Comments on Reliability demand response resource bidding enhancements: issue paper/straw proposal

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

The Council supports the CAISO proposal that RDRRs be required to bid at or above 95% of the $2000/MWh hard energy bid cap ($1,900/MWh) when the hard energy bid cap is in effect. Otherwise, RDRRs could risk creating the counter-intuitive result of suppressing real-time market prices during instances when reliability conditions most warrant that the maximum number of resources be made available.

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

The Council is sympathetic to the CAISO’s efforts to incorporate minimum load costs in market dispatch.  Unfortunately, there are no simple solutions due to the heterogeneous nature of the customers that are enrolled in RDRRs.  A customer’s unique minimum load costs are a reflection of their opportunity costs which can be influenced by a range of different factors, with the most prevalent being the financial tradeoff between forgoing the action or process that would otherwise be performed absent a DR event, and the energy market payment that would be earned through a market dispatch.  This financial tradeoff can come in the form of lost production, which may be easier to quantify, or lost utility, which can be more difficult to quantify.  To the extent the CAISO adopts the use of RDRR minimum load costs, they should only be considered when bidding economically in the day-ahead market because the efficiency of resource scheduling is of greater importance under less stressed conditions.  However, because RDRRs are only bid in the real-time market once the appropriate reliability-based conditions are met, accounting for minimum load costs in market dispatch is far less important.

If the CAISO is unable to determine a fairly simple way to calculate a resource-specific or a default minimum load cost, then these costs should not be included. Forcing an overly complex or inaccurate approach could be detrimental to RDRR participation.

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

As the Council understands this issue, increasing the 50 MW RDRR cap for discrete dispatch would only be needed to accommodate RDRR-enrolled customers with 50+ MW of load curtailment capability.  Without knowing whether this is currently a constraint for any current or potential RDRR participants, this appears to be a logical step to ensure that it will not limit participation by large customers.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

The Council recommends that, for the sake of simplicity, the CAISO adopt Option 3.  It seems reasonable to expect that, if a scheduling coordinator that has submitted a $950/MWh bid is prompted to submit a replacement bid in response to the hard cap going into effect, they would submit a bid at the $1900 level.  Therefore, this should be an automatic step taken by the CAISO.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

The Council reserves comment on this issue.

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

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

These comments should also be available within a few a business days of 11-12-2021 on the DMM website along with all DMM comments on stakeholder initiatives at:

 DMM comments, reports, and presentations

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

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

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

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

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

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

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

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

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

The bids from Reliability Demand Response Resources should be automatically adjusted when the bid cap is increased

Since Reliability Demand Response Resources (RDRR) are reliability programs intended to be used after other economic resources have been utilized, the price must be adjusted to stay within the existing tariff provision of being bid at 95-100% of the bid cap.

        The change in the bid for RDRR should be automated whenever the CAISO changes the bid cap. This change also reflects the reality that there may not be sufficient time for scheduling coordinators to adjust the RDRR bids if the adjustment is performed manually.   As the CAISO noted:

There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules.[1]

      CLECA does not have a preference regarding how an automated bid adjustment is implemented.

      CAISO noted there is a rare possibility that the bid cap could return to $1000/MWh after it was increased to $2000/MWh. Unless all other bids are automatically adjusted downward, there is a possibility there will be other resources priced above RDRR which would prevent other economic resources from being dispatched. This issue needs further investigation.

[1] http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

CAISO needs to focus on solutions to prevent infeasible dispatch of RDRR

The issue of Pmin of zero and zero minimum load costs allowing infeasible dispatch for demand response programs has been an issue since they have been treated as supply side resources. The CAISO is proposing to use the minimum load cost and Pmin bidding parameters to resolve an infeasible dispatch for RDRR. The CAISO is seeking input as to how to determine minimum load costs of the RDRR program, such as using opportunity costs. This is the wrong question. If infeasible dispatch is the problem, and the uses of minimum load and minimum load costs are the solution, then the question is what values are needed to prevent infeasible dispatch. The use of opportunity costs is irrelevant as it would not resolve the problem of infeasible dispatch.

