Bonneville Power Administration
Submitted 02/04/2021, 12:36 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
The Bonneville Power Administration (Bonneville)[1] appreciates the opportunity to comment on the CAISO’s Market Enhancements for Summer 2021 Readiness Straw Proposal dated January 26, 2021. Bonneville notes its general support for the comments submitted by the EIM Entities and seeks to expand on them here in specific topic areas.
Bonneville emphasizes that the most important step California should take to ensure reliable operations in summer of 2021 is to forward procure adequate resources. As discussed more thoroughly in these comments, the CAISO forecasted thousands of megawatts of capacity shortfall for summer 2020 in net peak hours back in September 2019. The capacity gap was not remedied and resulted in significant reliability challenges, impacting not just the CAISO BAA but also its adjacent BAAs. The market enhancements proposed as part of this initiative are helpful in addressing some of the symptoms and repercussions of a resource inadequate system, but these enhancements are not enough to ensure reliable operations for summer 2021 and should not be a replacement to proper forward procurement. It is critically important to the reliability of the CAISO BAA and to the reliability of the western grid that the CAISO BAA have adequate forward procured resources available to meet its summer 2021 needs.
As such, Bonneville underscores the recommended priorities provided in the EIM Entity comments for summer 2021 readiness:
- Reconsider treatment of wheel-through schedules for summer 2021 by maintaining current priority level and pursue a more durable solution for future years
- Prioritize resource sufficiency enhancements for summer 2021 to ensure the EIM RS test is accurate and that all BAAs participating in EIM are required to come in balanced with sufficient capacity to meet their obligations
- Defer System Market Power Mitigation and Scarcity Pricing to the more comprehensive and thorough Scarcity Pricing Enhancements initiative scheduled to begin in Q2 of 2021.
Bonneville also provides a summary of its recommendations for each topic area:
- Export and load priorities
- Exports supported by a non-RA resource that have been contracted for by an external entity should not be identified by the market and curtailed to address supply shortfalls in the CAISO BAA.
- Until such time as CAISO develops a process to allow wheel through schedules to be treated similar to a PT export, avoid making changes to the priority of wheel-throughs.
- EIM Coordination and Resource Sufficiency Test
- The Straw Proposal does not resolve the underlying causes of inaccurate resource sufficiency test results.
- Changes need to be made to ensure an accurate RS test ahead of summer 2021 and every effort should be made to achieve this.
- The current failure consequence does not support reliability and needs to be revisited.
- Import and Export Market Incentives during tight system conditions
- Bonneville supports CAISO’s Option 1: to modify settlement of real-time market imports and exports based on the higher of the HASP or the FMM LMP during tight system conditions.
- Real-time Scarcity Pricing
- Bonneville recommends any new pricing rules under tight system conditions be considered as part of CAISO’s more comprehensive scarcity pricing initiative scheduled to begin in Q2 2021.
- Instead more direct incentives should be pursued to ensure accurate scheduling in the day-ahead market when tight conditions are anticipated.
- System Market Power Mitigation (SMPM)
- Analysis to date does not justify SMPM.
- SMPM does not enhance reliability and should not be prioritized for summer 2021.
- The SMPM initiative has been very contentious amongst stakeholders and does not have broad support.
- Bonneville does not support the SMPM draft final proposal as it results in triggering of mitigation when there is no potential for market power to be exerted.
- The SMPM proposal needs revision and should be considered as part of the comprehensive scarcity pricing initiative scheduled to begin Q2 of 2021.
- Bonneville agrees with the CAISO that LSEs engaging in long-term contracting is fundamentally essential protection against market power and should be actively pursued as a solution for summer 2021.
[1] Bonneville is a federal power marketing administration within the U.S. Department of Energy that markets electric power from 31 federal hydroelectric projects and some non-federal projects in the Pacific Northwest with a nameplate capacity of 22,500 MW. Bonneville currently supplies 30 percent of the power consumed in the Northwest. Bonneville also operates 15,000 miles of high voltage transmission that interconnects most of the other transmission systems in the Northwest with Canada and California. Bonneville is obligated by statute to give preference in sales to Northwest municipalities, public utility districts, cooperatives and then other regional entities prior to selling power out of the region.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
Bonneville strongly supports the comments provided by select EIM Entities on this topic and reiterates the EIM Entities’ recommendations:
- Exports supported by a non-RA resource that have been contracted for by an external entity should not be identified by the market and curtailed to address supply shortfalls in the CAISO BAA.
- Until such time as CAISO develops a process to allow wheel through schedules to be treated similar to a PT export, CAISO should avoid making changes to the priority of wheel-throughs.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
- The Resource Sufficiency test is a foundational element of EIM design
Bonneville agrees with the CAISO that the purpose of the Resource Sufficiency (RS) test, along with the definition of leaning and repercussions of failure are foundational elements of EIM design. Consequently, to the extent the outcomes of the RS test result in a violation of the foundational principles of the EIM, which Bonneville believes is the case, modifications to the RS test should be prioritized and resolved without delay.
The CAISO has been clear about the purpose of the RS test from the inception of the EIM:
- A fundamental principle is that each EIM Entity will have a balanced resource plan for each operating hour, which would provide sufficient resources for that BAA to operate reliably without “leaning” on other EIM Entities or on the ISO. EIM then provides opportunity for EIM Entities and EIM Participating resources within their areas to operate more efficiently than they could on their own.” - Energy Imbalance Market Draft Final Proposal dated September 23, 2013[1]
- The purpose of the resource sufficiency evaluation is to ensure each EIM entity can adequately balance their own supply and demand prior to participating in the energy imbalance market… The resource sufficiency evaluation ensures that balancing authority areas do not inappropriately lean on the capacity, flexibility and transmission of other balancing authority areas in the EIM footprint. - EIM Resource Sufficiency Evaluation White Paper dated September 19, 2018[2].
A well-functioning resource sufficiency test that accurately assesses each EIM Entity’s resources and obligations, with failure consequences that prevent leaning and incent appropriate forward procurement to ensure reliability, has been and continues to be a foundational element in Bonneville’s decision to join the EIM, scheduled for Spring 2022. Bonneville is concerned about the CAISO’s statements that the RS test “performed as intended” during the August 2020 heat wave events and about the lack of commitment to ensure that changes needed to address both inaccurate passes of the RS test and failure repercussions that allow leaning on the EIM will be addressed in a timely manner.
- The EIM RS test is not producing accurate results
The CAISO BAA did not have sufficient resources to operate reliably during the heat wave events of summer 2020. As Bonneville has stated in its written comments to the Resource Sufficiency Evaluation workshop held on January 13, 2021 and oral comments provided on January 27, 2021, the CAISO BA was passing the EIM RS test during several intervals in which it was declaring an Energy Emergency Alert Stage (EEA) 2 and 3. NERC defines the circumstances around EEAs as follows[3]:
- EEA 1: All available generation resources in use.
- The BA is experiencing conditions where all available generation resources are committed to meet firm load, firm transactions, and reserve commitments, and is concerned about sustaining its required Contingency Reserves.
- Non-firm wholesale energy sales (other than those that are recallable to meet reserve requirements) have been curtailed.
- EEA 2: Load management procedures in effect
- The BA is no longer able to provide its expected energy requirements and is an energy deficient BA.
- An energy deficient BA has implemented its Operating Plan(s) to mitigate emergencies.
- An energy deficient BA is still able to maintain minimum Contingency Reserve requirements
- EEA 3: Firm load interruption is imminent or in progress
- The energy deficient BA is unable to meet minimum Contingency Reserve requirements.
Yet the RS test results showed CAISO passing the EIM RS test while declaring EEA 2 and EEA 3, enabling the CAISO to fully participate in the EIM for these intervals. This outcome does not reflect that the EIM RS test “worked as intended” as stated by the CAISO in several public forums. No BAA should be passing the EIM RS test while at the same time declaring an EEA 2 or and EEA3. Instead, the results of the RS test during these intervals signify that underlying components of the RS test are not properly evaluating the resources and obligations of the CAISO BAA. Changes are needed to ensure that the RS test is producing accurate results.
- The Straw Proposal does not resolve causes of inaccurate RS test results
In its Market Enhancements for 2021 Summer Readiness Straw Proposal, CAISO proposed additional improvements to the EIM RS test for summer 2021 that CAISO stated on the January 27 stakeholder call would correct the RS test and produce accurate results. These improvements included:
- Adding uncertainty requirements to the capacity test (the flexible ramping requirement for the BAA less the diversity benefit)
- Modifications to resource capacity accounting to better reflect actual availability (e.g. exclude offline resources whose startup time is greater than 1 hour).
Bonneville acknowledges that these are helpful improvements and should be pursued. However, Bonneville is concerned that these enhancements alone do not lead to an accurate RS test. For example, CAISO provided the following comparison of its RS capacity test requirement and the capacity shown to meet the requirement at the January 13 Resource Sufficiency evaluation workshop[4]:
During every interval of hour ending 18 of August 14, 2020, CAISO was declaring an EEA 2, which means that all available resources within the CAISO BAA were in use and CAISO was energy deficient.[5] Thus the blue bars in the graph above should show CAISO’s bid-range capacity below 0 MW.
- CAISO’s first proposed change would increase the capacity requirement by the uncertainty requirement (flexible ramping requirement for the BAA less the diversity benefit). The flexible ramping requirement for the CAISO BAA less the diversity benefit for hour ending 18 on August 14, 2020 was approximately 479 MW[6].
- Bonneville would like to better understand the interplay between the uncertainty that is already included in the capacity test and what uncertainty CAISO is proposing to add to the capacity test? Bonneville assumes it is additive but requests CAISO confirm this assumption.
- CAISO’s second proposed change would supposedly reduce the blue bar to better reflect actual resource availability. Bonneville requests CAISO provide the modifications it proposes to resource capacity accounting to better reflect actual availability along with the impact of each on resource capacity accounting.
Bonneville requests CAISO provide the re-calculated requirement and the re-calculated capacity values with these proposed improvements for all of the intervals in which CAISO was in an EEA2 or EEA3 provided in the below graph from Powerex’s presentation[7] at the January 13 RS workshop.
Bonneville urges the CAISO to prioritize changes to the RS test that are needed to produce accurate results, demonstrable by showing that the capacity test would have shown an available resource capacity shortfall for the CAISO BA while in an EEA. We urge the CAISO to fully investigate all of the root causes that contributed to the capacity test showing over 3,000 MW of available resource capacity for the CAISO BAA during periods it was declaring an EEA and develop a plan for resolving each issue. These enhancements should be prioritized for summer 2021 and every effort should be made to achieve this.
- The EIM RS failure consequence does not support reliability
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- The EIM RS failure consequence enables leaning
As stated earlier, the RS test is intended to support reliability by ensuring each EIM Entity and the CAISO BA have enough supply to meet their own needs on a stand-alone basis and prevent entities from leaning on the EIM. Bonneville defines leaning as an entity relying on the EIM to meet its energy, capacity, and/or flexibility needs less the diversity benefit in place of procuring sufficient resources (i.e. schedules and economic bids offered into the EIM) to meet those needs prior to the operating hour. In other words, a BAA is leaning on the EIM if the BAA cannot operate reliably or needs to take operator actions (i.e. curtail exports, shed firm load, etc.) to meet its obligations absent the EIM.
For the intervals in which CAISO failed the RS test while declaring EEAs, CAISO was relying on those EIM transfers to meet its own energy, capacity, and flexibility needs, thereby leaning on the EIM. For example, in all intervals of hours ending 17 and 18 on August 14, 2020, CAISO was importing between 1,500 and 2,500 MW of EIM imports which could not be economic displacement for the CAISO’s own resources given that all available CAISO generation resources were in use for those periods (according to NERC’s definition of EEA). Additionally, CAISO’s diversity benefit for hour ending 17 and hour ending 18 on August 14, 2020 was approximately 341 MW and 480 MW respectively[8], significantly less than the amount of EIM imports CAISO received for those hours. In conclusion, the EIM failure consequence of allowing prior hour EIM imports to continue enables a BAA that failed the test to lean on the EIM.
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- The EIM RS failure consequence undermines incentives for proper forward procurement
Bonneville believes the lack of meaningful repercussions for failing the EIM RS test undermine incentives to adequately forward procure resources needed to pass the RS test. This can lead to detrimental reliability challenges in real-time as was experienced in summer 2020.
Following rolling blackouts from the previous days, CAISO’s former CEO, Steve Berberich opened the CAISO ISO Board of Governors meeting on August 17, 2020 with these statements:
“The situation we are in could have been avoided. For many years, we [CAISO] have pointed out to the procurement authorizing authorities that there was inadequate power supply available during the net peak… We have indicated in filing after filing after filing that the Resource Adequacy program was broken and needed to be fixed. We told the CPUC that there was a 4,700 MW shortfall through 2022 and that the gap started in 2020. We even undertook notice of ex parte communications with the Commission on the matter. Despite all of that, only 3,300 MW was authorized for procurement and not starting until 2021. The bet has been that uncontracted imports will fill any void. We have told regulators over and over again that imports were drying up and that more imports should be contracted for. That was rebuffed.[9]”
Bonneville acknowledges that CAISO has been reporting on projected capacity shortfalls for its BAA far in advance of the CAISO BAA experiencing those shortfalls in real-time. CAISO provided a briefing to the ISO Board of Governors on September 18, 2019[10] that showed the following estimated capacity shortfalls at 7 p.m.:
The CAISO submitted a filing[11] to the CPUC on August 12, 2019 informing the CPUC of the projected capacity shortfalls and urging the CPUC to take immediate action on the basis of these deficiencies to ensure short-term resource adequacy sufficiency. The CPUC responded with a decision[12] requiring incremental procurement of 3,300 MW with resources to come online at least 50 percent by August 1, 2021, 75 percent by August 1, 2022, and 100 percent by August 1, 2023. The CPUC did not address the projected 2,300 MW capacity shortfall for 2020 and required 1,650 MW less procurement than the CAISO’s projected shortfall for 2021 and 2,775 MW less than the CAISO’s projected shortfall for 2022.
At the CAISO’s Board of Governor’s meeting on August 17th, CAISO estimated a resource deficiency for August 17 of up to 4,400 MW[13].
Bonneville believes that part of the reason the CPUC and California LSEs are not incented to adequately procure resources to meet the needs of the CAISO BA is that the direct consequences of failure to do so, such as failing the resource sufficiency test, are minimal. Yet these significant capacity shortfalls projected for the CAISO BAA that continue to increase dramatically year after year impose considerable reliability and financial risk to both the CAISO BAA and to adjacent EIM BAAs. For these reasons, it is important that the consequences for failing the RS test incent EIM Entities and LSEs within the CAISO BAA to procure the energy, capacity, and flexibility they need prior to the operating hour. The EIM is not a capacity market and should not be relied upon to meet those needs. Bonneville strongly recommends CAISO expand the current EIM RS failure consequence to include new physical, financial and oversight consequences which ensure that entities who fail the RS test are not enabled to lean on the EIM and sufficient incentives are provided for appropriate forward procurement of capacity. We request this be taken up as part of a comprehensive stakeholder process on resource sufficiency to begin in Q2 of 2021.
