Comments on Final Proposal

1. Provide your organization’s overall position on the Variable Operations and Maintenance Cost Review final proposal:

Please see attached.

2. Provide a summary of your organization's comments on this proposal:

3. Provide your organization’s feedback on the proposed operations and maintenance cost categorization principles as described in section 4 (page 8):

4. Provide your organization’s feedback on the proposed operations and maintenance cost framework and default operations and maintenance adders as described in section 4 (page 9):

5. Provide your organization’s feedback on the proposed implementation details as described in appendix D (page 30):

6. Additional comments on the Variable Operations and Maintenance Cost Review final proposal:

1. Provide your organization’s overall position on the Variable Operations and Maintenance Cost Review final proposal:

Vistra Corp. ("Vistra") is generally supportive of the Variable Operations and Maintenance Cost Review Final Proposal. The remainder of our comments will describe the rationale behind our position to support with caveats the proposal.

2. Provide a summary of your organization's comments on this proposal:

Vistra commends the CAISO for the thorough and detailed Variable Operations and Maintenance Cost Review Final Proposal. We appreciate the difficulty in establishing such details and the time spent in developing the proposal and its appendices. We are conceptually supportive of these improvements and the increased clarity on principles and guidelines to establish the O&M adders – default O&M or custom O&M. The remainder of our comments attempt to highlight where we still lack clarity on how the principles will be applied for negotiating custom O&M adder for storage resources participating through the Non-Generator Resource model. We understand that default O&M for NGR will not be established. We hope to gain greater clarity on the negotiation process and understanding these guidelines, principles, and negotiation plan for Q2 2021 for storage.

3. Provide your organization’s feedback on the proposed operations and maintenance cost categorization principles as described in section 4 (page 8):

Vistra conceptually supports the categorization CAISO proposes for variable operations costs and variable maintenance costs. We understand that storage resources will not have default O&M adders for any component of the three-part bid as shown in Table 1, Proposed default O&M Adder values. However, we are interpreting that the custom O&M negotiations will still be available to storage resources and these proposed principles in the Final Proposal will apply. We respectfully ask the CAISO to clarify our understanding that these principles will be used to evaluate eligible costs in both the default and the negotiated O&M values.

Vistra is concerned about one element of the proposed Variable Maintenance Costs proposal. The CAISO’s proposed principle for Variable Maintenance Costs states “if the item is a replacement, it cannot be a replacement of an existing major component of plant or equipment.” We are concerned that this language if used in the negotiations establishing the O&M adder would exclude energy storage augmentation costs. We are unclear whether the proposal would support negotiations for variable maintenance costs for the longer term major capital expenses for battery storage augmentation needed as a function of cycles and MWh throughput. Generally, we would like to better understand what “major” replacements would not be eligible. We commend the CAISO for providing the level of detail provided in Section VIII Appendix A and request the CAISO update the policy proposal or commit to including an examples of storage major components and substantial betterment investments in its Business Practice Manual revisions.

We are also unclear on whether the CAISO proposal supports inclusion of long-term variable maintenance costs associated with cycling in its negotiated O&M adders, because these variable maintenance costs are a function of cycling rather than MWh output.

Vistra respectfully asks the CAISO to clarify what the proposed principle is for eligibility to negotiate variable maintenance costs for replacement of components of a battery energy storage resource due to deterioration as the units reach their cycling limitations over multiple years in any O&M adder for Non-Generator Resources.

4. Provide your organization’s feedback on the proposed operations and maintenance cost framework and default operations and maintenance adders as described in section 4 (page 9):

Vistra supports the proposed simplifications to the mitigated price policies and processes administered by the CAISO where possible. We appreciate the efforts to clarify and simplify the process for including applicable O&M adders into the proxy costs and cost-based DEB. Vistra appreciates the CAISO reaffirming the opportunity for resources to negotiate the O&M adder through the customer O&M negotiation process. We respectfully ask the CAISO to clarify when the null values in Table 1, Proposed Default O&M Adder values, should be interpreted as no O&M adder will be supported for that resource even if negotiated versus the negotiated process is required.

To provide more context for our question, Vistra noticed the clarification in the Final Proposal stating, “For those technology groups that do not have default values, the CAISO either believes that the technology group does not have Variable Operation or Variable Maintenance costs (e.g. the Solar technology group) or insufficient data exist to estimate these costs that abide by our cost estimation principles (e.g. the Steam technology group).” We would like to confirm that the scenario for storage/NGR is a technology group for which the CAISO found insufficient data exists and where a negotiation would be more appropriate to establish the O&M adder.

Vistra asks the CAISO to clarify which resource types, if any, that have a null value in Table 1 for a given O&M adder type will not be eligible to pursue a Custom O&M pursuant to CAISO Tariff Section 39.7.1.1.2.

5. Provide your organization’s feedback on the proposed implementation details as described in appendix D (page 30):

Vistra commends the CAISO for the detailed implementation plan included in the Final Proposal. Our only additional request is for the CAISO to include additional clarifications on documentation needed for negotiating the storage O&M adder.

6. Additional comments on the Variable Operations and Maintenance Cost Review final proposal:

Vistra appreciates the difficulty of managing a stakeholder process refining O&M adder process based on existing policy and Tariff guidance while there is a parallel stakeholder discussion being held on principles for storage variable operating and variable maintenance costs. Our current understanding that we hope to have confirmed by our above questions is that storage can pursue a negotiation with the CAISO based on timeline proposed in Appendix D. We respectfully request the CAISO clarify what it anticipates would change, if anything, in the proposed principles and guidelines if the Energy Storage and Distributed Energy Resource Phase 4 policy that includes guidance for evaluation of storage O&M is approved. We ask for this clarity because the specific language on the variable operating cost included in ESDER 4 could be interpreted as details for treatment of storage in the custom O&M process that this proposal is updating. In essence, it is unclear if the policy details being proposed in ESDER 4 require Tariff level changes to allow CAISO to negotiate O&M based on the combined guidance of both proposals or if participants can begin negotiations under this timeline for storage O&M to include in either variable cost DEB or the proposed storage DEB, if approved.