The rules for bidding min load costs for RDRR need to be evaluated along with bidding parameters for proxy demand resources

CAISO DMM issued a report noting “some resources with high commitment costs for the amount of energy offered appeared uneconomic to commit in the integrated forward market in August and September 2020 despite often high day-ahead nodal prices.”[1]  CLECA is concerned that bidding parameters can be used by non-RDRR to prevent dispatch during peak events, causing them to be dispatched after RDRR, or perhaps not at all.  Since RDRR is a reliability program, it should be dispatched after economic proxy demand resources.

The CAISO should discuss in more detail how permissible bidding parameters interact between RDRR and proxy demand resources in the next proposal.

[1] http://www.caiso.com/Documents/ReportonDemandResponseIssuesandPerformance-Feb252021.pdf at 13.

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

The cap discrete bidding option for demand response should be removed, or increased

CLECA supports the removal or increase of the 50 MW cap for the discrete bidding option for demand response. For some industrial customers, a manufacturing process is a chain of processes; if you shut down one part, then rest of the chain must be shut down. There are industrial customers with demand response that exceeds the current cap. The cap prevents the scheduling coordinator from accurately bidding the resource.  CLECA support removing the limitation.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

The bids from Reliability Demand Response Resources should be automatically adjusted when the bid cap is increased

        Since Reliability Demand Response Resources (RDRR) are reliability programs intended to be used after other economic resources have been utilized, the price must be adjusted to stay within the existing tariff provision of being bid at 95-100% of the bid cap.

        The change in the bid for RDRR should be automated whenever the CAISO changes the bid cap. This change also reflects the reality that there may not be sufficient time for scheduling coordinators to adjust the RDRR bids if the adjustment is performed manually.   As the CAISO noted:

There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules.[1]

      CLECA does not have a preference regarding how an automated bid adjustment is implemented.

      CAISO noted there is a rare possibility that the bid cap could return to $1000/MWh after it was increased to $2000/MWh. Unless all other bids are automatically adjusted downward, there is a possibility there will be other resources priced above RDRR which would prevent other economic resources from being dispatched. This issue needs further investigation.

[1] http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

      CLECA does not have a preference regarding how an automated bid adjustment is implemented.

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

Large utility customers such as data centers are capable of providing more than 50 MW of RDRR capacity.  Therefore, Enchanted Rock strongly recommends that the CAISO remove the 50 MW cap.  While raising the cap to 100 MW is likely sufficient to cover current loads, unless there is a technical reason for having a cap at all, we recommend that CAISO simply eliminate the cap altogether.

Effective January 1, 2019, the CPUC ordered that customers participating in the IOU’s Base Interruptible Program (BIP), the primary source of RDRR capacity, would no longer be permitted to rely on fossil-fueled backup generation operation to reduce customer load during any demand response event, classifying such operation as “Prohibited Resources”.  A subsequent resolution (E-4906) exempted renewable fuels from the prohibition.  Since then, in a proposed decision in R.20-11-003, the CPUC further clarified and reaffirmed the Prohibited Resources exemption for renewable fuels. 

As a result, CAISO should expect to see new, appropriately fueled backup generation participating in this RDRR program. The Prohibited Resources exemption is likely to be utilized by large utility customers, such as data centers, who have installed backup generation to support their higher reliability requirements.  Indeed, several of these data centers currently under development have requested Small Power Plant Exemptions for backup generation to protect up to 100 MW of anticipated load.  These facilities would have the capability to utilize their backup resources to provide substantial and easily measured/documented demand response capability through the existing BIP program.  Because these individual facilities can provide more than 50 MW of RDRR capacity, CAISO should remove the 50 MW cap and raise the cap to 100 MW to cover current loads.  Further, unless there is a technical reason for even having a cap, Enchanted Rock recommends that the cap be eliminated in its entirety. This would facilitate RDRR participation by loads that can provide substantial and dependable demand response when and where needed.  BIP participation through backup generation would not entail production losses or other challenges that might otherwise disincentivize participation by load that can help during periods of need.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

Increasing the quantity allowed under the discrete option would enhance RDRR representation. Suggest increasing it to 150MWs.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

PG&E appreciates the opportunity to comment on the three potential options proposed by the CAISO as updates to RDRR Real Time Bidding rules that could work under the FERC Order No. 831 paradigm.[1]

In summary, PG&E supports the proposed Option 2 with caveats. Scheduling Coordinators (SCs) should ultimately be responsible for bid submission into the market.  The CAISO stated in the November 4^th stakeholder call that at least 30 minutes are allowed for market participants to input bids.  PG&E is concerned that the CAISO will not provide timely notice to SCs that the Real Time bid cap has been raised to $2000/MWh and that there will not be adequate time to modify and submit our bids. PG&E requests that the CAISO notify market participants 30 minutes before the hourly market bid submission deadline if the bid cap will be raised.