Regarding the calculation of uncertainty requirements, Bonneville appreciates the CAISO’s work to date on developing a new calculation approach through the Flexible Ramping Product Refinements initiative. We will provide more detailed feedback on CAISO’s specific proposal as part of that stakeholder forum.
[1] Reference: Page 38 of CAISO’s Energy Imbalance Market Draft Final Proposal dated September 23, 2013
[2] Reference: Page 3 of CAISO’s EIM Resource Sufficiency Evaluation White Paper dated September 19, 2018
[3] See NERC Attachment 1-EOP-011-1
[4] Reference: Slide 17 of CAISO’s January 13 Resource Sufficiency Workshop presentation
[5] “At 3:25 p.m., the CAISO declared a Stage 2 Emergency for the CAISO BAA from 3:20 p.m. to 11:59 p.m.” “At 6:38 p.m., the CAISO declared a Stage 3 Emergency because it was deficient in meeting its reserve requirement. The CAISO was not able to cure the deficiency with generation, because all generation was already online, and solar was rapidly declining while demand remained high.” “At 8:38 p.m., the CAISO downgraded from a Stage 3 to Stage 2, and Stage 2 was cancelled at 9:00 p.m.” Final Root Cause Analysis, CAISO, CPUC, CEC, January 13, 2021, pages 28-29 referring to the events of August 14, 2020.
[6] Reference: Slide 31 of CAISO’s January 13 Resource Sufficiency Workshop presentation
[7] Reference: Slide 4 of Powerex’s January 13 Resource Sufficiency Workshop presentation
[8] Reference: Slide 31 of CAISO’s Resource Sufficiency Evaluation presentation from January 13, 2021
[9] Reference: CAISO Board of Governors August 17, 2020 meeting Audio Recording
[10] Reference: Slide 6 of CAISO’s Post 2020 Grid Operational Outlook briefing; September 18, 2019
[11] Reference: Rulemaking 16-02-007. Reply Comments of the California Independent System Operator filed August 12, 2019
[12] Reference: D.19-11-06; November 7, 2019
[13] Reference: Slide 6 of CAISO’s Briefing on System Operations; August 17, 2020
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
Bonneville supports CAISO’s Option 1: to modify settlement of real-time market imports and exports based on the higher of the HASP or the FMM LMP during tight system conditions. Bonneville believes this option provides the greater incentive for hourly block imports during tight supply conditions. Bonneville’s preference is also informed by our understanding that Option 1 would be incorporated within the market optimization rather than Option 2 which we understand would be an “out of market” administrative pricing adjustment.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
Bonneville agrees with comments made on the January 27 stakeholder call that CAISO’s proposals on scarcity pricing for summer 2021 should be characterized more as “pricing rules under tight system conditions” rather than scarcity pricing enhancements. Bonneville believes more work needs to be done to understand all of the implications of implementing these pricing rules and the interaction with implementation of Order 831.
Bonneville recommends any new pricing rules under tight system conditions be considered as part of CAISO’s more comprehensive scarcity pricing initiative scheduled to begin in Q2 2021.
Bonneville believes a more direct approach to incent more accurate scheduling in the day-ahead market should be pursued for summer 2021. One option may be to require day-ahead load schedules be at least 95% of the forecast when conditions are expected to be tight.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
No comments.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
No comments.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
- Analysis to date does not justify System Market Power Mitigation
CAISO is proposing to implement system market power mitigation (SMPM) in August 2021 without providing the further analysis it committed to provide that would show a strong need for SMPM prior to this summer[1]. CAISO’s SMPM proposal attempts to solve a problem that analysis to date has shown does not exist. In its Report on System Market Issues for August and September[2], DMM stated that it “found no evidence that market results on August 14-15 were the result of market manipulation”. And in its 2019 Annual Report on Market Issues and Performance[3] stated that “overall prices in the ISO energy markets in 2019 were competitive, averaging close to what DMM estimates would result under highly efficient and competitive conditions, with most supply being offered at or near marginal operating cost… DMM estimates an average price-cost markup of $0.71/MWh or just under 2 percent… [which] indicates that prices have been very competitive, overall, for the year.”
- Current SMPM Proposal results in inappropriate mitigation
SMPM has been a very contentious initiative and various stakeholders have raised significant concerns with the revised draft final proposal. And while Bonneville understands the desire to mitigate the risk of market participants potentially exerting system market power, we believe there are significant consequences of applying SMPM when there is not actually potential for market power. In CAISO’s SMPM Revised Draft Final Proposal, CAISO stated:
“Applying system market power mitigation when there is not actually potential for market power:
- Discourages supply participation
- Leads to market prices that do not support suppliers’ real operating costs
- Discourages LSEs from engaging in long-term contracting, which is fundamentally essential protection against market power.”
Bonneville also reiterates that we do not support CAISO’s revised draft final SMPM proposal as it results in inappropriate triggering of mitigation. CAISO’s analysis showed that the proposal would have inappropriately triggered SMPM in around 50% or more of the intervals between HE13 and HE 21 on August 14, 15, 17, 18, and 19, 2020 and in 231 fifteen-minute intervals in 2019[4]. Bonneville believes further refinements are needed in order to ensure the SMPM framework does not inappropriately trigger SMPM, which would discourage supply participation, exacerbate reliability challenges and violate CAISO’s principle of having an SMPM design that maintains strong incentives for suppliers and consumers to economically participate in the CAISO’s market and to enter into long-term forward energy contracts.
- A revised SMPM proposal should be considered with comprehensive scarcity pricing initiative
Bonneville agrees with the CAISO that LSEs engaging in long-term contracting is fundamentally essential protection against market power and should be actively pursued as a solution for summer 2021. Bonneville recommends the CAISO defer implementation of a revised SMPM framework as part of the comprehensive Scarcity Pricing initiative scheduled to begin in Q2 2021.
[1] Reference: System Market Power Mitigation, Revised Initiative Schedule Market Notice
[2] www.caiso.com/documents/reportonmarketconditionsissuesandperformanceaugustandseptember2020-nov242020.pdf
[3] www.caiso.com/documents/2019annualreportonmarketissuesandperformance.pdf
[4] See CAISO’s presentation to the Market Surveillance Committee on October 9, 2020: www.caiso.com/documents/systemmarketpowermitigation-presentation-oct9_2020.pdf
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
No comments.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
Based on the current EIM Governing Body Charter and rules for decisional classification, Bonneville understands CAISO’s proposed EIM Governing Body role for each topic described in slide 45. Bonneville strongly supports the CAISO’s recommendation that the EIM Governing Body role is primary authority for resource sufficiency. While Bonneville recommends CAISO defer the scarcity pricing and system market power elements of this initiative, Bonneville asks the CAISO to be open to reconsidering the EIM Governing Body decision classification for a combined scarcity and SMPM initiative. Bonneville believes scarcity pricing mechanisms could meet the decision classification rules for EIM Governing Body primary authority and believes that changes to the competitive LMP may also meet the decisional classification rules for primary authority.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
No further comments.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
Bonneville reiterates the recommended priorities provided in the EIM Entity comments for summer 2021 readiness:
- Reconsider treatment of wheel-through schedules for summer 2021 by maintaining current priority level and pursue a more durable solution for future years
- Prioritize resource sufficiency enhancements for summer 2021 to ensure the EIM RS test is accurate and that all BAAs participating in the EIM are required to come in balanced with sufficient capacity to meet their obligations
- Defer System Market Power Mitigation and Scarcity Pricing to the more comprehensive and thorough Scarcity Pricing Enhancements initiative scheduled to begin in Q2 of 2021.
California Efficiency + Demand Management Council
Submitted 02/04/2021, 04:14 pm
Submitted on behalf of
California Efficiency + Demand Management Council
1.
Provide a summary of your organization’s comments on the straw proposal:
The California Efficiency + Demand Management Council (Council) appreciates the CAISO’s efforts to improve the functioning of its market for summer 2021. The Council’s comments do not pertain to the straw proposal, but rather, what is currently missing from it.
The Council is concerned that the CAISO has not taken steps to ensure that Proxy Demand Resources (PDR) are being fully awarded in the day-ahead market (DAM) when the market clearing price exceeds the bid price. This occurred on several occasions to at least one demand response (DR) provider during the August 2020 heat event. The CAISO should work with the DR community and investigate the cause of this issue so that it can be fixed in time for summer 2021 deployment.
One potential solution the CAISO might want to consider is adopting a trigger similar to the one in place for Reliability Demand Response Resources (RDRR) that would allow the CAISO to dispatch PDRs capable of real-time market (RTM) dispatch that were not scheduled in the DAM under emergency conditions pursuant to Operating Procedure 4420. The CAISO DAM is designed to clear based on economics and not on system conditions, so emergency events are not reflected in the DAM. To the extent that the CAISO is not economically scheduling PDRs in the DAM despite bids below the market clearing price, this will ensure that those capable of 30-minute dispatches can be used during emergency events.
Another critical issue the CAISO should address for summer 2021 is the accuracy of its DR baselines. The Council is very concerned that the CAISO’s DR baseline options undercount DR performance under extreme heat conditions which can lead to under-compensation of DR participants. This can have a disenfranchising impact on participants and reduce the amount of DR capacity that is available to maintain reliability.
The CAISO’s 10-in-10 baseline caps the day-of adjustment at +/- 20% and its 5-in-10 baseline, which is only available to residential customers, has a day-of adjustment capped at +40%/- 29%. In some instances, the sustained extreme heat events during August 14-19 and September 5-7 resulted in such high and sustained customer loads relative to their baselines that even with the day-of adjustment, curtailed customer loads were still greater than the adjusted baseline, despite the customer’s actions to execute their load reduction plans which resulted in no compensation for their load reductions.
The CAISO should consider alternative baselines, including a higher day-of adjustment, to ensure accurate measurement of DR resource performance. One potential approach could be to work with the IOUs to assess the August 14-19, 2020 and September 5-7, 2020 loads of customers not participating in a DR program to determine an appropriate alternate day-of adjustment. As a corollary, this alternate day-of adjustment could be attached to a trigger such that it is only applied during emergency or high-heat conditions so that it does not over-count performance under less-than-extreme heat conditions.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
California Energy Storage Alliance
Submitted 02/03/2021, 06:31 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
CESA appreciates the work of the ISO to ensure the necessary market updates are applied in advance of this year’s summer months. Given the reliability deficiencies that were exposed by the August 2020 heatwave, CESA recognizes the commitment of the ISO to identify and address issues with its market tools and processes that could, even inadvertently, exacerbate reliability concerns during periods of grid stress.
While these objectives are reasonable, CESA believes urgent market changes should be limited and targeted to the areas and issues the ISO and other pertinent authorities have identified as key during the August 2020 events. To this end, the ISO should base its prioritization on the findings of the Preliminary and Final Root Cause Analyses, two reports the ISO co-authored with the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC). In these reports, the authors note that only 200 MW of RA battery storage were operating in the ISO market, and that “it is difficult to draw specific conclusions about fleet performance from such a small sample size.”[1] In this context, CESA does not believe there is sufficient evidence to preempt solutions to unsubstantiated “problems” and advance the implementation of a proposal such as the minimum state-of-charge (MSOC) requirement.
Moreover, CESA continues to be concerned with particular elements of the Straw Proposal as currently drafted. Namely, the MSOC proposal continues to lack clarity regarding its trigger condition, the compensation or settlement related to its application, and the period for which it will be applicable. As such, CESA’s comments can be summarized as follows:
- The ISO should not implement the MSOC as currently defined in the Resource Adequacy (RA) Enhancements Draft Final Proposal; instead, it should consider applying the proposal put forth by LS Power.
- If the ISO moves forward with the current MSOC proposal, it should include the following modifications:
- Update the RA Enhancements Draft Final Proposal to properly reflect the reservations stakeholders have regarding the MSOC requirement.
- Include a sunset provision for December 31, 2021 and commit to develop a market-oriented solution within its forthcoming storage-focused initiative.
- Provide stakeholders with the data analyses on the different trigger conditions considered in order to evaluate their impact and pertinence.
- Hold an additional stakeholder call within the RA Enhancements Initiative to timely incorporate stakeholder feedback prior to the March Board of Governors meeting.
[1] Final Root Cause Analysis, at 6.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
CESA offers no comment at this time.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
CESA offers no comment at this time.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
CESA offers no comment at this time.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
CESA offers no comment at this time.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
CESA offers no comment at this time.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
The ISO should not implement the MSOC as currently defined in the RA Enhancements Draft Final Proposal; instead, it should consider applying the proposal put forth by LS Power.
While CESA recognizes and shares the ISO’s commitment to reliability, we have previously expressed serious concerns with regards to the MSOC proposal. In essence, this requirement is unwarranted, potentially discriminatory by virtue of its targeting of a specific technology class, unduly restrictive, and currently incomplete given its omission of a clear compensation structure. As such, the MSOC proposal as currently drafted does not represent a workable solution and the ISO should refrain from rushing its implementation to summer 2021.
Given this context, and recognizing the ISO commitment to implement market changes that will ensure all storage resources contribute to the grid’s reliability, CESA supports the alternative proposal put forth by LS Power in its comments relative to the RA Enhancements Draft Final Proposal.[1] In this proposal, LS Power offers a pathway to improve the ISO’s multi-interval optimization (MIO) tool to mitigate its current unintended negative impacts on the state-of-charge (SOC) of storage assets. Currently, the MIO is a design aspect of the Real Time (RT) market that estimates market conditions several intervals in the future, known as the advisory intervals, in order to optimize the dispatch signals given to resources in the immediately following interval, known as the binding interval. Storage resource dispatch signals (DOTs) are moved up and down in the binding interval in a way that is beyond the control of resource owners any time CAISO estimates a very low or high price materializing in the advisory intervals. Unfortunately, the MIO tool does not consider Day Ahead (DA) schedules in any way when determining RT market dispatches. This results in DOTs being often awarded at LMPs outside of the resource’s bid curve in any given interval. Moreover, this means CAISO sometimes discharges resources for lower prices than the resource has offered into the market, leaving them emptier than they would otherwise be in intervals prior to their DA schedules. As a result, the current MIO formulation creates the very risks the ISO is trying to mitigate.
Considering the need to modify the MIO, LS Power’s proposal recommends only discharging and charging storage assets at the prices they have indicated in their bid curves. This would minimize the unintended effects of the MIO while granting additional financial certainty to resource owners. LS Power also recommends minimizing the number of advisory intervals considered in the issuance of DOTs. These modifications will strengthen the already existing incentives that link financial risk and rewards to reliability-driven outcomes.
With these core modifications applied, LS Power offers an MSOC alternative that is based on market principles, limits the number of days and intervals affected by a MSOC-like requirement, and ensures the tracking of this requirement in a manner consistent with exceptional dispatch (ED). LS Power’s alternative framework can be summarized as follows:
- The ISO should focus on market-based tools first such as a revised MIO; out-of-market tools such as MSOC should only enforced when CAISO sees a reliability risk or an imminent System Emergency.
- The ISO should run sufficiency tests on a regular basis throughout the day to determine if MSOC is still needed, not limiting itself to a single test after the DA schedules are determined.
