support the CAISO’s proposal to defer re-introducing an uncertainty adder to the RSE tests pending evaluation of the performance of the quantile regression methodology in the context of the Flexible Ramping Product Refinements implementation, as described in Section 4.3.2 of the Revised Draft Final Proposal. 

The Six Cities also support the CAISO’s proposal to eliminate permanently the intertie uncertainty adder.  As the Six Cities have noted in their previous comments in this initiative, the absence of any trends or correlations with overall market conditions or other types of uncertainties demonstrated by the CAISO’s analyses of intertie deviations indicates that an intertie deviation adder is unlikely to contribute meaningfully to improving the accuracy of resource sufficiency evaluation.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

The Six Cities strongly oppose approval and implementation of the WEIM assistance energy transfer proposal as described in Section 5.1 of the Revised Draft Final Proposal.  The Six Cities support the concept of allowing a BAA that has failed an RSE test an option to receive incremental assistance energy transfers through the WEIM to mitigate potential effects of the RSE deficiency.  The Six Cities also support pricing incremental assistance energy transfers (i.e., the volume of additional transfers necessary to cure the RSE deficiency) at sufficiently high levels to discourage repeated reliance on such transfers.  However, the CAISO’s current proposal for WEIM assistance energy transfers will expose CAISO BAA customers (and perhaps customers of other BAAs) to risk of excessive prices and undue cost burdens under non-scarcity conditions.

 As described in Section 5.1 of the Revised Draft Final Proposal, an election by a BAA to receive assistance energy transfers would result in the price for all Real-Time Imbalance Energy for that BAA (not just the volume of assistance energy transfers needed to cure the RSE failure) to increase by $1,000/MWh.  There is no minimum RSE failure amount to trigger such a result; a de minimis RSE failure of even 5 or 10 MW apparently would lead to application of the $1,000/MWh adder to the price of Imbalance Energy for the deficient BAA regardless of prevailing supply conditions for the overall WEIM.  It is not entirely clear from the description in the Revised Draft Final Proposal whether the failure of the RSE itself would trigger application of the $1,000/MWh adder for a BAA that has indicated its willingness to receive assistance energy transfers through a Master File election, or whether the adder would apply only if WEIM transfers occurred after dispatch of all available resources internal to the failing BAA.  Either way, it appears entirely possible that a BAA failing an RSE test by a small amount likely would have its entire supply of Imbalance Energy for the hour or hours covered by the failed RSE test(s) priced at more than $1,000/MWh (i.e., $1,000/MWh plus the otherwise applicable LMP price for the import), even if the remainder of the WEIM has ample supply available and irrespective of the circumstances leading to the failure.

Such a result would be unjust and unreasonable.  The revenues produced by application of the $1,000/MWh adder likely would be many multiples of the cost to supply the assistance energy transfers, especially when the RSE test failure involves a modest amount and/or when market-wide supply conditions are not stressed.  Recognizing the appropriateness of an incentive to avoid relying on assistance energy transfers, the price impacts that could occur under the proposed structure for assistance energy transfers far exceed boundaries for legitimate incentives and would be unreasonably punitive.

Moreover, adopting a structure that would impose such extreme cost impacts for even a minor RSE test failure would be particularly inappropriate in view of continuing widespread controversy with respect to the accuracy of the RSE tests and potential inconsistencies in the application of the tests.  As noted in the Six Cities’ July 25, 2022 comments in this initiative, based on review of the Energy Imbalance Market Business Practice Manual, it does not appear that the current application of the RSE includes any mechanism to ensure consistency or symmetry in the treatment of imports and exports for RSE purposes.  The evaluation of base schedules submitted by WEIM Entities appears to be based on internal resource schedules plus net scheduled interchange.  The Six Cities were not able to locate any provision specifying criteria for imports or exports to be counted for RSE purposes or any mechanism for differentiating among interchange schedules.  In the absence of clear criteria for determining whether to include or exclude interchange transactions for RSE purposes, figures for net scheduled interchange likewise provide no assurance that base schedules submitted by WEIM Entities provide comparable assurance of resource sufficiency. 

Discussions in workshops concerning RSE design for the Extended Day-Ahead Market have addressed proposed criteria for the types of interchange transactions and other resources that should be reflected in the RSE evaluation, but the Six Cities do not believe that a consensus regarding appropriate criteria has yet emerged.  Although implementation details may vary to adapt to different market or business models, principles for assessing RSE performance should be applied consistently and symmetrically.  Absent a demonstration of consistency, symmetry, and transparency with respect to resources counted for RSE purposes, there is no basis to conclude that the RSE tests produce a sufficiently accurate assessment of the ability of a BAA to serve its load to support imposition of highly punitive consequences for test failures.