PG&E has operational and implementation concerns for Option 1 and Option 3 proposals.

The following are detailed comments on each of the three potential options:

• Option 1: Re-run bid validation rules

PG&E agrees with CAISO that a downside of Option 1 is that “sizable quantities of real-time market RDRR bids” may not be considered by the market if the bid cap is raised, RDRR bids are not resubmitted on time, and existing bids are rejected. This is especially concerning if the bid cap increases in the middle of a Real-Time hour, when it is impossible to modify existing bids for the hour being optimized. Rejecting RDRR bids during emergency conditions is an unacceptable operational risk.

• Option 2: Take no action

This Option appears to be the best of the three proposed options. PG&E believes RDRR bids that remain unchanged at the $950-$1,000 price range, at the discretion of the SC, do not pose a reliability or operational risk.  Additionally, PG&E notes that one approach to the implementation of Option 2 would be to submit RDRR bids in the $950-$1,000 range after Day Ahead results are published, then allow the SC to automatically submit additional bids in the $1,900-$2,000 range close to the real time market close. Such bids would be invalid if there were no change in the bid cap and would not overwrite the bids in place.  However, if the price cap increases, the higher priced bids would be valid, accepted by SIBR, and would overwrite/replace the lower priced bids. Such an approach would not require major changes to systems for CAISO or market participants.

• Option 3: Automatically adjust bids upwards

PG&E opposes Option 3, because it would likely introduce complexity into the CAISO systems and may introduce implementation challenges and risks. This approach requires introducing a new market process (applying only to RDRR resources) that has no obvious precedent. If the changes were made in SIBR, the only comparison would be the process which creates clean bids, and if the changes were made in the market systems, the most similar process would be market power mitigation.  But these examples do not imply that changes to RDRR bids could reasonably be folded into these processes, whose purposes are entirely different. 

Additionally, PG&E is concerned that Option 3 will create potential gaming opportunities. For example, an unscrupulous market participant could use Real-Time market bids in excess of $1,000/MWh (i.e., an unverified import with a bid price of $1,001), which only have to be verified after the market. Under Option 3, this will trigger an automatic bid increase over $1,900 on submitted RDRR resources, which will likely set the market clearing prices. Such gaming behaviors could be motivated because they either increase the value of the participant’s import or increase the compensation for an already awarded RDRR resource.

[1] CAISO Option Document: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

• Do RDRR have actual minimum load costs from a physical and/or program perspective?

PG&E believes RDRRs have minimum load costs and including these costs would result in a more efficient real time market dispatch of the resource.  For example, minimum load RDRR costs could be based on programmatic opportunity costs of dispatching a resource for an additional hour.

• If so, do stakeholders have proposals for calculating their minimum load costs?

PG&E suggests Scheduling Coordinators could submit documentation to the CAISO to negotiate custom minimum load costs (either specific to a resource if physical or an aggregator if programmatic). 

• If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? 

PG&E suggests the CAISO could conduct a stakeholder survey to gather documentation to develop a default RDRR value.  If the CAISO conducts minimum load cost negotiations, eventually a default could be based on a representative sample of RDRR minimum load costs from various market participant negotiations.

• Do stakeholders believe these costs should be included?

Yes; PG&E believes minimum load costs should be included in the RDRR program.

• Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

PG&E believes that RDRR minimum load and minimum load cost of less concern in day-ahead.

PG&E stresses the importance of making minimum load cost parameter available to RDRR programs in real-time to improve program calls and recover costs of calling the programs. Minimum load costs are important when they affect the dispatch of a DR program.? Considering two cases: (i) In the case of a DR program with Pmin close to Pmax, the minimum load cost represents most of the cost of calling a program and hence it is essential that this cost be represented, whether the program is called day ahead or in real time.? (ii) In the case of DR programs with Pmin at or near zero, the minimum load cost represents the opportunity cost incurred by the program when it is called and not dispatched at maximum, a phenomenon that may occur day ahead or in real time. However, when occurring in real-time, having Pmin at or near to zero is especially important. This is because RDRR programs are in general limited to one call per day and dispatches of RDRR programs to zero are interpreted as ending program calls. For the reason noted, to allow for continued commitment and the possibility of later dispatch, it is essential to capture the opportunity cost of zero- dispatch hours in real time.