- The ISO should set MSOC to the minimum amount and time needed given the results of the sufficiency tests. This should result in the minimum quantities of charge power (in MW) and stored energy that must be maintained across the storage fleet (in MWh). Once the ISO counts the MW of DA storage awards in each hour and sum over the appropriate time scales, it should estimate the appropriate fraction of a resource’s storage capacity to be reserved from the RT market, as opposed to all of it.
- The ISO should ramp MSOC requirements smoothly and linearly to allow grid and resource flexibility on days where the sufficiency tests described above indicate that a certain MSOC is needed across the storage fleet for system reliability. The portion of each resource’s capacity subject to the MSOC requirement should be proportional to its maximum energy capacity relative to the total storage on the grid. The ramp should take place over N hours immediately preceding the start of that resource’s DA schedule, where N is the number of hours it would take to charge that resource from empty to achieve an SOC equal to the quantity of MWh it is needed to discharge based on DA, plus a safety factor (LS Power offers 20% as an example).
- The ISO should modify the bid cost recovery (BCR) mechanism to ensure storage resources are compensated for the reliability service they provide.[2]
- The ISO must track and report MSOC usage in a manner consistent with ED.
In sum, the framework offered by LS Power represents a workable solution that could be applied by summer of 2021. This proposal targets fundamental issues related to the ISO’s optimization tools, better equipping the ISO’s systems for the expected rise of energy storage assets. As such, CESA supports adopting LS Power’s proposal rather than pursuing the MSOC as currently drafted.
If the ISO moves forward with the current MSOC proposal, it should include the following modifications.
As previously stated, CESA opposes the implementation of the MSOC proposal as currently drafted within the RA Enhancements Initiative. In this section, CESA puts forth several modifications the ISO must address of it decides to move forth with the MSOC requirement despite the reservations communicated by stakeholders.
- Update the RA Enhancements Draft Final Proposal to properly reflect the reservations stakeholders have regarding the MSOC requirement: CESA considers the current RA Enhancements Draft Final Proposal does not fully capture the type and magnitude of reservations communicated by stakeholders during the development of the MSOC requirement. Specifically, the ISO has not captured CESA’s and other stakeholders’ comments regarding the potentially discriminatory nature of this requirement, nor does it reflect the provision of alternative requirements by engaged parties.
- Include a sunset provision for December 31, 2021 and commit to develop a market-oriented solution within its forthcoming storage-focused initiative: CESA considers the MSOC proposal as currently drafted is incomplete and overlooks the need for urgent modifications to the ISO’s systems to properly operate storage assets. In this context, CESA appreciates the ISO commitment to institute a new storage-focused initiative in the upcoming weeks.[3] CESA believes this future initiative will be the adequate venue for the ISO and stakeholders to develop a permanent solution to the issues the MSOC proposal seeks to address. In order to guarantee this outcome and allow the ISO to implement an interim solution for this year’s summer, CESA recommends including a sunset provision to the MSOC proposal for December 31st, 2021. CESA believes this provision will enable the ISO to manage immediate risks while communicating to stakeholders and investors this measure will not be permanent and shall be improved in the near term.
- Provide stakeholders with the data analyses on the different trigger conditions considered, to evaluate their impact and pertinence: If the ISO decides to move forward with its current MSOC proposal, CESA requests it shares detailed data analyses on the different trigger conditions staff has considered over the course of its development. As of February 2021, CESA has heard the ISO put forth at least three different trigger methodologies for the MSOC requirement; nevertheless, we have yet to see analyses that demonstrate the pertinence of said methods. CESA recognizes that the ISO has committed to share this information as part of the Final Proposal, and urges staff to do so expeditiously.[4] The lack of information related to the probability of the MSOC requirement to become binding for any given day seriously hinders stakeholders’ ability to provide substantial feedback on the methodologies considered by the ISO. In order to guarantee market participants have an adequate understanding of the new conditions they will face, the ISO must share this data in advance of the March Board of Governors meeting, where this proposal is set to be voted.
- Hold an additional stakeholder call within the RA Enhancements Initiative to timely incorporate stakeholder feedback prior to the March Board of Governors meeting: During the January 29th Market Enhancements for Summer 2021 Readiness Q&A call, CESA noted that the current procedural schedule grants little time for stakeholders to offer substantial feedback on the proposal and ISO staff to incorporate said feedback prior to the March Board of Governors meeting. In order to mitigate this concern and ensure stakeholders are heard, CESA recommends the ISO schedule and additional stakeholder call under the RA Enhancements Initiative dedicated to the MSOC proposal.
[1] See LS Power, LS Power’s Comments on RA Enhancements Draft Final Proposal, filed January 21, 2021.
[2] See LS Power, LS Power’s Comments on the Market Enhancements for Summer 2021 Readiness Initiative, filed January 14, 2021.
[3] This was noted by Gabriel Murtaugh during the January 29th Market Enhancements for Summer 2021 Readiness Q&A call.
[4] Ibid.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
CESA offers no comment at this time.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
CESA offers no comment at this time.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
CESA offers no comment at this time.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
CESA offers no comment at this time.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
CESA offers no comment at this time.
California Large Energy Consumers Association
Submitted 02/03/2021, 05:30 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
CAISO should address the bidding rules for proxy demand resources so they are dispatched prior to reliability demand response resources. See the response to question 6 for more details.
CAISO should implement restrictions on charging of batteries during the times of Alerts, Warnings, and Stage 1-3 Emergencies. See the response to question 7 for more details.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
CLECA is concerned that CAISO is only focusing on the performance of Reliability Demand Response Resources (RDRR) and is ignoring improving the performance of Proxy Demand Resources (PDR). Per the CAISO’s Department of Market Monitoring (DMM) Report on events on August and September,2020, the following occurred:[1]
For August 14 delivery, out of 244 MW of supply plan DR, 48 MW were not bid into peak net load hours in the day-ahead market.[2]. Out of these 244 MW of supply plan DR for August, 133 MW were not bid into the day-ahead market for August 15 delivery. Furthermore, only about 53% of supply plan DR was available to the CAISO on August 15.
Real-time availability was worse. On August 14 there was 53 MW less capacity available in real-time compared to day-ahead and on August 15 there was 30 MW less available in real-time compared to day-ahead. The majority of supply plan PDR that did not bid into the market is less than 1 MW so it is exempt from resource adequacy availability incentive mechanism (RAAIM).
On August 14 in hours ending 19 and 20, about 50% of supply plan DR was dispatched by the CAISO and on August 15, during those hours, only about 25% of supply plan DR was dispatched. None was manually dispatched despite the manual dispatch of RDRR.[3] DMM stated contributing factors were the use of $1000/MWh bid cap offers and the use of start-up bids and minimum load costs resulting is resources being uneconomic in the day-ahead market.
All PDR should be dispatched before RDRR. Since RDRR bids between 95-100% of the bid cap, the bid cap for PDR should be set at 94% of the maximum bid price. The CAISO should also consider removing start-up bid parameters for PDR to prevent them being used as a tool to increase the bid cost further and which can result in its dispatch after RDRR resources. The CAISO should also investigate how it can improve the exceptional dispatch of PDR prior to exceptional dispatch of RDRR.
The CAISO should also consider the proposals for supply plan demand response resources listed in the DMM report:
1. The ISO should be able to manually dispatch supply plan demand response before needing to resort to exceptional dispatch of non-resource adequacy capacity and firm load curtailment. The ISO has the ability to manually dispatch utility demand response and did so on high load days in August and September.
2. Consider removing the exemption for long-start proxy demand response to be available in the residual unit commitment process. This exemption does not exist for other types of long-start resources providing resource adequacy.
3. Continue to review why demand response resources in the same sub-lap continue to be sized less than 1 MW. Consider applying RAAIM to demand response resource adequacy capacity at the demand response provider and sub-lap level rather than the resource level to ensure this capacity remains exposed to resource adequacy availability incentives.[4]
The CAISO should provide more detail on what changes the CAISO will be making to expected performance of Reliability Demand Response Resources the Load Forecast Adjustment as mentioned on slide 32.[5]
CAISO’s proposal to have scheduling coordinators spread the bids of RDRR between $950-1000 is problematic because it involves equity issues among participating customers.[6] For the Base Interruptible Program, which consists of relatively few customers with very large loads, spreading the bids means that some customers could be dispatched more than other customers. This would result in equity issues among customers that receive the same incentive. This is an issue that would need to be resolved prior to implementation. CLECA does not believe there is sufficient time to resolve this before Summer 2021, and this aspect of the proposal should be dropped.
[1] CAISO DMM, (November 24, 2020) Report on System and Market Conditions, Issues and Performance: August and September 2020 at 55-56.
[2] Most of the supply plan DR is proxy demand resources.
[3] CAISO DMM, (November 24, 2020) Report on System and Market Conditions, Issues and Performance: August and September 2020 at 56.
[4] CAISO DMM, (November 24, 2020) Report on System and Market Conditions, Issues and Performance: August and September 2020 at 60.
[5] CAISO, (Jan 27, 2020) Market Enhancements for 2021 Summer Readiness, Slide 32.
[6] CAISO, (Jan 27, 2020) Market Enhancements for 2021 Summer Readiness, Slide 33.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
Batteries were charging during Stage 2 and Stage 3 Emergencies or during the times when Reliability Demand Response Resources were utilized. This occurred five times on August 14-15, August 18, and September 5-6. (See attachment A which shows the battery operation chart from the CAISO website with the times of Warnings, Stage 2, and Stage 3 events.) It does not make sense for batteries to charge during times when customers are on rotating outage (August 14) or when the CAISO has, or anticipates having, insufficient operating reserves, resulting in activation of which RDRR. The optimization may be producing dispatch anomalies that do not make sense during conditions when the system is unable to maintain the necessary number of operating reserves. The final root cause analysis report does not address this issue.
While CLECA supports improvements to encourage storage to have sufficient charge during periods of resource need, it is not clear the CAISO’s proposal will actually prevent a reoccurrence of what happened last year. With 1700 MW of batteries expected for summer 2021, there need to be changes so that the storage can be sure to resolve shortfalls, not contribute to resource shortfalls. There should be a set of rules that apply just during periods of stress on the electrical grid. CLECA recommends the following rules:
- When a Grid Alert occurs (which forecasts by 3 pm the day before of operating reserve deficiencies), storage will not be given day-ahead awards to charge from the grid during specified times of expected reserve deficiency.
- When a Warning is called, Storage is not allowed to charge from the grid and prior dispatch awards for charging are canceled. If charging from the grid does occur without a dispatch instruction there is a penalty charged.
- An exception is made for a manual (exceptional) instruction from the grid operator; this would waive any penalty
- During any Stage Emergency storage is not allowed to charge from the grid. If storage charges from the grid it is subject to a penalty.
CLECA believes this set of rules will offer several benefits to prevent storage from contributing to resource shortfall. With a day-ahead notice that storage is not permitted to charge during certain hours, the operator can change its real-time bidding strategy to charge outside the restricted hours. The prohibition to charging during Warnings and Stage Emergencies will prevent any market anomalies that contribute to operating reserve shortfalls instead of resolving shortfalls. Yet, there should be a manual (exceptional) dispatch provision for operators in case there is some unusual reason for the grid operator to request some storage to charge, with no penalty.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
Calpine
Submitted 02/03/2021, 02:23 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
First, do no harm. The scale and scope of CAISO proposed initiatives is impressive. Implementing a fraction of the proposals will require significant dedication on both the part of the CAISO and its vendors, but also significant effort on the part of market participants. In fact, the CAISO can create a platform for reliability and market confidence by winnowing this list early and applying uncommon diligence to understanding programmatic interactions, software testing, market simulations and roll-out preparedness.
The CAISO may be exposed to challenging market conditions this summer driven by exogenous climate factors. In the past, the CAISO has recognized that reliability risks can be amplified by unintended consequences as well as “bugs” embedded in new operational systems software. As such, it has avoided software changes during or near summer peak conditions. Nonetheless, the CAISO appears to be headed to major software drops and or activations in June, and possibly on August 1, at the height of summer. The CAISO may not be able to avoid the challenges of a hot summer, but it can avoid the self-inflicted harm of attempting to do too much at the wrong time and with too little preparation.
With that, Calpine recommends that the CAISO prioritize the following initiatives to be implemented as soon as possible before summer. We base our priorities on our own perception of implementation difficulty as well as the need to address real and present danger to reliability or irreparable harm. All other proposals can and should be pursued diligently, but implemented, as needed, after this summer.
- Modify and rationalize the priority for intertie transactions including wheel-through, exports, loads and imports.
- Consider bid-assurance for HASP imports, coupled with transparency and limits on operator load bias.
- Move RDRR into the 15 minute market and bias the cleared load to avoid price suppression.
We strongly discourage any changes that affect market optimization, scheduling or dispatch on August 1 or anytime during the summer/fall peak period.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
As one of the highest priorities, Calpine supports the realignment / clarifications of scheduling priorities identified in the presentation. Rationalizing the treatment of wheels-through, exports, imports and load is absolutely critical to the CAISO obtaining the incremental energy it needs to support reliable operations.
We agree with commenters that the CAISO must specifically define “non-RA capacity” that can be used to support the higher priority for PT exports. It seems the intent is that non-RA capacity is NQC of an internal resource that is not submitted on any RA supply plans.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
Calpine supports modifications, if administratively feasible, to rationalize the quantities demanded or supplied in the resource sufficiency tests. In the longer term, we support modifications such as those proposed by Powerex and WPTF to create scarcity prices when a BAA test reveals capacity insufficiency. This can be consider as part of the holistic review of scarcity pricing proposed by the CAISO.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
With caveats regarding operator load biasing incentives, Calpine supports the proposal to grant bid assurances to HASP imports during tight market conditions.
The CAISO eliminated BCR for HASP imports in about 2012 as it implemented FERC Order 764. The CAISO’s intention was to eliminate BCR in order to avoid a disincentive to 15 minute scheduling at the interties. Nonetheless, the volume of 15 minute intertie scheduling has never met expectations and the absence of BCR continues to place significant risk on hourly intertie transactions. This risk discourages intertie bids – which are generally required for reliability, particularly during stressed system conditions.
The risk is manifest in the difference between HASP (hourly) and FMM (15-minute) pricing. Intertie transactions are confirmed in the hourly market, based on hourly bids, but settled at the 4 individual FMM prices. Under normal conditions, one would not anticipate substantial price difference given the close sequential clearing of these markets. However, because they lack confidence in other market products (specifically, but not isolated to ineffective Flexible Ramping awards), the CAISO grid operators substantially increase (bias) the load forecasts in HASP – increasing the demand for HASP cleared imports and subsequently reducing the demand for FFM capacity.
The resulting higher prices in HASP are of course applied to imports – and would be assured by BCR -- but those prices are not available to internal resources. This discriminatory access to a preferred market should be eliminated over time, but given the exigent circumstances Calpine understands the CAISO’s desire to eliminate the disincentive to import bidding during tight system conditions.
While paying ALL resources (including internal resources) the higher-of HASP or FMM would resolve this discrimination, Calpine assumes that such a fundamental change might create implementation infeasibility as well as unintended consequences.