In addition, the proposed framework could result in price distortions for exports from the BAA receiving the assistance energy transfers.  How the $1,000 adder would apply to exports from the BAA subject to the adder is not discussed in the Revised Draft Final Proposal.  But it would be grossly inequitable to not apply the adder to all exports treated as obligations of the BAA in the failed RSE test, because exports counted as obligations in the test contributed, perhaps substantially, to failure of the test.  If the $1,000 adder is applied to exports from a BAA receiving assistance energy transfers, it would result in increased costs to the BAA receiving such exports. 

Finally, in view of all of the risks and flaws in the assistance energy proposal as currently framed, the Six Cities would strongly oppose any election by the CAISO to receive assistance energy transfers under the proposed framework.  It is not at all clear to the Six Cities that CAISO acceptance of assistance energy transfers under the proposed framework would result in better outcomes for the CAISO BAA than the alternative of limiting WEIM import transfers at the level for the last interval in which the CAISO passed the RSE.  In the absence of a demonstration that the “cure” would not be worse for CAISO customers (and perhaps substantially worse) than the consequences of limiting WEIM import volumes, the Six Cities would strongly object to the CAISO opting in to assistance energy transfers.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

The Six Cities support allowing BAAs participating in the WEIM to elect whether to receive assistance energy transfers.  Based on the CAISO’s statement at page 26 of the Revised Draft Final Proposal that, “the only option the CAISO can realistically implement by summer 2023 is to provide for elections through the Master File,” the Six Cities do not oppose use of a Master File designation to exercise the option at the outset of implementing assistance energy transfers.  Because there may be benefits to allowing election of the option closer in time to potential incremental transfers, the Six Cities recommend that the CAISO remain open to re-evaluating the process for exercising the option, at stakeholder request, at a future time.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

In their July 25, 2022 comments in this initiative, the Six Cities expressed a preliminary preference for allocating assistance energy revenues to all BAAs that have identified surplus capacity in the WEIM so as to include in the allocation of assistance energy revenues BAAs that may assist in addressing resource insufficiency by reducing imports.  The Revised Draft Final Proposal states at page 27 that it would not be feasible to implement that allocation approach by the Summer of 2023.  Based on that consideration, the Six Cities would not object to allocation of assistance energy revenues to net WEIM exporters at the outset of implementing energy assistance transfers.  The Six Cities urge the CAISO, however, to move forward with system modifications necessary to facilitate allocation of assistance energy revenues to all BAAs that have identified surplus capacity in the WEIM.

If the assistance energy framework reflected in the Revised Draft Final Proposal is adopted over the Six Cities’ objections, the Six Cities oppose the CAISO’s proposal, at page 27 of the Revised Draft Final Proposal, to sub-allocate energy assistance revenues received by the CAISO BAA to Real-Time Imbalance Energy from Supply.  Under the assistance energy framework proposed by the CAISO, CAISO Demand would bear the entire cost burden if the CAISO receives assistance energy transfers.  Indeed, suppliers within the CAISO would benefit significantly by being paid the $1,000/MWh adder plus the otherwise applicable cost of transfers.  It is unreasonable and inconsistent with the allocation of risks to allocate assistance energy revenues received by the CAISO entirely to Supply.  Assistance energy revenues received by the CAISO should be allocated to CAISO Demand, consistent with the allocation of risk of incurring costs associated with assistance energy transfers to the CAISO.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

The Six Cities support the CAISO’s proposal to monitor for misuse of WEIM assistance energy transfers as described in Section 5.1.2 of the Revised Draft Final Proposal.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

The Six Cities support the CAISO’s proposed decisional classification as described in Section 6 of the Revised Draft Final Proposal.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

At this time, the only element of the Revised Draft Final Proposal that should move forward for near-term implementation is the exclusion of Real-Time LPT exports from CAISO obligations in applying the RSE tests.  To improve (while not necessarily fully achieving) consistency in the treatment of import and export transfers in the HASP, that aspect of the CAISO’s proposals should be implemented as promptly as possible.

Remaining elements of the Revised Draft Final Proposal require further discussion, clarification, or (particularly in the case of the WEIM assistance energy proposal) substantial revision.  To inform further consideration of RSE enhancements, it would be extremely helpful to understand how proposed elements of the Revised Draft Final Proposal would have impacted CAISO reliability and pricing outcomes if they had been in place during the recent heat emergency beginning on August 30, 2022, and continuing for the subsequent ten days.  The Six Cities request that the CAISO provide such an analysis and conduct a subsequent workshop for related discussion with stakeholders.

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

SCE appreciates the opportunity to comment on the Resource Sufficiency Evaluation Enhancements Phase 2 Draft Final Proposal.  SCE is generally supportive of the proposal.  Below is a high-level summary of SCE’s comments: 

Load Conformance: SCE supports CAISO’s proposal not to include load conformance as part of the WEIM RSE obligation.  CAISO analysis determined that there is no direct correlation (one-to-one) between load conformance and increases in WEIM import transfers.  It also appears that the intent of using load conformance is to increase the internal generation capabilities within the CAISO BAA and not to lean on other BAAs for supply.   