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

PG&E has no comment at this time.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

Please see comments under Item 1.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

Please see comments under Item 1.

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

CAISO should address price formation related to the use of Reliability Demand Response Resources through better scarcity pricing, not through a proposal that seems clearly inconsistent with Order No. 831. Vistra recognizes that CAISO has yet to implement the elements of Commitment Cost and Default Energy Bid Enhancements policy that addressed demand response including RDRR cost policies. Vistra implores the CAISO to finish implementing pieces of CCDEBE that have been delayed as soon as possible and to separately explore scarcity pricing enhancements during periods of emergency action.

Turning to focusing on seeking CAISO implement its previously approved policies that address this question. The CAISO largely has the policy established and Board approved for Reliability Demand Response Resources (RDRR) under FERC Order 831 through Commitment Costs and Default Energy Bid Enhancements (CCDEBE). While the later effort called FERC Order 831 - Import bidding and market parameters amended CCDEBE’s policy for setting the price cap and penalty prices in the market, we do not believe it impacts the policy on RDRR. The RDRR policy has not been implemented in the Tariff yet and should be done expeditiously without delay since the policy is approved. Vistra recommends CAISO take prompt action to file the Tariff clarification that is still pending.

In the Second Revised Draft Final Proposal for CCDEBE, approved at the March 22, 2018 Board of Governors meeting, the CAISO established the following policy for RDRR treatment in compliance with 831:

“For both options [marginal or discrete], the California ISO proposes to revise the bid price requirements for RDRR to require either a single-segment bid or a multi-segment bid in real-time that must be at least 95% of the market-based cap at $1,000/MWh and can be no greater than the lower of the $2,000/MWh cap or the higher of the $1,000/MWh cap or the reference level as calculated or adjusted.”[1]

Given the policy change made in the Order 831 import bidding and market parameters, there is a minor wording change needed to the above approved policy language but it will not change the policy direction that was approved. The minor change is to replace the references to $1,000/MWh cap and $2,000/MWh to soft energy bid cap and hard energy bid cap respectively so existing Tariff language implemented seamlessly flows into this policy. We view this as implementing the CCDEBE RDRR policy with the refinements to the cap made under Import Bidding and Market Parameters, both approved by Board and ready for a FERC filing.

There were various Tariff amendments approved to implement a combination of the 831 compliance items related to CCDEBE policy and other non-compliance items related to the import bidding and market parameters policy. As a result of these filings, the rules are present in the Tariff appropriately to govern the implementation of CCDEBE’s 831 policy for RDRR in Section 30.11, Adjustments to Reference Levels Prior to CAISO Market Processes, and Section 30.4. Vistra provides the citation for one of these Tariff sections that should govern RDRR reference level change requests as well – and was intended to – with emphasis in bold on the element that is important for RDRR and PDR.

“The CAISO will calculate the Reasonableness Thresholds for all resources except for Non-Resource Specific System Resources. The CAISO will calculate Reasonableness Thresholds for evaluating Reference Level Change Requests for Bids from resources, other than Hydro Default Energy Bids and Virtual Bids. For resources for which the CAISO does not calculate Default Energy Bids, the CAISO will set the Reasonableness Threshold at the Soft Energy Bid Cap. The Reasonableness Threshold for Default Energy Bid or Default Minimum Load Bid adjustments shall not exceed the Hard Energy Bid Cap or Minimum Load Cost Hard Cap, respectively

While demand response resources today do not have default energy bids calculated for them, in CCDEBE there was consideration of non-gas resources with opportunity costs. The CAISO policy at the time was that “Non-gas resources that have opportunity costs are limited to calculated or negotiated opportunity cost adders developed under Commitment Cost Enhancements Phase 3.” The CAISO was willing to support reasonableness thresholds for demand response in the ex-ante verification.