Rather, Calpine asks that if the CAISO moves forward with this proposal that the CAISO report, in a transparent matter, and as close to RT as possible, the amount and direction of load biasing performed by the CAISO operators. While this may not reduce market intrusion necessary for reliability, the transparency could create a discipline on overly-conservative actions that harm price formation.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
The CAISO proposes two modifications that it coins “scarcity pricing” and proposes to implement concurrently with its system market power mitigation mechanism. The CAISO proposes that this “balanced approach” would be activated on August 1st.
First, Calpine disagrees with the characterization that the implementation of the two proposed “scarcity” modifications in any significant way “balances” the ubiquitous, and continuous imposition of system market power mitigation. The two scarcity proposals would only be triggered when the CAISO is in a dire circumstance (either SMEC over $800 or load shedding is “armed”) and even then, their impacts on price formation are entirely speculative due to likely contemporaneous factors. On the other hand, the evaluation of system market power would apply to every internal resource during every interval of the entire year. Calpine urges the CAISO to once again commit to a holistic review of scarcity pricing and not presume that the largely toothless proposals it puts forward here are a sufficient replacement for a more comprehensive review.
Second, with respect to the specific scarcity proposals, Calpine can support implementation so long as they do not deter from other more important initiatives and as long as the CAISO restates its commitment to a holistic review of scarcity pricing.
The first proposal suggests that if DA SMEC is $800 or other conditions are met, the pricing parameters in RT would be raised to or above the hard bid cap. The possible increase in pricing parameters above the hard cap was mentioned in the discussion, but not included in the presentation materials. Since these speculative proposals have a direct and consequential influence on market confidence, expectations and near term hedging, the CAISO must either dispel this possibility or provide details of the proposal immediately.
There has been no detailed discussions of how this proposal may interact with Order 831 Enhancements, SMPM, or how these proposed systemic differences in DA-RT price expectations would affect virtual bidding incentives. Nonetheless, one might reasonably conclude that this new trigger for higher pricing parameters is likely over shadowed and subsumed by triggers in the 831 Enhancements proposal – for example, the maximum import bid screen -- making this proposal ineffectual and unnecessary.
The second proposal would set prices at the bid cap (either soft or hard cap, depending on circumstances) whenever the CAISO has run short of reserves, is on the verge of blackouts, and therefore must “arm” load shedding as a contingency reserve. The CAISO presentation does not describe the duration of this proposed administrative pricing – that is, whether the price would be set at the cap for a single interval, or as Calpine would propose, for the duration of “arming’ and any subsequent load drop.
Calpine’s tepid support for these measures is driven by the fear that the CAISO may conclude that they have done enough – that the measures are sufficient (albeit ineffective) to (1) deem the proposal “balanced” with SMPM or (2) avoid or significantly defer consideration of a more holistic review of scarcity and price formation.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
The joint report on the events of the summer 2020 blackouts observed that RDRR was “manually dispatched” on several, if not all occasions. The unstated, but logical conclusion of manual dispatch is that RDRR, (as well as PDR) did not set or affect prices. Ironically, rather than raise price, the manual dispatches of load curtailments most likely had the effect of suppressing prices as the load reductions softened demand.
In part, the need for manually dispatching RDRR is attributed to the fact that RDRR is not included in the 15-minute pre-dispatch runs (RTPD) and does not generate start-up instructions. The CAISO proposes to correct this by allowing RDRR to be dispatched in RTPD and carry through to each of the succeeding 3, 5-minute RTD periods. Calpine supports this change.
Calpine also supports the process of load-biasing to avoid the double-counting of DR. That is, it appears that when DR supply is dispatched up, telemetered data also shows a demand reduction. Counting a single action with both a supply response and a demand response would have the outcome of reducing prices rather than reflecting an accurate representation of marginal cost. The CAISO indicates that to solve this, operators will inject a positive load bias coincident with demand reductions. While Calpine seeks much more detailed discussion of how much and when this biasing occurs, we support this correction to support proper price formation. Additionally, we support further analysis of historic performance of DR programs as well as a critical review of the crediting processes performed at the CPUC.
However, Calpine has remaining concerns about the durability of price signals created by load interruptions. On one hand, if the load biasing is performed for the duration of the DR dispatch prices could reasonably reflect the appropriate marginal cost of shedding load. However, if load biasing lasts only the initial or a few intervals, prices may only sporadically represent those true costs. As such, perhaps the CAISO could revisit the application of fast-start (or constrained-output generation) modeling to DR supply resources. In essence, these programs model resources as if they are fully dispatchable, and able to set LMP for the full duration of dispatch.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
Calpine would set a fairly low priority on implementing a state-of-charge constraint prior to the summer of 2021. However, we understand the CAISO’s concern that a storage device must be positioned to meet a DA award, especially during tight conditions. As such, Calpine would not object if the CAISO and its consultants have the bandwidth to build, test and implement this scaled down proposal.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
Calpine objects to the implementation of SMPM, especially in the middle of the summer.
The CAISO has presented no evidence that market power has been exercised by the resources that would be targeted by this proposal (i.e., internal generation). In fact, the ISO appropriately suspended action on this initiative in November pending further demonstrations of need. The cryptic and unsupported rebirth of the initiative presents no further evidence which would compel a rushed implementation of a potentially transformative policy.
The CAISO’s own analysis concluded that SMPM would have triggered in a majority of the intervals during the summer tight conditions. These triggers could have resulted in false-positive indications of market power, mitigated bids and lowered prices when the CAISO’s need to attract imports was at its peak. Alternatively, or possibly concurrently, mitigated bid prices from internal resources coupled with operator fears of inadequacy could cause aggressive biasing of the HASP load forecast, favoring imports and as described above, putting further downward pressure on the 15 and 5 minute mitigated prices applicable to internal generation.
Calpine recommends that the CAISO consider implementation of SMPM at a later date (and certainly not in the middle of the summer) after the interactions of SMPM, Order 831 and the prospective implementation of scarcity pricing can be evaluated with due diligence and any unintended interaction and consequences can be discovered and addressed. Only this would be a truly balanced approach to implementation.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
The CAISO has not provided any evidence or cause to modify the provisions of RAAIM. Such evidence should be presented and evaluated before consideration of changes. For example, changing RAAIM assessment hours could be a time-consuming and complicated endeavor, distracting programming and vendor time. Given the higher relative priorities of other initiatives, this proposal should be dropped – only to reemerge if and when specific problems can be identified. And then, the CAISO should consider whether RAAIM is appropriately structured (if in fact, UCAP efforts are unsuccessful). Eastern markets have used much stronger performance incentives, such as New England’s Pay-for-Performance mechanisms.
Additionally, RAAIM should not be changed in the middle of an RA cycle. Parties have made decisions to sell/buy, or not sell/not buy NQC based on current penalty structures. Any modifications should only be made prospectively and for the next (2022) RA cycle.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
No Comment
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
No Comment
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
As stated in the summary, above, Calpine recommends that the CAISO prioritize the following initiatives to be implemented as soon as possible before summer. We base our priorities on our own perception of implementation difficulty as well as the need to address real and present danger to reliability or irreparable harm. All other proposals can and should be pursued diligently, but implemented, as needed, after this summer.
- Modify and rationalize the priority for intertie transactions including wheel-through, exports, loads and imports.
- Consider bid-assurance for HASP imports, coupled with transparency and limits on operator load bias.
- Move RDRR into the 15 minute market and bias the cleared load to avoid price suppression.
Desert Southwest EIM Entities
Submitted 02/04/2021, 03:39 pm
Submitted on behalf of
Arizona Public Service, NV Energy, Salt River Project, Tucson Electric Power
1.
Provide a summary of your organization’s comments on the straw proposal:
In addition to the comments in the paragraphs below, which mirror those submitted by the EIM Entities, Salt River Project (SRP), Arizona Public Service (APS), Tucson Electric Power (TEP), and NV Energy (NVE) would like to highlight concerns with the CAISO proposed reprioritization of loads and exports. The reprioritization results in a significant modification to previous scheduling priorities and is being done on an extremely tight timeline. The modifications as proposed can directly impact the ability of Desert Southwest load serving entities to import power contracted to serve load. SRP, APS, TEP, and NVE contract for energy with the Northwest, whether for resource adequacy, month ahead, day ahead or bilateral trades. With the proposed reprioritization of exports and loads for next summer, firm energy purchased from the Northwest could be curtailed by the CAISO to address the insufficient supply within its own Balancing Authority Area (BAA), leaving the Southwest short.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
The Commenters appreciate and support the CAISO’s proposal to modify scheduling priorities to better align CAISO’s priority practices with those of other Balancing Authorities (BAs) across the West. By establishing Price Taker (PT) Exports as a primary priority within the Day Ahead and Real-Time market runs, CAISO would help to ensure that it does not inadvertently transfer any reliability issues it may face to other BAs across the West.
However, in proposing to differentiate Residual Unit Commitment (RUC) exports without generation, CAISO’s proposal fails to consider how curtailment of generation originating outside of its BAA, transported through the CAISO BAA, and delivered to another BAA for firm load (wheel-through generation) would be consistent and aligned with practices and protocols across other utilities in the West. SRP, APS, TEP, and NVE are significantly concerned with the CAISO’s proposal to lower the priority of wheel-through schedules in favor of CAISO Resource Adequacy schedules in the RUC process. Such an approach would be inconsistent with practices and protocols across other utilities in the West and would likely pass along reliability issues from CAISO to Desert Southwest entities. Throughout the West, wheel-through transactions are afforded the same opportunity to acquire and use firm transmission service to deliver energy from one BA to another as import transactions, and BAs are unable to selectively de-prioritize and/or curtail wheel-through schedules to address a supply shortfall in their own BAA. This concept is also reflected within the EIM, where some entities experience a significant volume of wheel-through transactions across their areas. When an EIM Entity BA fails to pass relevant sufficiency tests, net imports or net exports to and from that BA are frozen, but wheel-through transactions can continue unaffected. This reflects the principle of not passing along issues from a deficient EIM participant to other participants. In lacking consistency, it is clear that CAISO wishes to have it both ways – limiting wheel through when it is detrimental for its own system, but establishing rules to ensure wheeling is fundamentally available through other BAAs when it is beneficial to CAISO. This is a particular concern in light of CAISO’s own challenges in meeting EIM sufficiency tests and its dependence upon wheel-through itself within the EIM environment.
CAISO’s proposal is problematic in two ways. First, CAISO’s proposal does not consider the many opportunities and competitive practices that occur in a forward environment. Load serving entities across the west routinely compete for forward products to ensure resource adequacy needs are met. Competitive processes exist for capacity and energy in the forward markets and allow entities to ensure deliverability attributes and firmness of transmission. Such products often come at a premium price in the marketplace due to the deliverability attributes – load serving entities all across the Western Interconnection willingly compete in these processes. CAISO’s proposal would fundamentally upend competitive practices for energy and capacity across the West. SRP, APS, TEP, and NVE view the congestion issues faced by CAISO as resulting from deficiencies of forward products procured by load serving entities within CAISO, and such entities should further consider the deliverability of the product and not merely the economics of the product.
The second manner in which CAISO’s proposal to deprioritize RUC without generation is problematic is that it is likely to result in fundamentally affecting the products, priorities, and customers of other transmission service providers. For example, if CAISO were to curtail a wheel-through generation import provided by an entity with firm point-to-point transmission up to CAISO’s BAA in favor of generation supply with lesser non-firm transmission rights (such as Hourly or Daily Service), CAISO will have materially affected the priority and product firmness of the transmission service provider adjacent to CAISO’s BAA, potentially overriding established North American Electric Reliability (NERC) Transmission Service Priorities[1] as well as the Open Access Transmission Tariff priorities established by the transmission provider for CAISO’s own benefit and priority.
Such an action would upend current transmission pricing and products, as well as substantially disincentivize long-term investment in transmission if an entity could no longer ensure the service offered and sold is fundamentally met. In addition, it creates questions of reciprocity and fairness, as open access and fair treatment requirements would substantially limit a transmission provider’s ability to modify its product offerings as result of these changes.
The changes CAISO has proposed should not take place at the last minute through a rushed process that will materially affect planning processes across the West, but rather should be engaged through a more robust stakeholder process where notifications and timing can better fit broader planning efforts in the West.
[1] https://www.nerc.com/pa/rrm/TLR/Pages/Transmission-Service-Reservation-Priorities-.aspx
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
EDF-Renewables
Submitted 02/03/2021, 03:16 pm
Submitted on behalf of
EDF-Renewables
1.
Provide a summary of your organization’s comments on the straw proposal:
EDF-Renewables appreciates the CAISO’s expedited effort to ensure reliability for summer 2021.
EDF-R opposes the RA Enhancements Minimum State of Charge (MSOC) proposal for energy storage resources. EDF-R does not believe the CAISO has demonstrated a need for such a blunt and restrictive market action and believes the best way to ensure generation resources perform is to send proper price signals. EDF-R would prefer an effort to enhance market price signals to incent generation to be available when needed.
EDF-R especially opposes the MSOC proposal when taken together with the scarcity pricing proposal in this summer 2021 effort. The MSOC is designed to ensure battery storage resources are available to meet their day-ahead schedule. But generation schedules change from day-ahead to real-time all the time across generation types. It is discriminatory that one resource type, storage, may not have the benefit of responding to higher real-time price signals under scarcity pricing conditions. This is not in the spirit of wholesale market design.
CAISO must narrow the summer 2021 effort and focus time, energy, and resources on things that are feasible for summer 2021 and that will address the issues identified in the final root cause analysis- demand which exceeded existing RA targets, planning targets that have not kept pace to ensure sufficient resources to meet demand in the early evening hours, and some day-ahead market practices which exacerbated the supply challenges under highly stressed conditions. After multiple stakeholder calls over the last two weeks, it is apparent CAISO is pursuing a collection of disparate efforts some of which lack basic consensus. Meetings have gone long and not all stakeholders have had a chance to ask their questions. EDF-R believes CAISO should quickly eliminate topics that are non-starters due to time and complexity such as the EIM coordination and resource sufficiency evaluation, import and export market incentives during tight system conditions, real-time scarcity pricing, and system market power mitigation. This pruning is critical to making sure that there is sufficient time for all commenters to be heard in the next stakeholder meeting.[1]
CAISO should also publish a paper in the likeness of a draft final proposal on the remaining proposals in this initiative. The presentation format was an efficient way to generate stakeholder engagement on a short-term basis. Now we are getting to the mature stage of these proposals but without any reference material except for a few bullets on a slide. The lack of written discussion coupled with the inability to ask questions at stakeholder meetings warrants, at a minimum, more detail in writing. As of February 1, the videos from Jan 27th and Jan 29th meetings were not posted online to review. If a stakeholder were to want to review the CAISO’s discussion for comments due February 3rd one would have to go off a few bullet points on a slide and memory from the call. This is perhaps an extreme example but highlights the critical nature of having these proposals in writing for fair review. For the same reasons, EDF-R also requests the CAISO publish a stakeholder comments matrix to demonstrate that comments and suggestions have been duly considered.