Low Priority Exports: SCE continues to support not including LPT exports as an RSE obligation for the CAISO BAA and remains concerned with the issues of undelivered advisory HASP imports affecting the CAISO BAA’s cleared real-time market exports.  SCE recommends CAISO continue to explore ways to improve the HASP.  SCE also is requesting more details of the “firm provisional” E-TAG requirement.  CAISO should provide more details on who will be responsible for identifying the LPT export amount and e-tagging. 

Uncertainty Treatment: SCE supports using the quantile regression methodology and believes it is more accurate than the intertie uncertainty adder because it includes additional data such as weather and VER output in its calculation.     

Energy Assistance (EA): SCE supports a program like EA which will help increase reliability.  However, SCE does not take a position on the pricing of the proposal and believes the administrative charge should be consistent with what will be proposed as part of EDAM. SCE is interested in knowing the sequence of when the Energy Assistance transfers will occur and questions whether Reliability Demand Response Resources (RDRRs) will be utilized before EA. SCE also requests CAISO to provide more details on how administrative cost/revenue will be allocated to the LSEs within the CAISO BAA.  

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

Please see question #1. 

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

SCE agrees with CAISO that load conformance should not be included as a WEIM RSE obligation and there is not a “straight one-to-one relationship to changes of WEIM import transfers.[1] 

The purpose of the RSE is to prevent BAAs that do not have adequate supply from leaning on other BAAs.  By including load conformance in the RSE obligation, the test has the potential to falsely fail the CAISO BAA even when there is adequate supply to serve its load.  CAISO analysis report states “load conformance consistently results in CAISO’s internal resources scheduled at higher output levels relative to the solution where there is no load conformance applied to the FMM market”.[2] It is apparent in CAISO’s analysis that the result of load conformance would be the opposite of leaning, which is to utilize internal supply within CAISO.  

[1] WEIM Transfers, Hourly Interties and Load Conformance. ?Department of Market Analysis and Forecasting. June 21, 2022. ?Pg. 68 at?http://www.caiso.com/InitiativeDocuments/FinalAnalysisReport-WEIMTransfers-HourlyInterties-Load.pdf 

[2] WEIM Transfers, Hourly Interties and Load Conformance. ?Department of Market Analysis and Forecasting. June 21, 2022. ?Pg. 96-97 at?http://www.caiso.com/InitiativeDocuments/FinalAnalysisReport-WEIMTransfers-HourlyInterties-Load.pdf 

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

?SCE’s comments are consistent with the comments submitted on July 25, 2022. [1] SCE recommends CAISO continue to explore ways to improve the HASP process to address the issues of the CAISO BAA clearing higher exports because of undelivered advisory WEIM imports. 

[1] SCE Comments: RSE Enhancements Phase 2. July 5, 2022.  Pg. 2: Paragraph 1 at https://stakeholdercenter.caiso.com/Common/DownloadFile/9c928786-34d3-4361-8098-5c6f5dac59f6 

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

SCE remains supportive of not considering lower priority exports from the CAISO BAA’s WEIM RSE obligation and believes the proposal provides symmetric treatment that other BAAs are receiving for the RSE test. 

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

SCE appreciates CAISO’s efforts to help identify LPT exports by proposing a “firm provisional” tag for non-firm imports entering the CAISO BAA.  SCE believes CAISO’s intent is to identify which type of exports can be curtailed during a system emergency (EEA3).  

It is unclear in the proposal how the LPT exports are identified and who will be responsible for tagging the LPT exports as “firm provisional”. Would CAISO be responsible for the identification and tagging or the individual LSEs?  How would that coordination work between the multiple LSEs within the CAISO BAA? CAISO should provide more clarification on the next iteration of the proposal.  

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

SCE supports CAISO’s proposal to continue to remove the intertie uncertainty adder from the RSE capacity test and to use the quantile regression methodology once the Flexibility Ramping Product enhancement goes live.    

Based on CAISO analysis, the intertie uncertainty adder was highly inaccurate using only historical data from the previous 3 months.   SCE believes CAISO’s proposal to utilize the quantile regression methodology would be a major improvement to forecasting uncertainty because the calculation not only takes into consideration historical data, but also weather and VER output.  SCE recommends CAISO closely monitor the quantile repression methodology for accuracy when FRP goes live.  