While the CAISO in its Second Revised Draft Final Proposal stated, “California ISO will not be supporting ex post review of non-gas resources at this time. Until specific circumstances and experience can be gained on how to verify actual costs for such resources, the California ISO will limit the verification to the ex-ante review. Non-gas resources that have opportunity costs are limited to calculated or negotiated opportunity cost adders developed under Commitment Cost Enhancements Phase 3.”[2] However, this was a lower case “policy” rather than a capital case “policy” that is set in stone, the CAISO should be able to support ex post verification if a Demand Response provider can show sufficient justification. We encourage the CAISO to implement these policies with the refinement to allow for ex post verification.

Even if the CAISO does not amend its intent to perform the ex-post review for DR (PDR & RDRR), the policy still bakes in a process for providers to seek any supportable costs after the fact. The approved policy states, “Given the proposal that the California ISO support an ex post verification of actual costs, the California ISO believes it prudent to retain the option for stakeholders to seek after-the-fact cost recovery at Federal Energy Regulatory Commission in the event that the California ISO cannot verify the request for uplift resettlement based on actually incurred costs.”[3] If the CAISO cannot either agree with the submitted documentation in ex post or if it is not willing to perform ex post review for these resource types then the resources still have the after-the-fact cost recovery option at FERC.

Finally, Vistra observation from the current Issue Paper and stakeholder call discussion is that there may be an interest to have price formation reflect the use of RDRR in real-time to manage through emergency actions. We strongly believe this is separate from an Order 831 compliance that supported allowing offers above the soft energy bid cap that could be verified. We are interested in a stakeholder effort that explores how emergency actions taken by CAISO operations during these periods should be better setting prices capturing this scarcity.

[1] Commitment Costs and Default Energy Bid Enhancements, Second Revised Draft Final Proposal, March 2, 2018, Page 41, http://www.caiso.com/InitiativeDocuments/SecondRevisedDraftFinalProposal-CommitmentCosts-DefaultEnergyBidEnhancements.pdf.

[2] Id at 42

[3] Id at 42.

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

Similar questions were discussed at length during an earlier initiative, CCDEBE, where the CAISO proposed and have board approval to file Tariff changes to implement policies that clarify minimum load treatment for both PDR and RDRR, when it’s behaving equivalent to PDR through day-ahead participation. Vistra respectfully requests the CAISO implement the pieces of CCDEBE that were developed to provide clarity and address some of these issues. Further, Vistra encourages the CAISO to apply this implementation, largely process, such that RDRR registers this information in Master File similarly to PDR for the purpose of using in the day-ahead market. The current practice of reflecting RDRR minimum load costs in the markets at $0/hour should continue for the purpose of the emergency dispatch in real-time and we believe this can be affected best through a SIBR rule. The following policies should be implemented as soon as possible consistent with the board direction at the March 2018 BOG meeting.

Clarifying that Demand Response resources are eligible for minimum load[1]

While less relevant it also clarified startup costs can be supported for RDRR in IFM and PDR[2]

Include minimum load costs for run hours unassociated with energy provision[3]

Vistra notes that even in the absence of allowing for the above hourly minimum load bids, the policy allowing the registration of these minimum load costs should be implemented.

Establish basis for evaluating costs for demand response under 831[4]

Stakeholder feedback was provided on these questions

Vistra specifically recalls that the OhmConnect comments[5] submitted on July 20, 2017 held particularly helpful context for thinking about minimum load for some types of demand response. Through the remainder of the stakeholder effort the CAISO arrived at the conclusion that certain actions may require costs to prepare the Demand Response to provide its load curtailment, such as turning off a piece of equipment.

[1] Id at Page 46

[2] Id at 46

[3] Id at 33-34

[4] Id at 40

[5] OhmConnect comments, http://www.caiso.com/InitiativeDocuments/OhmConnectComments_CommitmentCosts_DefaultEnergyBidEnhancementsStrawProposal.pdf

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

None currently.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

Vistra believes that the CAISO is thinking about this in a sub-optimal manner by confusing 831 compliance and the ability for demand response (PDR and RDRR in IFM) to submit cost-based offers into the market if verifiable ex ante or if not to be eligible to seek after-the-fact cost review with a need to discuss scarcity pricing. Vistra recommends the CAISO expeditiously pursue the opening of the scarcity pricing enhancements effort planned to include a scope item on price formation during periods of emergency energy action. Through framing this need more accurately to what is needed for improving market efficiency, we believe we can arrive to a workable implementation solution, specifically one that the CAISO market applies.