EDF-R requests a representative from the CAISO Project Management Office (PMO) present a comprehensive list of what projects are in the queue, from which initiative, and the timeline for implementation. EDF-R makes this request because it seems CAISO has a variety of items planned for MAP stage deployment, and, we are concerned about what is within the realm of the possible for IT implementation by summer 2021. EDF-R believes this communication from the PMO during the Market 2021 meeting is very important as a way of demonstrating that the CAISO is internally aligned for this large lift and short development timeline across all its divisions -- from policy design through IT implementation. Also please clarify the planned MAP Stage deployment date.
-
- RAAIM changes
- RDRR
- MSOC
- Export and load priorities
- Import and export incentive
- New OASIS report showing gross exports and imports by intertie
- Independent study interconnection enhancements
- FERC Order 831
[1] Example of a previous stakeholder comments matrix:
http://www.caiso.com/Documents/CommentsSummary-RegionalResourceAdequacy-DraftRegionalFrameworkProposal.pdf
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
EDF-R requests CAISO provide detailed and careful tariff definitions for the terms (1) non- Resource Adequacy capacity and (2) supporting resource.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
None
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
None
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
EDF-R supports market prices reflecting market conditions and appreciates the CAISO intention behind the real-time scarcity price enhancements.
EDF-R is very concerned about possible adverse pricing impacts to battery storage resources and cannot support this proposal when coupled with the RA Enhancements Minimum State of Charge (MSOC) proposal for battery storage resources. The MSOC proposal was crafted to ensure battery storage resources are available to meet their day-ahead schedule. But, the day-ahead schedule may differ from real-time conditions, especially in special weather and market situations like those encountered last August. Under the MSOC proposal a battery resource would be restricted from responding to real-time conditions and excluded from accessing the high real-time prices. Not only is this potentially inefficient market dispatch, but this is also discriminatory to one resource type.
EDF-R requests that the CAISO explicitly renew its commitment to undertake the proposed Scarcity Pricing stakeholder initiative this summer and appreciates CAISO’s clarification on the January 27th call that the scarcity pricing proposal in this initiative is not meant to replace the stakeholder initiative planned for this summer.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
None
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
EDF-R reiterates it supports a reliability-via-markets approach where possible. Where energy storage resources are uniquely suited to solve supply problems, they should be compensated for doing so, rather than being corralled into forgoing revenue opportunities as would happen with the RA Enhancements Minimum State of Charge (MSOC) proposal. And, CAISO has not demonstrated with empirical evidence that economic signals alone are insufficient to appropriately position storage or hybrid generators.
EDF-R continues to oppose the MSOC proposal in the CAISO’s RA Enhancements draft final proposal because it limits battery storage generators wholesale market participation. Currently, the MSOC proposal would apply restrictions to storage when traditional resources cannot meet demand.
If the CAISO insists that some form of generator command measure is needed to prevent future blackouts, then the proposal should be generator attribute driven so that they apply to all resources uniformly (use-limited resources, for example) rather than being specifically and only applicable to battery storage. EDF-R believes that storage resources are no less predictable than “traditional generation” nor are battery storage resources specifically responsible for causing or solving supply problems.
CAISO has not provided data to support the proposal that battery storage resources must be restricted in the market. The joint agencies final root cause analysis report states that during the mid-August 2020 events and early September 2020 events there were approximately 200MW of RA battery storage resources in the CAISO market but it was difficult to draw specific conclusions about the fleet performance. The report also states CAISO would work with storage providers to effectively incentivize and align storage charge and discharge behavior with the reliability needs of the system. Again, CAISO has provided no supporting evidence to suggest battery storage resources do not respond appropriately to price signals and optimize charge and discharge based on day-ahead awards and real-time price signals.
EDF-R requests more information about the proposed AGC algorithm changes to ensure regulation dispatch does not overly deplete storage resources. On both the January 27th and January 29th call, the storage proposal piece was rushed towards the end of each call. Stakeholders have not been given adequate time or information to address this piece of the proposal. It would be very helpful to have a straw proposal in writing to have any greater sense of what is actually being proposed.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
EDF-R believes it is important to develop and implement market changes that will make an impact for summer 2021, and it isn’t abundantly clear system market power mitigation (SMPM) is needed in the market or is going to make the impact necessary for summer 2021 readiness. EDF-R understands this proposal is in partnership with the idea of increasing scarcity prices in the real-time market and the concern of increased incentives to exert market power and benefit from higher prices.
CAISO has not demonstrated market power to be an issue in the CAISO market even under the idea of increased scarcity prices in the real-time market. On the Friday, January 29th call CAISO stated CAISO hasn’t seen anything that would have immediately triggered review and an implementation of changes to market power mitigation. EDF-R requests supporting data and analysis to show this is really an issue.
Additionally, CAISO has DMM to review market performance. Has DMM indicated this is an issue? EDF-R sees DMM as the answer to any market power concerns for summer 2021.
We have limited time and resources to focus on market changes to make an impact for summer 2021 and EDF-R does not believe SMPM is an efficient use of time and resources based on the fact the CAISO has the DMM in place to investigate market power and CAISO hasn’t show market power to be an issue to this point.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
EDF-R supports a new OASIS report showing gross exports and imports by intertie and appreciates CAISO’s effort at increased transparency.
EDF-R also supports independent study interconnection enhancements which will apply to a limited set of projects which will provide LSEs the potential to procure additional available RA capacity for summer of 2021.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
None
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
CAISO must narrow the summer 2021 effort and focus time, energy, and resources on things that are feasible for summer 2021 and that will address the issues identified in the final root cause analysis- demand which exceeded existing RA targets, planning targets that have not kept pace to ensure sufficient resources to meet demand in the early evening hours, and some day-ahead market practices which exacerbated the supply challenges under highly stressed conditions. After multiple stakeholder calls over the last two weeks, it is apparent CAISO is pursuing a collection of disparate efforts some of which lack basic consensus. Meetings have gone long and not all stakeholders have had a chance to ask their questions. EDF-R believes CAISO should quickly eliminate topics that are non-starters due to time and complexity such as the EIM coordination and resource sufficiency evaluation, import and export market incentives during tight system conditions, real-time scarcity pricing, and system market power mitigation. This pruning is critical to making sure that there is sufficient time for all commenters to be heard in the next stakeholder meeting.
CAISO should also publish a paper in the likeness of a draft final proposal on the remaining proposals in this initiative. The presentation format was an efficient way to generate stakeholder engagement on a short-term basis. Now we are getting to the mature stage of these proposals but without any reference material except for a few bullets on a slide. The lack of written discussion coupled with the inability to ask questions at stakeholder meetings warrants, at a minimum, more detail in writing. As of February 1, the videos from Jan 27th and Jan 29th meetings were not posted online. If a stakeholder were to want to review the CAISO’s discussion for comments due February 3rd one would have to go off a few bullet points on a slide and memory from the call. This is perhaps an extreme example but highlights the critical nature of having these proposals in writing for fair review.
If CAISO will not publish a paper, EDF-R requests, at a minimum, publishing a comments matrix to understand the CAISO’s proposal and where stakeholders stand on issues. It is apparent from stakeholder conferences there are a range of feelings on each topic and this should be clear and in writing as these efforts charge ahead.
EDF-R requests the PMO present a comprehensive list of what projects are in the queue, from which initiative, and the timeline for implementation. EDF-R makes this request because it seems CAISO has a variety of items planned for MAP stage deployment, and, we are concerned about what is within the realm of the possible for IT implementation by summer 2021. EDF-R believes this communication from the PMO during the Market 2021 meeting is very important as a way of demonstrating that the CAISO is internally aligned for this large lift and short development timeline across all its divisions -- from policy design through IT implementation. Also please clarify the planned MAP Stage deployment date.
-
- RAAIM changes
- RDRR
- MSOC
- Export and load priorities
- Import and export incentive
- New OASIS report showing gross exports and imports by intertie
- Independent study interconnection enhancements
- FERC Order 831
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
Imperial Irrigation District
Submitted 02/03/2021, 03:47 pm
Submitted on behalf of
Imperial Irrigation District
1.
Provide a summary of your organization’s comments on the straw proposal:
IID is concerned with the Straw Proposal’s approach to wheel-through transactions, which destabilizes one alternative for adjacent Balancing Authority Areas potentially to utilize in response to the de-prioritization of LPT exports imposed through Business Practice Manual Proposed Revision Request 1282.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
IID acknowledges Powerex’s comments at the Jan. 27. 2021 stakeholders’ meeting and shares its position concerning the need for confidence in wheel-through transactions.
IID’s concerns with the emergency changes implemented September 5, 2020, in Business Practice Manual Proposed Revision Request 1282, have been reflected in prior comments. As a result of the emergency changes, IID is investigating whether wheel-through transactions are viable alternatives to exports that have been de-prioritized, such that IID can use such wheel-throughs as an emergency means for importing power in the event of tight market conditions.
IID is a load serving entity and balancing authority adjacent to the CAISO with import capability exceeding 600 MW and summer peak load over 1100 MW. In the current market environment, IID is challenged with procuring Non-RA resources from within the CAISO, which from the Straw Proposal, is one of the preferred solutions to obtain resources featuring a higher-level priority for export from the CAISO. Relying on non-RA exports does not realistically address or enable IID to reliably plan for and serve load for the 2021 summer.
The next best alternative for IID is to seek resources that utilize wheel-throughs as a means to obtain reliable resources from outside of the CAISO. However, the CAISO’s Straw Proposal indicates wheel-throughs will be treated as lower-priority LPT exports. The CAISO proposes a subsequent stakeholder process to consider elevating wheel-throughs to a higher priority, but that will not provide any relief for IID or others with regard to the 2021 summer.
While IID is sympathetic to the difficult situation that the CAISO is placed in preparing for summer 2021 and its desire to prioritize protection of its own load, it appears from the Straw Proposal this priority will lead to the CAISO at certain, stressed times operating as an isolated system. By de-prioritizing exports not contracted to specific resources and destabilizing reliance on wheel-through transactions, the Straw Proposal discounts the needs of adjacent systems and load-serving entities that face the same issues. Taking away wheel-throughs as a viable alternative to LPT exports from the CAISO Balancing Authority Area discredits the value of balancing authorities’ interconnection with each other and is in conflict with open access, regionalization, and coordination.
IID encourages the CAISO to seek solutions aiming to address the challenging summer 2021 circumstances with consideration of grid reliability as a whole. IID continues to search actively for Non-RA resources to strengthen the priority of its exports from the CAISO and appreciates the opportunity to provide feedback.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
The CAISO should prioritize shoring up aspects of its Straw Proposal, such as its proposed treatment of wheel-through transactions, that rather than improving the stressed conditions at issue, would exacerbate those conditions among interconnected systems.
Middle River Power, LLC
Submitted 02/03/2021, 04:06 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
MRP is troubled by many aspects of the proposal in this initiative, both in terms of process and substance.
First, after decades of sensibly refusing to implement even minor software modifications during the summer peak season, the CAISO is now proposing to simultaneously implement two software modifications – scarcity pricing and system market power mitigation – on August 1, 2021. This rush to implement complex market modifications in the middle of the summer peak demand season is both difficult to understand and even more difficult to believe is achieveable, especially when viewed in light of (1) the CAISO’s recent inability to timely implement Phase 1 CC-DEBE modifications[1] and (2) the CAISO’s recent petition to delay implementation of Order 831 provisions first ordered by FERC in 2016 and approved by FERC in September 2020.[2]
Second, in contradiction to a November 2020 market notice, and as will be discussed below, the CAISO is, without explanation, reversing course on its pledge to implement system market power mitigation and scarcity pricing in concert.[3] Not only has the CAISO not provided the analysis referenced in this market notice, but, more concerningly, the CAISO’s “scarcity pricing” proposal is not scarcity pricing, at least as how that term is typically and reasonably used. Instead, what the CAISO proposes is to (1) increase the real-time penalty price when the CAISO’s day-ahead market clears at $800/MWh or greater and the CAISO issues a warning or emergency notice in real-time. Merely setting the real-time penalty price to a high value, however, does not amount to scarcity pricing; the penalty price will only set the real-time price if the CAISO relaxes the power balance constraint. As a result, this aspect of the CAISO’s proposal does not constitute scarcity pricing as that term is generally understood to mean “a series of automatic, graduated increases in market clearing prices that reflect increasing scarcity of supply”; it merely constitutes either the possibility of high prices or the realization of high prices after reserves levels have dropped to unacceptable levels. Similarly, the CAISO’s proposal to set the market clearing price to the offer cap if the CAISO arms load to be shed because it has run out of operating reserves is not scarcity pricing. While it is perfectly appropriate to set the market clearing price at the offer cap when the CAISO has run out of reserves, at this point the “scarcity horse has already left the barn”. Such an action should not be the first and only scarcity pricing action; it should be the last.
What the CAISO has proposed would not affect the real-time price under scarcity conditions unless the CAISO relaxes the power balance constraint or runs out of reserves. As such, what the CAISO proposes cannot reasonably considered to be scarcity pricing. To cobble these two hastily-derived things together at the 11th hour and purport to pair them with system market power mitigation – which has already undergone a fifteen-month stakeholder process – to create the perception of some kind of balanced way undermines any semblance of a meaningful stakeholder process.
Third, as the CAISO is well aware, in the 23 years since the CAISO has been in operation, the CAISO’s annual peak demand has occurred in June or July nine times – approximately 40% of the time, including the CAISO’s all-time peak demand in July 2006. Even if the CAISO could achieve the proposed August 1, 2021 implementation date, which seems highly questionable, given the CAISO’s recent track record related to CC-DEBE and Order 831 modifications, there is a substantial chance the modifications would come after the summer peak demand, exposing CAISO and market participant systems to significant risk for questionable gain. Trying to implement complicated market design modifications in the middle of the summer peak season, after the CAISO has sensibly avoided doing so for decades, is highly questionable.
MRP respectfully encourages the CAISO to stop the damage already done to what is supposed to be a collaborative stakeholder process by dropping the dangerous idea of implementing software modifications in the middle of the summer operating season (and, quite possibly, beyond the time of peak demand) and instead resuming work on a cooperative and collaborative stakeholder process to develop a reasonable and effective scarcity pricing program to pair with system market mitigation.
[1] See http://www.caiso.com/Documents/CommitmentCost-DefaultEnergyBidEnhancementsPhase1DeploymentPostponed.html.
[2] See http://www.caiso.com/Documents/Jan26-2021-PetitionLimitedTariffWaiver-FERCOrder831-ER19-2757.pdf.
[3] See http://www.caiso.com/Documents/SystemMarketPowerMitigationRevisedInitiativeSchedule.html.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
The CAISO proposes these priorities:
Day-Ahead Market (RUC)
1.PT Export
2.Load
3.LPT Export
4.Economic Bid Export
Real-Time Market
1.RUC Export w/ Gen
2.PT Export
3.Load
4.RUC Export w/o Gen
5.LPT Export
6.Economic Bid Export
MRP strongly supports the CAISO’s proposal to give exports with supporting capacity the highest priority.
MRP agrees with the CAISO that prioritizing CAISO load over CAISO BAA export commitments in all cases would run counter to long-standing western interconnection practice and would be disruptive and counterproductive.