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

SCE appreciates the idea of increasing reliability within the WEIM by having a program like Energy Assistance (EA) which allow BAAs to assist another BAA experiencing an undersupply condition.  CAISO is proposing to administer an incremental transfer cost for using the EA of either $1000/MWh or $2,000/MWh depending on which bid cap is currently in effect ($1000/MWh soft bid cap or $2,000/MWh hard bid cap).  The transfer cost would be added on top of the marginal cost of energy of the external supply that is providing the EA.   For example, if the marginal cost of energy of an external supplier is $1000/MWh then the cost for using the EA program would be $2,000/MWh (transfer cost + marginal cost of energy).  If the marginal cost of energy has exceeding the soft bid cap of $1,000/MWh and is $2,000/MWh and the marginal cost of energy of an external supplier is $2,000 then the EA cost would be $4,000/MWh.   The EA cost would be applied to the incremental portion of the BAA shortfall.   

In general, SCE does not take a position on the pricing of the proposal.  This same issue is being discussed in the EDAM process where an administrative charge aligned with market conditions is proposed.  SCE believes that both the EDAM and WEIM charges should be consistent, and thus it is premature to take a position on the WEIM charges for EA at this time. 

SCE has concerns with the lack of clarity of when the EA administrative charge and transfer goes into effect and the reasonableness of these prices under non-stress conditions.   Suppose a BAA inadvertently fails the RSE test but does have enough supply to serve its load, will the BAA still be charged the EA hurdle rate?  SCE does not believe the hurdle rate should be applied for situations where a BAA failed the RSE due to reasons other than deficient supply.  CAISO mentions in its presentation that all internal supply and available balancing capacity (ABC) would be utilized prior to clearing Energy Assistance transfers.[1] Does the utilization of all internal supply also include dispatching Reliability Demand Response Resources?  If yes, then this would mean that EA would only be in effect after the CAISO BAA has declared an EEA2, RDRRs have been dispatched, and LPT exports have been curtailed.  It also means that RDRRs were counted towards the RSE and the CAISO BAA still failed the test.  It is SCE’s understanding that RDRR are not normally included in the RSE test unless it is scheduled for dispatch, which in this case, would only be dispatched during an EEA2 declaration.  

The sequences of events that precedes the use of EA is unclear.  SCE encourages CAISO to provide details on the process/timeline for when EA will be utilized.   

[1]?WEIM Resource Sufficiency Evaluation Enhancements– Phase 2. Draft Final Proposal presentation. ?Market Infrastructure Policy. September 2, 2022. ?Page. 20 at?http://www.caiso.com/InitiativeDocuments/Presentation-WEIMResouceSufficiencyEvaluationEnhancementsPhase2-Sep2-2022.pdf 

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

SCE’s comments are consistent with the comments submitted on July 25, 2022. [1] 

[1] SCE Comments: RSE Enhancements Phase 2. July 5, 2022.  Pg. 2: Paragraph 3 at https://stakeholdercenter.caiso.com/Common/DownloadFile/9c928786-34d3-4361-8098-5c6f5dac59f6 

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

SCE supports the CAISO’s proposal of how Energy Assistance revenue will be allocated to BAAs supplying EA.  CAISO proposes to allocate the EA revenue pro-rata by net export transfers for BAAs that pass the RSE.  This appears to be a better approach than allocating revenue to BAAs based on their excess RSE showing because the revenue payment is based on the flow of energy.  It also encourages BAA to be economical in their bids and is less susceptible to gaming.  For example, using the alternative approach, BAAs could intentionally game the market to collect EA revenue simply by submitting high priced bids that will never be accepted.  The result of this practice could also cause higher prices in the market.  

It is not clear how the EA administrative costs and revenues will be allocated to LSEs within the CAISO BAA.   If the CAISO BAA were to fail the RSE, how would the EA administrative cost be split among all LSEs?  How would the administrative costs be determined if there was one “bad actor” that caused the CAISO BAA to fail? Would the other “good actors” be charged the cost?  The same question can be asked about how EA revenues are allocated to the multiple BAAs.  SCE recommends that CAISO host a separate workshop with CAISO LSEs to discuss how cost/revenue allocation would be administered for EA.   

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

At a high-level, SCE supports administrative actions for BAAs that misuse EA. However, SCE understands that developing a framework will require time and stakeholder input.  SCE encourages CAISO to monitor for misuse and publish a yearly report.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

SCE agrees with CAISO on the decisional classifications of the 4 proposed changes to the resource sufficiency test.   

Below is a list of the proposed changes and the decisional classifications SCE also agrees it should fall under: 

WEIM Governing Body & CAISO Board of Governors 

1. Permanent removal of the intertie uncertainty adder from the RSE Capacity Test 

2. Not counting LPT exports when calculating the CAISO BAA’s WEIM RSE obligation 

3. Changing the consequence for a BAA that fails the RSE using a new framework called “Energy Assistance” 

CAISO Board of Governors 

4. Requiring the tagging of LPT exports as “firm provisional” for the CAISO BAA  

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

SCE does not have any additional comments.