Vistra strongly encourages the CAISO to take this approach. Order 831 does not allow the concept of demand response being eligible to submit offers above the soft energy bid cap without verification. The CAISO should implement the policy detailed above in response to number 1 that is aligned with the current SIBR validation. If the CAISO pursues a policy that allows non-verifiable demand response bids to set prices above the soft energy bid cap with a Tariff Amendment at FERC this puts the market in an untenable situation where parties will need to protest such a filing.

Pursuing a change that seems clearly inconsistent with Order 831 is not just unduly discriminatory, but it appears to be out of compliance with Order 831. While we believe FERC may have to struggle to find an interpretation where allowing demand response to have non-cost verified offers above $1,000/MWh could be considered unjust and unreasonable, it will be much more difficult for the FERC to reach a determination that approves elements not compliant with a FERC regulation. Vistra hopes to avoid this situation proactively and consequently makes this appeal in these comments for the CAISO to separately pursue scarcity pricing enhancements for emergency actions including RDRR not through a proposal such as this that is inconsistent with Order 831.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

See above.

1. Please provide your organization’s comments on RDRR Real Time Bidding rules under the FERC Order No. 831 paradigm.

Overall Summary

WPTF appreciates the opportunity to submit comments on the CAISO’s Reliability Demand Response Resource Bidding Enhancements Issue Paper and Straw Proposal discussed during the November 4, 2021 stakeholder meeting. Ensuring that (1) resources can bid to accurately reflect direct costs as well as opportunity costs and (2) the resulting energy market clearing prices accurately reflect the market conditions are fundamental in a well-functioning competitive market. Thus, WPTF is supportive of the CAISO engaging with stakeholders on both elements as they relate specifically to RDRR in the CAISO market.

As outlined in more detail below, WPTF first believes that it is extremely important for the CAISO and stakeholders to clearly define the issue/problem statement that is trying to be addressed through the proposed changes to energy bids when the bid cap is set at $2,000/MWh. At that point, stakeholders and the CAISO can more effectively evaluate which option (or alternative) outlined in the supplemental document would be most effective and efficient. Additionally, WPTF asks for data analysis that summarizes the existing RDRR fleet such that stakeholders can make a more informed decision related to the ability of RDRR to reflect minimum load costs.

WPTF also asks the CAISO provide an update to stakeholder regarding implementation of board approved policies under its Commitment Costs and Default Energy Bid Enhancements project regarding RDRR cost-based offers. Specifically, CCDEBE included policies regarding cost-based offers for RDRR above $1,000/MWh consistent with FERC Order 831 and policies for establishing more accurate minimum load costs for demand response resources generally including RDRR when behaving like Participating Demand Resources. Providing an update as well as a summary of the RDRR related policies and discussions that took place in the CCDEBE efforts may help inform this policy effort.

Detailed Comments on #1

WPTF supports the ability for RDRR to submit energy offers above $1,000/MWh when the energy bid cap is set at $2,000/MWh. However, prior to jumping to proposed solutions, WPTF believes a clearly defined problem statement is warranted up front. Based on the discussion during the stakeholder call it appears as though the problem trying to be addressed is more of a scarcity pricing issue rather than a FERC Order 831 policy gap. However, the paper frequently references FERC Order 831. Thus, WPTF asks that the CAISO clarify exactly what issue/problem it is trying to address such that we can ensure an effective and appropriate solution.

RDRRs should not be bidding inconsistent with FERC Order 831 today; in other words, they should have to ability to bid above $1,000/MWh under the current policy which allows for bids above $1,000/MWh if cost-verified. As discussed in the CAISO’s CCDEBE proposal, the fuel equivalent cost of RDRRs is primarily driven by customer opportunity costs, which would likely justify costs greater than $1,000/MWh when the bid cap is at $2,000/MWh.

By definition, these resources are to be used by the real-time market only during system conditions where the CAISO BAA is approaching a reliability emergency (e.g., EEA-2, EEA-3), during which market clearing prices must reflect relative scarcity conditions warranting dispatch of RDRR. However, it is WPTF’s understanding that the status-quo is highly problematic as RDRR is unable to bid above $1,000/MWh which has a price suppressing effect during tight supply or stressed system conditions when the CAISO is using its Hard Energy Bid Cap – exactly the conditions which should lead to elevated prices. Under the assumption that the issue being addressed here is to ensure when RDRRs are dispatched by the market they are not inappropriately suppressing prices, it then follows that RDRR’s associated energy bids should always be at or near the energy bid cap – either $1,000/MWh or $2,000/MWh. This is a different problem statement and solution than allowing for cost-verified bids above $1,000/MWh under Order 831.