In MRP’s view, where a resource is providing both RA and non-RA capacity, and the resource suffers a de-rate, that the RA and non-RA capacity be reduced pro-rata. As an example, where a 200 MW resource is providing 150 MW of RA capacity and 50 MW of non-RA capacity, as is re-rated to 100 MW, that resource should be deemed to be providing 75 MW of RA capacity and 25 MW of non-RA capacity. Such treatment of RA and non-RA capacity is completely consistent with the CAISO recognizing that its forward obligations to other BAAs within the western interconnection are at least at par with the CAISO’s obligation to load within its BAA. To avoid any doubt, MRP requests the CAISO articulate and memorialize how it treats RA and non-RA capacity from the same unit as part of this initiative.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
While the fact that the CAISO passed EIM sufficiency tests during some hours on August 14 and 15 in which it was simultaneously shedding firm load seems clear evidence that the sufficiency tests need to be changed, it does not seem responsible to try to make those changes to complex tests that have the potential to exacerbate supply challenges before Summer 2021.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
The CAISO has proposed these two options:
- Option 1: Modify settlement of real-time market imports and exports based on higher of HASP or FMM LMP during tight system conditions, where tight system conditions are hours in which the CAISO issues an alert in the day-ahead time frame,or issues a warning or emergency in the real-time. According to the CAISO, this treatment would not apply to Price-Taker (“PT”) exports.
- Option 2: Provide for make-whole payment to bid price for real-time market hourly block economic imports during tight system conditions.
MRP does not support either of these options. Under tight supply conditions, CAISO operators will be strongly incented to bias the HASP dispatch (already a routine practice), which will drive up prices in a market in which internal resources do not participate. Biasing HASP will drive up the HASP price, but the additional import supply obtained in the biased HASP market will then serve to suppress prices in the fifteen-minute market (“FMM”), to the detriment of all resources, especially internal resources. Moreover, paying the better of HASP or FMM prices to only import supply is discriminatory towards internal resources that can only earn the HASP-suppressed FMM price. Because the CAISO’s proposal will further benefit import supply to the detriment of internal supply, MRP cannot and does not support it. If the CAISO were proposing to pay the better of HASP or FMM prices to all supply dispatched in the HASP or FMM. MRP would consider supporting the CAISO’s proposal, but does not support it as currently proposed.
MRP does not support the second option because of the problematic outcomes articulated by the CAISO on the January 27 call.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
As noted above, while MRP does not object to the CAISO’s “scarcity pricing” proposals as they are considered in isolation, MRP strongly objects to either of these proposals being referred to as “scarcity pricing” and even more strongly objects to these hastily-contrived things being presented as a meaningful scarcity pricing program with which to pair system market power mitigation.
The CAISO’s first proposal is to set the real-time penalty price to $2,000/MWh under tight supply conditions. As an initial matter, if the CAISO had timely implemented Order 831 provisions, the real-time penalty price would already be at $2,000/MWh. Moreover, merely setting the penalty price to $2,000/MWh provides absolutely no guarantee that real-time prices will reflect scarcity. The only time that the real time price will reflect scarcity is if the CAISO must relax the power balance constraint; absent this, setting the real-time penalty price to $2,000/MWh means nothing. Offering a chance that real-time prices will reflect scarcity conditions is not the same as ensuring real-time prices reflect scarcity conditions. MRP therefore does not support this completely inadequate proposal.
The CAISO’s second proposal – to set real-time prices to the offer cap with the CAISO must arm load to be shed as reserves – is likewise inadequate. Without question, the CAISO’s real-time price should be at the offer cap when the CAISO must arm load to be shed to maintain reserve levels. But any kind of reasonable scarcity pricing should have already acted to drive up the real-time price well in advance of the CAISO reaching this point. MRP supports the CAISO implementing this proposal, but also strongly objects to the CAISO referring to this as “scarcity pricing”.
The CAISO’s November 20, 2020 market notice[1] indicated that the CAISO believed that “…the SMPM initiative would be best implemented in concert with scarcity pricing measures.” That same market notice indicated that the CAISO could move forward with system market power mitigation “…in the event further analysis shows a strong need for the proposal prior to next summer.” Since that market notice was published, the CAISO has not offered any kind of analysis purporting to show a “strong need” for system market power mitigation. Instead, MRP perceives that the CAISO has cobbled together two proposals that the CAISO asserts amount to some kind of scarcity pricing regime, but, as MRP has noted above, amount to nothing of the kind, in order to justify moving forward with system market power mitigation. This hasty and unsupported about face creates the perception that the CAISO is not acting in good faith. It is difficult to think that the CAISO could come up with a scarcity pricing proposal to appropriately balance its system market power mitigation proposal in a few days when it spent fifteen months working with market participants to develop and refine its system market power mitigation proposal.
To be clear, MRP would not object to the CAISO implementing these proposals. But MRP strongly objects to the CAISO considering these to be "scarcity pricing" propsals that would serve to balance the system market power mitigation propsal.
[1] Available at http://www.caiso.com/Documents/SystemMarketPowerMitigationRevisedInitiativeSchedule.html.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
MRP supports the CAISO’s proposals to (1) dispatch RDRR in the real-time pre-dispatch market run and (2) to have RDRR set price when it is dispatched. RA resources – and RDRR is an RA resource because it directly affects the amount of RA that an LSE must acquire and show – should be integrated into the CAISO’s spot energy markets. In fact, the CAISO’s spot markets are THE way that RA capacity is operationalized. Allowing RDRR to be used outside of the CAISO markets without having it set price improperly opens the door for this reliability product to be used for something other than reliability.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
MRP continues to support implementation of a real-time minimum state-of-charge (“SOC”) requirement to support four-hour battery resources having sufficient charge to be able to operate continuously across the operationally challenging net peak demand period. As MRP understands the CAISO’s proposal, the minimum SOC requirement would require storage resources that discharged prior to the discharge period set forth in their day-ahead schedule to charge uneconomically so as to maintain the SOC needed to satisfy their day-ahead schedule, or could preclude storage resources from discharging if there was insufficient time left to re-charge before they were scheduled to discharge according to their day-ahead schedule. Given storage resources’ ability to respond to real-time conditions very quickly, in a perfect world (i.e., one in which these resources were not so duration-limited), allowing these resources to respond to real-time events without limitation would be ideal; given, however, the very limited duration of these resources, MRP believes it is rational to preserve storage resources’ limited discharge duration for more predictable, longer duration operational challenges. In MRP’s view, enforcing the real-time minimum SOC requirement is reasonable because these resources count at their nameplate capacity values towards RA requirements, the same way that duration-unlimited resources count. Allowing these resources to deplete their SOC and be unavailable across the net load peak demand period would be inconsistent with the idea that the purpose of the RA program is to make capacity available to the CAISO to meet the CAISO’s operational needs. The CAISO’s proposal to limit enforcement of this minimum state of requirement to days in which the storage is required to meet 110 percent of forecast net peak demand is a reasonable condition that should help ensure that the minimum SOC constraint is applied only when necessary.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
The CAISO’s “scarcity pricing” proposal does not constitute anything like the “balanced approach for market pricing” that the CAISO asserts it is proposing on slide 38. Moreover, implementing scarcity pricing and system market power mitigation together in the middle of the summer operating season in August 2021 is risky and likely to be ineffective, given the likelihood that the CAISO will realize its annual peak prior to August 1. MRP respectfully urges the CAISO to drop this idea and to begin, with real, collaborative stakeholder involvement, work on a credible and effective scarcity pricing proposal to pair with system market power mitigation in a balanced and reasonable way
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
MRP hesitates to comment on possible RAAIM changes, given that the CAISO has not actually proposed them yet. As with other aspects of the CAISO’s proposal, MRP is concerned that the CAISO might propose to modify aspects of this long-standing program, which were developed over the course of many years and much discussion, with little notice and even less collaborative effort. Should the CAISO be tempted to modify any aspect of RAAIM, MRP strongly encourages the CAISO to lay out a carefully developed and persuasive argument as to how RAAIM contributed to the events of last summer, identify how any proposed modifications would better help the CAISO manage this summer, and provide adequate time (commensurate with how long it took the existing provisions to be developed) for any modifications to be considered.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
MRP has no comment.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
MRP has no comment.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
The CAISO’s already-enacted modifications to RUC and its proposed export priorities should help ensure that the CAISO does not inadvertently export power when conditions other wise suggests it should not.
The CAISO should ensure that RDRR appropriately setts price when it is used, consistent with its status as an RA resource.
The CAISO should not pursue any modifications that that would require changes to market systems in the middle of the summer. The CAISO should only pursue modifications that can be adequately tested prior to the summer operating season.
The CAISO should not enact settlement modifications that further disadvantage internal resources due to operator actions taken to bias HASP.
The CAISO should, in good faith, conduct a thorough stakeholder process to develop a reasonable and effective scarcity pricing proposal that can be paired with system market power mitigation in a balanced way.
Morgan Stanley Capital Group Inc.
Submitted 02/03/2021, 02:04 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Morgan Stanley Capital Group Inc. (“MSCG”) has reviewed and generally supports the CAISO’s straw proposal for Market Enhancements for 2021 Summer Readiness with respect to export and load priorities. MSCG is an active participant in the CAISO markets and is a provider, among other products, of Import RA to California Load Serving Entities “LSE”s.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
MSCG appreciates the CAISO clarifying the scheduling priorities for load, exports and wheel throughs. As a market participant, MSCG follows price signals and relies on CAISO to set clear rules and to have the tools necessary to manage the reliability of the grid. These proposed rules provide that clarity.
MSCG agrees with CAISO’s proposed scheduling priorities of PT export (a schedule backed by specific contract with non-RA generation), load, LPT export (not backed by specific non-RA generation), followed by economic export bids. MSCG encourages ongoing and open transparency as model changes are implemented and business practices updated to accommodate these enhancements. CAISO is part of an integrated western grid and benefits greatly from the wholesale markets and import transactions. That participation should continue to allow for exports from CAISO to neighboring regions in need when California load reliability is not at risk.
MSCG supports the CAISO’s proposed treatment of Wheel Through schedules for summer 2021. We feel it is important that non-RA wheel through schedules are not granted the right to outbid Import RA for intertie transfer capability that is granted pursuant to MIC allocations to California LSEs. We note that pursuant to ISO Tariff Section 40.4.6.2.2.3 Holders of Import Capability for year 2021 include 169 entries between LSEs and associated Branch Groups. We understand that the majority of the MIC allocations are associated with import RA products serving California LSE load. It would devalue the import RA program to allow, particularly during tight system conditions, a non-RA wheel through schedule to outbid and acquire transmission into California by bumping, or otherwise causing an Import RA schedule to be curtailed. The MIC allocation and Import RA contract for load serving entities, while different in process, can be considered similar to the designated network resource designation under the OATT. No external BA in WECC would allow a wheel through to bump their designated network resource schedule. We believe CAISO’s proposal is consistent with this general concept, but future enhancements after summer 2021 should consider whether the full MIC allocation should have priority over wheel through schedules or whether only MIC that has contracted for external import RA contracts in at least the month ahead timeframe should have priority.
On Slide 15, CAISO states as part of its Policy catalog – it will consider a process to allow wheel through schedules to be treated similar to a PT export (presumably backed by non RA source). MSCG supports further consideration of this initiative as part of the Policy catalog so market participants can deliberate the various issues.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
MSCG is supportive of Option 2, which would provide for make-whole payment to bid price (Bid Cost Recovery “BCR”) for real-time market hourly block economic imports during tight system conditions. The HASP price is advisory only, so this additional assurance that an importer will get at least what they bid will provide greater incentive to offer imports to CAISO. During tight system conditions, it is likely that other neighboring markets are also experiencing high prices; therefore this would allow the CAISO to better compete for available supply when importers would prefer a known price rather than an unknown FMM price. The additional scheduling priorities being implemented by CAISO for loads vs. exports should prevent any of this BCR uplift being used to serve LPT or economic exports.
The CAISO notice for when BCR applies should be very clear to avoid any settlement miscues.
To provide the greatest notice to market participants, any Day Ahead (“DA”) notice by CAISO should align with the WECC preschedule calendar. Taking last August’s heat wave as an example, a majority of preschedule decisions for Friday August 14th and Saturday August 15th, were being made by market participants early on the morning of Thursday August 13th. Similarly, for Sunday and Monday August 16th/17th decisions were being made on the morning of Friday August 14th. To encourage the greatest number of DA imports, any market notices or alerts from CAISO regarding tight system conditions should take these WECC preschedule timelines into account and be issued prior to DA trading in broader west markets.
It should also be noted, MSCG believes that BCR on imports should be revisited after this summer as a long term initiative to improve import liquidity at all times, not just during stress conditions. This would afford imports the same treatment as internal generation which gets BCR. In MSCG’s opinion the change made several years ago where HASP became advisory has been a contributing factor to a drop in economic participation and liquidity on the interties.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
MSCG supports the CAISO’s real-time scarcity price enhancements as described in the presentation. Market participants follow price signals and it is important that those price signals are an accurate reflection of market conditions.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
NV Energy
Submitted 02/03/2021, 01:54 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
NV Energy appreciates the opportunity to comment on the outline of potential market design changes to be implemented prior to the summer of 2021. Given the challenges of last summer, NV Energy understands the CAISO’s desire to make targeted revisions to improve market performance during the upcoming peak season. Nevertheless, with the complex nature of the CAISO’s markets and the extremely tight timeframe for this initiative; any expedited changes should be of limited scope and directly related to the issues identified in the Final Root Cause Analysis. While is it difficult to offer specific recommendations given the extremely limited information and time available, NV Energy offers three general recommendations:
- Any proposed revisions must consider not only the impact on the CAISO BAA, but also the effects on the EIM and the broader Western market. The continued integration of the western market is a vital component of achieving decarbonization goals at reasonable cost. Improvements should foster that integration.
- As described by CAISO management during the most recent EIM Governing Body meeting, any changes should be foundational to the EDAM and other future market enhancements. The Summer 2021 initiative should not proceed with changes that will need to be reconsidered or worse undone as part of an EDAM, as that would likely delay broader market improvements.
- The CAISO should not make major market design changes through modifications to procedures or BPMs without a tariff change reviewed by FERC. Under the Commission’s “rule of reason” actions that “significantly affect rates and services” fall within the directive of section 205 of the Federal Power Act. Any significant and possibly controversial rule changes should be vetted by FERC.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
NV Energy requests clarification of the CAISO’s proposal. Assume four situations:
- A non-RA resource self- scheduling as an export
- A non-RA resource self-scheduling as a wheel-through
- A RA resource bidding as an import
- A non-RA resource bidding as an import
The first situation is similar to a geothermal unit in Nevada securing firm transmission to CAISO to serve a California LSE. NV Energy would only curtail the transaction if there was a physical derate on the line that made transmission unavailable. How is CAISO proposing to give the same level of priority to non-RA exports from its BAA?
As to the second situation, while load serving entities in Nevada can reserve intertie capacity, if they have a designated network resource and transmission to the boundary, wheel-through transactions can compete for the import transmission capacity on a first-come, first-served basis. How does, CAISO propose to maintain the same level of fairness for non-RA wheel-through transactions?