2. Please provide your organization’s comments on RDRR minimum load and minimum load costs. The CAISO is specifically interested in feedback to the following questions: • Do RDRR have actual minimum load costs from a physical and/or program perspective? • If so, do stakeholders have proposals for calculating their minimum load costs? • If there was a default RDRR minimum load cost, are there recommendations stakeholders have on how these default costs should be calculated? • Do stakeholders believe these costs should be included? • Do any of these answers vary based on if the resource is bidding economically in the day head market or bidding in real time?

WPTF believes that all resources should be able to reflect costs in the market, including RDRR to the extent they are participating as economic resources and have such costs – including opportunity costs. We appreciate that this is a nuanced topic in that economic participation is only available in the day-ahead market; real-time market participation above and beyond any day-ahead awards is considered emergency energy and must be bid in between 95% and 100% of the bid cap. It may possible that the treatment for these resources is appropriate today; we also think it may be appropriate to support the minimum load costs under some scenarios. However, these questions warrant additional information and discussion such that the CAISO and stakeholder can explore various options that allow for resources to appropriately reflect all costs in the market - including customer opportunity costs.

As we continue discussing this topic, we believe it would be useful for stakeholders to have a better understanding of the existing RDRR fleet’s operating and dispatch characteristics. We ask that the CAISO provide data regarding what percentage and MWs of RDRRs have non-zero pmin values as this would help inform discussions going forward. For example, it could be the case that no RDRRs have non-zero pmin values thus the costs considered within the minimum load cost category may differ than if there is significant amount of RDRR resources with non-zero pmin value.To the extent the CAISO and stakeholders opt for the ability of RDRR resources to reflect minimum load costs, we wonder if a one-size fits all formulation may be overly prescriptive such that it does not accurately capture the variation among RDRR costs. Thus, it may also be useful for the CAISO and stakeholders to consider an approach similar to non-gas fired resources today, which recognizes the variation among the resources’ costs.

WPTF also believes it is worthwhile to discuss with stakeholders if and how energy prices should reflect the fact that the market is relying on emergency energy from RDRRs (i.e., reflect scarcity pricing) when dispatched to minimum operating points. Under today's price formation, when resources are disptached to minimum operating points the resulting market clearing energy prices do not reflect the cost of energy being provided at that point. 

3. Please provide your organization’s comments on RDRR registration. The CAISO is specifically interested in feedback to the following question: • Would a revision to the discrete cap on RDRR of 50 MW to a higher threshold (e.g., 100 MW) enhance RDRR representation and increase the number of RDRR MW using the discrete option?

WPTF supports exploring if the threshold should be increased. It would be useful to first understand why the threshold was put in place to begin with. If the threshold was due to technological limitations, and if such limitations are less of (or no longer) an issue, then it may make sense to increase or remove the limitation entirely to provide additional flexibility and more accurate modeling and dispatch of RDRRs.