With regard to the third and fourth situations, while NV Energy can understand the CAISO’s priority claim to RA resources with must-offer bids, does the CAISO believe California LSEs should have a similar priority claim to non-RA resources being bid into what is a regional market? California LSEs have not paid for this capacity. Is the CAISO suggesting as part of the current design or EDAM that California LSEs will have priority access to these bids under tight supply conditions?
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
Any proposed changes to the RS test and especially the consequences of failure must be carefully considered. Most importantly, any limitations on transfer capacity must not be so sudden or severe as to jeopardize a BA’s ability to respond to events.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
NV Energy questions the need to include scarcity pricing in this initiative as it is a complex, challenging issue that is the subject of an upcoming, separate stakeholder process. Of the two proposals presented on Slide 24. NV Energy strongly opposes Option 1. In an effort to induce more accurate day-ahead scheduling in CAISO, the Option 1 proposal would scale real-time market’s penalty prices relative to $2,000/MWh power balance constraint penalty price when: (1) day-ahead market clears at $800/MWh or greater or (2) CAISO issues a warning notice or emergency stage 1-3 (EEA 2) in real-time. As such, Option 1 would appear to undo the careful compromise on parameter penalty prices from the Order No. 831 initiative, even before the Board-approved tariff change is filed at FERC.
The CAISO conducted a robust stakeholder process on the power balance constraint penalty parameter following Order No. 831 from May 2019, with the release of an Issue Paper and Straw Proposal, to October 1, 2020, with the Board of Governor’s unanimous approval of the upcoming tariff filing. NV Energy along with several other EIM Entities participated in the stakeholder process with extensive comments.* In particular, these EIM Entities supported the CAISO’s final recommendation, as approved by the Board of Governors, to set the power balance penalty price used by the market to $2,000/MWh, and scale related price parameters accordingly, only for those intervals in which verified energy costs are greater than $1,000/MWh. Specifically, the CAISO will propose to FERC to use these higher priced parameters only when (1) there is a submitted and cost-verified energy bid from a resource-specific resource greater than $1,000/MWh or (2) a CAISO-calculated “maximum import bid price,” used to screen the costs of imports, is greater than $1,000/MWh.
The proposal on Slide 25 of the Summer 2021 Straw Proposal would undo the compromise and increase penalty prices to the EIM Entities’ customers as an inducement for CAISO LSEs to more accurately schedule their day-ahead load. A recommendation to address the concern, without modifying the Order 831 compromise, would be for CAISO to adopt a targeted penalty, similar to that applied in the EIM, to any LSE that does not follow the CAISO’s forecast and under-schedules by a specified bandwidth.
Under the second proposal, the CAISO would release contingency reserves at the bid cap when arming load to meet the contingency reserve requirement. NV Energy does not have a comment on this proposal.
* See Joint Party Comments Commitment Costs and Default Energy Bid Draft Tariff Language dated May 28, 2019; http://www.caiso.com/InitiativeDocuments/JointPartiesComments-CommitmentCostsandDefaultEnergyBidEnhancements-DraftTariffLanguage.pdf; Comments of the EIM Entities on CAISO’s FERC Order 831 Import Bidding and Market Parameters Revised Straw Proposal dated December 19, 2019, http://www.caiso.com/InitiativeDocuments/APS-IPC-PGE-PacifiCorp-NVEJointComments-FERCOrder831-ImportBidding-MarketParameters-RevisedStrawProposal.pdf; Comments of Select EIM Entities on the CAISO’s Order 831 Import Bidding and Market Parameters Draft Final Proposal dated May 20, 2020, http://www.caiso.com/InitiativeDocuments/JointSelectEIMEntityComments-FERCOrder831-ImportBidding-MarketParameters-DraftFinalProposal.pdf; and Comments of Select EIM Entities on the CAISO’s Order 831 Import Bidding and Market Parameters Revised Draft Final Proposal dated August 12, 2020, http://www.caiso.com/InitiativeDocuments/EIMEntitiesJointComments-FERCOrder831-ImportBidding-MarketParameters-RevisedDraftFinalProposal.pdf. See also PSE Comments on CAISO’s FERC Order 831 Import Bidding and Market Parameters Revised Straw Proposal dated December 19, 2019. http://www.caiso.com/InitiativeDocuments/PSEComments-FERCOrder831-ImportBidding-MarketParameters-RevisedStrawProposal.pdf.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
NV Energy agrees that the EIM Governing Body should have primary authority over resource sufficiency and advisory authority over scarcity pricing. NV Energy suggests that the EIM Governing Body also have advisory authority over export priorities as these can directly affect EIM Entities and their customers.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
Pacific Gas & Electric
Submitted 02/04/2021, 02:24 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
PG&E supports the CAISO’s efforts to find near-term solutions to ensure grid reliability in Summer 2021, in coordination with the Emergency Reliability proceeding at the CPUC and the RA Enhancements initiative.
We note, however, that the scope in this initiative covers many complicated market rules which the CAISO has spent the last decade plus developing. Given the risk of implementation challenges and the potential for unintended consequences, PG&E requests the CAISO focus on discrete changes where there are clear benefits to reliability in the summer of 2021. For example, the CAISO could develop specific solutions to address the market design gaps identified in the RUC market that led to the CAISO allowing the exports of California RA during periods of system emergencies.. Other initiatives, such as scarcity pricing, could have unintended consequences ( e.g. incentivizing physical withholding to drive up prices) and might exacerbate and not improve reliability problems.
Additionally, PG&E requests that any market rule changes that have not been developed through the standard (and complete) stakeholder process, should have sunset provisions at the end of the summer of 2021. The CAISO can examine the effectiveness of these temporary changes in a full stakeholder process before making permanent changes.
With the above principles in mind for evaluating the CAISO’s proposals – 1) clear reliability benefits for the 2021 summer, 2) implementable through the CAISO’s software and business rules and/or tariff change by June 1st, 3) a focus on discrete changes that address operational and market design flaws, and 4) with sunsetting provisions – PG&E supports moving forward with further consideration of the proposals in:
- Export and Load Priorities (specifically the aspects deprioritizing wheels and LPT exports below load and import rules that prohibit them from serving exports)
- Import and Export Market Incentives
- System Market Power Mitigation
- Reliability Demand Response Resources (RDRR) dispatch
- Independent Study Process (ISP) enhancements
And PG&E currently opposes moving forward with the topics below within the scope of this expedited initiative:
- Export and Load Priorities (specifically the aspects reprioritizing PT exports above CAISO load)
- Real-time Scarcity Pricing
- Management of Storage Resources
- EIM Resource Sufficiency Evaluation
- Changes to RA Availability Incentive Mechanism (RAAIM)
These topics raise valid market design issues, but PG&E believes they do not meet enough of the above criteria to continue to be considered as part of the Summer 2021 Readiness initiative.
PG&E appreciates the opportunity to engage the CAISO and provide initial comments on the Market Enhancements for Summer 2021 Readiness initiative. Please see our comments by topic listed below.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
Executive Summary
- PG&E does not support the CAISO’s proposal to give PT exports priority above load within this initiative as the CAISO will be unable to achieve reciprocal tariff rules across BAs in the West.
- PG&E supports the following elements:
- The CAISO’s proposal to prioritize LPT exports under load in all markets
- The proposal to treat wheeling priority on the same level as LPT exports
- The import rules that clarify that imports cannot be used to support an export
- Additionally, PG&E requests the CAISO to make the following additions and clarifications:
- Clarifying what qualifies as non-RA capacity
- Additional attestation rules and processes to increase transparency
- A process for the CAISO to make public any export transaction given PT priority
- The requirement that designated resources for PT exports be required to generate in real-time during emergency conditions
CAISO Export and Load Prioritization Proposal
PG&E appreciates the CAISO’s efforts to align export and load prioritization with BAs in the West, but we are concerned it is not possible to achieve the necessary reciprocal prioritization in tariffs in time for Summer 2021. Idaho Power discussed in their presentation during the workshop, the practice in the West to prioritize firm exports over native load from an energy standpoint. It appears the CAISO’s proposal to give PT exports priority above load will in effect align us with this practice. PG&E understands this change to prioritization would require changes to the CAISO’s tariff while other BAs would be trusted to uphold this standard practice.
As it is likely that we will face future West-wide reliability events, it is important that CAISO seek alignment within the tariffs to ensure that this standard practice is legally binding preventing a scenario where other BAs might curtail California’s RA imports to serve their own load. Therefore, without this reciprocal treatment in the tariff, the CAISO’s current proposal could in fact be detrimental to reliability in Summer 2021. Moreover, it does not appear likely that this reciprocal treatment is achievable in time for Summer 2021 implementation. As such, PG&E cannot support the CAISO’s current proposal to give PT exports a higher priority than load.
Instead, PG&E asks the CAISO to consider giving PT exports the same priority as load in all markets. Due to concerns outlined within these comments, PG&E is concerned that the CAISO does not have adequate rules to ensure PT exports can only be served by contracted non-RA supply. Therefore, to improve reliability for Summer 2021, we ask the CAISO to prioritize these exports on the same level as load.
PG&E, however, does support the CAISO amending its prioritization to give LPT exports a lower priority than load in all markets. We are concerned that, under the current rules, LPT exports (which do not require a designated non-RA resource) that receive a RUC award could prevent California RA resources from serving load during reliability events if the CAISO’s load forecast is not accurate. Therefore, PG&E supports the CAISO deprioritizing these exports relative to load in all markets.
PG&E’s proposed export prioritization is as follows:
Day-Ahead Market (RUC)
- PT Export & Load
- LPT Export
- Economic Bid Export
Real-Time Market
- PT Export (including DAM awards) & Load
- LPT Export
- Economic Bid Export
Clarifications on Non-RA Definition
PG&E requests that the CAISO clearly define what constitutes non-RA capacity that can serve a PT export. We also request the CAISO include a detailed explanation of how the CAISO will define non-RA capacity by major resource type, explaining how the CAISO will determine that resource’s qualifying capacity. PG&E would like to note that we have specific concerns around the treatment of variable energy resources (i.e. wind, solar, and some hydro), resources without full deliverability, and demand response.
- PG&E has specific concerns regarding the rules for resources like wind, solar, and hydro. For example, if there is a hydro resource that has been derated based on expected output, an exporter should not be able to designate extra output above the RA value as a PT export. If this resource’s nameplate capacity is 100 MW and has a RA value of 60 MW, the resource should not be able to designate the additional 40 MWs as capacity available to serve a PT export. We ask the CAISO to consider this scenario and lay out specific rules that show how the CAISO will determine the exportable capacity from these resources.
- Regarding resources without full deliverability (energy-only resources), PG&E requests that these resources cannot be used to support PT exports even if they do not have an RA contract. PG&E is concerned that these resources under the current rules could be used to support exports and crowd out the ability for RA resources to serve California load due to transmission constraints.
- Additionally, PG&E believes that the CAISO should prohibit demand response from serving PT exports. While demand response resources can be considered non-RA, PG&E has concerns that due to the current nature of demand response these resources cannot reliably serve PT exports.
Additional Attestation Rules and Processes
PG&E continues to request that the CAISO include additional rules and processes for PT export attestation. As PG&E understands it, the current process requires that exporters designate a non-RA resource when scheduling a PT export. Additionally, CAISO is proposing to add a function that will provide a notification to the designated resource’s scheduling coordinator that it is supporting a PT export. PG&E believes that these current and proposed rules are still insufficient to ensure the CAISO has properly validated the export.
Specifically, PG&E would like the CAISO to require exporters to include information regarding their contracts to supply energy. This information is necessary so that CAISO can ensure that the exporter has the right to the non-RA energy and can receive PT export status. Alternatively, the CAISO should publicly share information about exports designated as PT a day after the fact. This would give market participants the ability to further vet these exports and ensure they met all standards for receiving PT status. If the CAISO believes this information is too sensitive for public release, the data could be shared with the DMM and the CPUC for review and another level of validation. PG&E believes this additional layer of transparency will help identify any other issues or concerns with rules and processes for these exports.
The CAISO should also create a process to penalize exporters who have not met the PT export standard. PG&E believes that a penalty is key to ensuring that exporters abide by the CAISO’s rules for receiving PT export status. Without additional attestation rules and this penalty, PG&E fears that exporters would be able to improperly receive priority above native load to the detriment of California reliability.
Require Generators Run to Support PT Export
PG&E believes that generators supporting PT exports should be required to be generating during emergency conditions in order to receive this export status. We are concerned that if a designated resource is not required to be generating even during times of emergency conditions, California’s RA resources may be required to serve the export. The CAISO should add additional rules to ensure that in times of emergency conditions a designated resource is required to run to support that export. If the designated resource is unable to generate to support the export, it should lose its PT status. PG&E understands that during normal operating conditions this requirement does not align with the CAISO’s economic dispatch model, but would encourage the CAISO to consider applying the requirement when it anticipates emergency conditions.
Wheeling Prioritization and Import Rules
PG&E supports the CAISO’s proposal to prioritize wheeling transactions below CAISO load. PG&E also supports the CAISO proposal that non-RA imports cannot be designated to serve a PT export, but requests that the CAISO include additional information in its next proposal on how it will ensure that imports are not able to be used as a designated resource to serve exports. PG&E believes these proposals will ensure that RA imports will serve native CAISO load over an export and will limit the potential for wheeling transactions to create congestion on CAISO transmission that could prevent other RA resources from serving native load.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
Executive Summary
- PG&E opposes the CAISO’s EIM resource sufficiency test proposal as currently stated. By making the capacity test more stringent, the straw proposal may jeopardize near-term grid reliability by increasing the likelihood that transfers between EIM BAs will be constrained when they are most needed.
- An alternative for consideration is suspending import capping when a deficient BA is in an emergency system condition. This suspension would only apply in the emergency condition to ensure a life line that would not be unnecessarily cut off if neighboring BAs are able to assist without risk to themselves.
- Reforms to the RSE and its core elements that do not directly support near-term grid reliability should not be included in this initiative.
Detailed Summary of PG&E’s Position
PG&E appreciates the CAISO’s workshop and consideration of improvements to the resource sufficiency evaluation (RSE) to support summer 2021 reliability. The CAISO has put forward two proposals to change the RSE: 1) adding an uncertainty requirement – calculated as the flexible ramping requirement less the diversity benefit – to the bid range capacity test, and 2) adjusting resource capacity accounting to better reflect actual resource availability. PG&E is concerned that both proposals could do more harm than good in protecting grid reliability this summer. We appreciate the CAISO’s consideration of the following concerns:
A more stringent RSE will increase the likelihood that BAs will fail the RSE and jeopardize grid reliability in summer 2021
The CAISO straw proposal would add an uncertainty requirement to the capacity test, in effect raising the bar for the megawatts needed for balancing areas to pass the capacity test. The underlying intent of this proposal seems to be geared toward creating stronger incentives for long-term forward capacity procurement. Incremental capacity procurement is an important goal that other efforts at the CAISO and the CPUC are exploring to prepare for summer 2021 reliability. However, unvetted changes to the RSE may have the counterproductive effect of undermining reliability by capping otherwise economic EIM transfers during emergency conditions, and other unintended consequences.