4. Based on feedback received during the 11/4 stakeholder call, the CAISO has added the following information and is requesting stakeholder feedback: Currently, CAISO bid validations enforce a real-time energy bid floor for RDRRs of 95% of the soft bid cap of $1000/MWh. Those validations are performed at the time the bid is submitted. After these validations are checked, and the bid passes further validations, the bid is considered ‘clean’ and approved for sending to the market optimization. As part of this proposal, the energy bid floor for RDRRs in real-time will be set to 95% of the energy bid cap of $1000/MWh or $2000/MWh. In many cases, the bid cap will have been raised in the day-ahead market to $2000/MWh for a particular trade date, and as part of the existing business rules, that $2000/MWh cap will be inherited by the real-time market for that trade date when the bid validation timeline opens after the publishing of the day-ahead market. There will be other cases where the variable bid cap is raised from $1000/MWh to $2000/MWh within the real-time bid validation timeline. In these cases there may be energy bids for RDRRs which have passed validation under the $1000/MWh cap (i.e. energy bids between $950/MWh and $1000/MWh) and which would be sent to the market as clean bids if no further action is taken. The expectation for bids which fall into this category is that market participants resubmit those bids, which will then be revalidated against the $2000/MWh cap. There may be rare scenarios where the conditions that precipitate raising the bid cap occur so late within the validation timeline that there is no opportunity to resubmit the bids, or scenarios where market participants didn’t receive the notification that the bid cap was raised. Thus there are times where the CAISO may need to take action to handle RDRR bids that no longer meet the bid validation rules. CAISO staff have reviewed the following options and request feedback on which scenario is preferred. Alternative options which can be implementable within the existing bid validation framework are also welcome. Option Description Advantages Disadvantages 1 Re-run bid validation rules against all submitted real-time market RDRR energy bids when the bid cap is raised from $1000/MWh to $2000/MWh. Bids between $950/MWh-$1000/MWh which were previously validated are rejected. Ensures no real-time market RDRR energy bids will be passed to the market optimization that do not meet the current validation rule parameters. Risk of sizable quantities of real-time market RDRR bids which cannot be considered by the market, if participants are not able to submit replacement bids. 2 Take no action, let previously validated bids be passed to market. Real-time market RDRR energy bids in the $950-$1000/MWh range will be passed to the market along with bids in the $1900-$2000/MWh range. Simple rule that provides optionality of RDRR pricing. Requires SC to take action to re-submit bids in potentially condensed time frame. If unable to do so, RDRRs priced between $950-$1000/MWh may be dispatched ahead of non-RDRR resources which have much higher bid prices. 3 After market close, if there are real-time market RDRR energy bids which are priced outside the $1900-$2000/MWh range, adjust the bids so that they are within the range. Alternative options include adjusting all bids up to the $1900/MWh bid floor, or doubling the existing bid. Ensures that no real-time market RDRR energy bids are lost, and all bids are within the $1900-$2000/MWh range. Adjusting energy bids upwards on the participant’s behalf is not currently a common practice. To be clear, for all options market participants will have the opportunity to resubmit their existing bids at the higher bid floor and bid cap values, time allowing. Options 2 and 3 apply only if no action is taken by the close of each hour’s market. Note: A scenario can occur where the bid cap is lowered from $2000/MWh to $1000/MWh in real-time. However, this scenario is considered to be much more rare, and more importantly should not occur under conditions when RDRRs are likely to be dispatched. In these scenarios CAISO is proposing to re-run validation rules and reject bids priced above $1000/MWh, similar to treatment of import bids.

5. Please provide your organization's comments on the options for SIBR handling real-time market RDRR energy bids. More information is available in the link below:

Copy the following link into web browser to open: http://www.caiso.com/InitiativeDocuments/CommentsTemplateSupplement-OptionsforSIBRHandlingReal-TimeMarketReliabilityDemandResponseResourceEnergyBids.pdf

WPTF appreciates the CAISO issuing the supplemental paper following the November 4, 2021 stakeholder call that outlines various solutions for consideration. We believe there is a fourth option that should also be considered – one that efficiently and effectively addresses not only the issue statement defined above but also the cons of the various options outlined by the CAISO in the supplemental paper. The fourth option would be for the CAISO to simply adjust the energy offers of RDRR when the bid caps change by preserving the percentage of the bid cap originally submitted by the SC. For example, if the RDRR was initially bid in at $950/MWh (95% of the $1,000/MWh bid cap) then if the bid cap increases to $2,000/MWh, the market would adjust the $950/MWh bid to $1,900/MWh (95% of $2,000/MWh) automatically and only for RDRRs. Likewise, if the submitted offer was initially based on a $2,000/MWh bid cap (e.g., 99% of the $2,000/MWh bid cap) but the bid cap is later adjusted downward, then the CAISO would simply adjust the energy offer down to 99% of the updated $1,000/MWh bid cap.

The option described above is slightly nuanced from Option 3 in the supplemental paper in two ways. First, it automatically adjusts all RDRR bids not just those that remain outside the 95%-100% of bid cap range. Additionally, it addresses the scenario when the bid cap may decrease from $2,000/MWh to $1,000/MWh. The benefit of this approach is that it is the CAISO implementing scarcity pricing mechanism not a market participant inappropriately impacting pricing without their offer being cost-verified. The former is a robust market design choice and the latter will likely cause FERC to struggle to approve it as it is inconsistent with its Order 831 requirements.