Changes to resource accounting should proceed carefully to minimize unintended consequences
The CAISO has not provided specific changes to resource accounting other than suggesting on slide 18 that it may “exclude offline resources whose startup time is greater than 1 hour.” While PG&E supports the CAISO’s objective to ensure more accurate resource counting, proposed changes need to be carefully vetted. For example, PG&E supports comments submitted by the CAISO Department of Market Monitoring[1] on January 21, 2021, pointing out the potential problems in resource counting when advisory interval EIM transfers displace otherwise available but uncommitted resources.[2]
Reforms to the RSE’s core functions should not be addressed in this expedited initiative
PG&E supports the CAISO’s conclusion that changes to the foundational elements of the RSE should not be rushed in this initiative. The CAISO’s stated goal of this initiative is to ensure “better access available supply, protect grid reliability, and avoid rotating power outages during extreme heat waves.” Because we believe the straw proposal on this topic has the potential to undermine grid reliability and access to available supply, PG&E opposes moving forward with this topic as currently proposed. PG&E could support changes that directly improve EIM emergency processes when regional reliability is threatened, such as suspending the current limitation on import transfers to deficient BAs.
[1]CAISO Department of Market Monitoring. “Comments on Market Enhancements for Summer 2021 Readiness Stakeholder Workshops January 12-13, 2021.” January 21, 2021. http://www.caiso.com/Documents/DMMCommentsonMarketEnhancementsSummer2021Readiness-Jan12-13Workshops-Final.pdf
[2] Ibid.
“First and foremost, Powerex proposes not to consider offline capacity in the bid range capacity test. This approach fails to consider that EIM import transfers in advisory intervals impact unit commitments in the real-time market. If EIM import transfers displace internal resource commitments in the short-term unit commitment (STUC) or RTPD commitment processes, the capacity from these resources would not be appropriately considered in Powerex’s proposed capacity test. Excluding resources whose commitment is displaced by advisory interval EIM import transfers does not appropriately consider that this capacity was procured and would have been available, but for EIM import transfers in advisory intervals.”
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
Executive Summary
- PG&E agrees with the CAISO’s approach to restrict new import and export market incentives in this initiative only to pre-defined emergency system conditions, as proposed on slide 23 of the straw proposal presentation shared on January 27th.
- PG&E does not support Option 1 to pay the higher of the HASP or FMM price. This option would unfairly advantage hourly schedules over resources dispatched in the FMM. It also creates potential gaming concerns that we believe need further examination.
- PG&E also has significant questions and concerns with Option 2 to provide make-whole payments to hourly block imports. This option lacks needed details to understand how the make-whole payments would work and introduces gaming opportunities, as CAISO noted on slide 25.
- As an alternative to address concerns with Options 1 and 2, PG&E would like to propose a third option: compensating all HASP-awarded Hourly Block Schedules at the advisory HASP LMPs instead of the binding FMM LMPs during the predefined emergency conditions. We believe this option may ease the administrative burden of implementation by June 1 and reduce the potential for gaming and excessive uplift costs that exists with Options 1 and 2.
- A benefit of the market incentive changes considered in this topic is reducing the need to expedite the scarcity pricing measures proposed in the straw proposal, which PG&E believes requires significant clarification and may not improve system reliability in summer 2021.
Detailed Summary of PG&E’s Position
PG&E offers the following questions and additional comments on Option 1, 2 and our proposed Option 3:
Option 1
PG&E does not support Option 1; modifying the settlement of real-time market imports and exports to be based on higher of HASP or FMM LMP during tight system conditions. PG&E is concerned that this would provide Hourly Block intertie resources with an unfair advantage over resources dispatched as part of the Real-Time FMM market. This would include 15-minute dispatchable intertie schedules, as well as dispatchable physical resources in both the CAISO and the EIM balancing authority areas. PG&E does not believe that such treatment would be fair or equitable and could result in a reduction of 15-minute dispatchable intertie bids, at the expense of dispatch flexibility within the operating hour. PG&E also believes there could be potential unintended consequences or gaming opportunities with paying the higher of the HASP price of the FMM prices that would need to be evaluated.
Option 2
PG&E has significant concerns regarding Option 2; providing for make-whole payment to bid price for real-time market hourly block economic imports during tight system conditions. We request that the CAISO provide further clarity on the granularity of such make-whole payments:
- Would they to be done hour by hour, as is done for incremental above-market revenues for exceptionally dispatched resources, or over the course of a trade day like the Bid Cost Recovery process?
- How would any real-time operational adjustments or curtailments affect these make-whole payments under either scenario?
- Would the implementation of this option also be likely to reduce the use of 15-minute dispatchable intertie bids during such intervals?
PG&E Proposed Option 3
PG&E would like the CAISO to also examine the possibility of a third option: compensating all HASP-awarded Hourly Block Schedules at the advisory HASP LMPs instead of the binding FMM LMPs during emergency conditions. Without additional details as to the actual HASP award mechanisms, as stated below, PG&E is unable to fully evaluate the appropriateness of such a possibility but believes that this mechanism would be considerably easier to implement in the short time frame of this initiative and could meet the CAISO’s objectives of providing price certainty to the hourly block importers during system emergencies.
Finally, a benefit of the market incentive changes considered in this topic is reducing the need to expedite the scarcity pricing measures proposed in the straw proposal, which PG&E believes requires significant clarification and may not improve system reliability in summer 2021.
Additional questions:
Convergence Bidding
PG&E is concerned about how any of the options suggested might interact with the Convergence Bidding process, and how changes to Hourly Block intertie schedules compensation could be leveraged to generate inappropriate revenues through the interaction with virtual bids.
HASP Scheduling and Intertie Shadow Prices:
Under the current process, bid-in Hourly Block Schedules on the interties are awarded based on the results of the CAISO’s HASP optimization for each given hour. This process produces physical import and/or export schedules for the entirety of the trading hour and advisory prices for each 15-minute interval within the hour.
The CAISO did not clearly define how this current HASP process identifies which Hourly Block import and/or exports are considered economic during the HASP optimization. PG&E requests the CAISO include an explanation of how it determines the awarded capacity for such schedules, as well as clarification on how the current intertie shadow prices associated with each intertie line would be applied to the Hourly Block Schedules being committed by the HASP scheduling run, so that the CAISO’s proposed options may be more accurately compared to the Real-Time FMM commitment and pricing processes.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
Executive Summary
- PG&E opposes moving forward with this proposal in an expedited fashion. This proposal does not present sufficient technical details and lacks needed clarity for stakeholders to compare any reliability benefits against undesirable market consequences, such as (i) Incenting withholding and creating gaming opportunities for convergence bids in day-ahead markets; and (ii) Failing to protect against load dropping and improve reliability in real-time markets. In addition, it is unclear how the proposed enhancement will interact with FERC Order 831 market changes.
- Since this proposal could have significant impacts on price formation across EIM markets, PG&E believes that it needs rigorous validation and will not be feasible to implement by summer 2021.
- PG&E appreciates CAISO’s attempt to incent accurate day-ahead scheduling and improve real-time market incentives. We hope to continue working with the CAISO constructively to develop measures to improve market incentives for reliability.
Detailed Summary of PG&E’s Position
- On the first enhancement:
“Scale real-time market’s penalty prices relative to $2,000/MWh power balance constraint penalty price when: (1) Day-ahead market clears at $800/MWh or greater, or (2) CAISO issues a warning notice or emergency stage 1-3 (EEA 2) in real-time[1].”
PG&E requests the CAISO to clarify the following:
Effective timing of the triggering conditions: PG&E requests the CAISO to clarify when market participants will be informed of the triggering of scarcity pricing. Since Condition (1) and (2) can only be activated post the day-ahead market or in real-time, it is not clear how the potential uplift profit, if any, would incent import bids and improve scheduling accuracy day-ahead.
On the contrary, the enhancement could create gaming opportunities by incenting withholding in the day-head market in order to activate condition (1) and trigger scarcity pricing in real-time. This could significantly increase market operation costs and defect forward market supply scheduling.
Implication for market actions and load reliability: PG&E asks the CAISO to (i) clearly define what it means by ‘scale,’ and (ii) clarify whether the increase of penalty prices is in the scheduling run or pricing run of the real-time market.
PG&E is concerned that this enhancement will not improve load reliability. The CAISO proposes to raise the penalty price of the power balance constraints to $2,000/MWh and increase the penalty prices of other constraints relative to it. This change will keep the rank of constraint violation the same as in the current real-time markets,[2] which implies the power balance constraint will be violated instead of going short of reserves to meet supply deficiency. PG&E requests the CAISO to confirm whether this understanding is correct. In such a case, loads will be dropped before releasing contingency reserves during tight system conditions as in the summer of 2020.
Implication for price formation: As pointed out in the MSC meeting in December 2020, “it is not clear what occurred on August 14 to allow prices to be set at levels that did not reflect a power balance violation when the CAISO was in stage 2 emergency and presumably short of reserves.[3]” It appeared that the price signal was muted for unknown reasons, which will not be resolved by scaling up the penalty prices. PG&E believes that it is important for the CAISO to fully investigate the price formation during the heatwave period. Simply amplifying the penalty prices could result in a price increase in an unpredictable manner.
In addition, unlike the eastern ISOs’ scarcity pricing designs, which settle based on demand curves at multiple levels, the proposed enhancement uniformly raises the market-clearing prices to Order 831’s import bid cap at $2,000/MWh during tight conditions, which assumes that imports are always at their highest possible bids and necessary to clear the market. This assumption is overaggressive and does not accurately reflect system scarcity.
It is also not clear how the two enhancements will interact with Order 831 and what additional reliability value the enhancement will provide.
For the reasons listed above, PG&E is concerned that the proposed enhancement will negatively impact price formation and create misleading incentives in both the day-ahead and real-time markets.
- On the second enhancement:
“Release contingency reserves at the bid cap when arming load to meeting contingency reserve.[4]”
PG&E is concerned that this enhancement will provide limited or no reliability benefits. As noted in the comments under the first enhancement, based on the current rank of penalty prices in real-time markets, loads will be dropped before going short of contingency reserve. Releasing the reserves appears to have no materialized effects after dropping the load to meet the energy constraint and further arming the load to meet the contingency reserve requirements.
PG&E requests the CAISO to clearly define the value of ‘the bid cap,’ i.e., $1,000/MWh or as effective under Order 831. PG&E further seeks clarification on how ‘releasing contingency reserve at the bid cap’ will interact with the existing Ancillary Service Marginal Pricing (ASMP). Under the existing scarcity pricing, if supply is insufficient to meet the minimum reserve requirements, ASMP will rise to administratively determined values set by the demand curves.[5] Does the proposed enhancement override the demand curve by setting the ASMP at the bid cap flat when the condition is triggered?
It is not clear if the CAISO intends to limit the price increase to operating reserve products. Under this enhancement, energy price will be formed in the same way as the existing scarcity pricing design, i.e., it may either rise together or may be unaffected, depending on whether a generating unit backs down its schedule of operating reserves to provide one additional MW of energy. Therefore, PG&E worries that the enhancement may fail to achieve its stated goal of creating incentives and attracting more supply during tight system conditions to meet both energy and contingency reserve requirements.
[1] “Market enhancement for 2021 summer readiness - Straw proposal,” CAISO, Jan. 26, 2021.
[2] “Business practice manual for market operations,” CAISO, version 70.
[3] “Scarcity pricing background discussion,” Scott Harvey, California ISO Market Surveillance Meeting, Dec. 11, 2020.
[4] “Market enhancement for 2021 summer readiness - Straw proposal,” CAISO, Jan. 26, 2021.
[5] “Business practice manual for market operations,” CAISO, version 70.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
Executive Summary
- PG&E supports moving forward and further discussion on the reliability demand response resource (RDRR) topic.
- The CAISO’s proposal to request that scheduling coordinators change how they bid RDRR resources requires consultation with the CPUC on if there are equity issues for customers that need to be mitigated.
Detailed Summary of PG&E’s Position
In light of the CAISO’s operational and software challenges with optimizing RDRR, the CAISO is proposed that RDRR scheduling coordinators (SCs) change how they bid resources. Specifically, the CAISO is proposing that RDRR resources would spread their bids between 95%-100% of the $1,000 soft offer cap. Bids would be structured so that each bid contains more than one segment.
PG&E offers the following comments on the implications of this proposal:
- Customer implications need further review: As changes to bidding practices could cause some RDRR to be picked up before other RDRR, PG&E believes the CPUC must be consulted on whether any mitigation measures need to be set up to demonstrate certain customers are not always on the bottom of the bid range.
- Magnitude of impact: PG&E believes proposed changes will help operationalize ~250-330 MW of RDRR for PG&E.
- Proposed changes appear straightforward to implement: PG&E understands that this proposal does not require implementation steps by the CAISO; only SCs would change their bidding behavior.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
Executive Summary
- PG&E supports the development of grid operator tools such as the automatic generation control (AGC) signal to manage storage resources
- Due to unresolved technical challenges and the risk of adverse effects, PG&E strongly opposes the rollout of the minimum state of charge (MSOC) for the summer 2021 timeframe.
- PG&E also requests clarification on key implementation details of the proposal (i.e. timing, testing opportunities, bid cost recovery (BCR), etc.
Detailed Summary of PG&E’s Position
First, PG&E would like to acknowledge and support the CAISO’s efforts towards developing and expanding grid operator tools such as the AGC signal to manage storage resources. That said, PG&E has several clarification questions regarding this proposal that were submitted in previous comments:
- Does the CAISO’s proposal only apply to energy storage resources which are operating under AGC?
- Would such control be available if an energy storage resource is not providing (or not certified) to provide AGC?
- What testing or confirmation does the CAISO have of its capability to use AGC to manage SOC other than in the REM model?
- Under the REM model, AGC can only be used to manage SOC to 50% of maximum SOC, which is a static value. Is the proposal for AGC to manage state of charge to dynamic values in the NGR model?
Secondly, PG&E urges the CAISO to postpone its implementation of the MSOC due to the significant unresolved challenges that remain with the proposal and the risk of adverse effects of early adoption. PG&E is aware of the CAISO’s aim of ensuring that storage resources are (fully) charged during the peak hours in tight supply conditions, however the CAISO hasn’t addressed the many concerns raised by stakeholders. For example, transparency and alignment over state-of-charge telemetry continues to be an issue between PG&E and the CAISO, which would only be exacerbated by the creation of the MSOC tool.
Furthermore, PG&E has many clarifying questions regarding the MSOC that were shared in our earlier round of comments that have yet to be addressed. PG&E reiterates the clarifying questions below:
- What would the trigger/criteria be for when the minimum SOC is used in the summer 2021context? If the criteria are the same as stated in the RA Enhancements initiative (on days when non-storage supply fails to meet 110% of net load), the CASIO should make this clear.
- Would the requirement be implemented in the CAISO market business systems (i.e., where it would affect the validation or processing of bids), or only in the real time dispatch market algorithms?
- Will there be any opportunity to test the MSOC tool or see the results of CAISO testing prior to implementation?
- Will market participants have any way of validating the use of the requirement? Could CAISO, for example, provide data allowing ex-post reviews for the days in question?
- The CAISO suggests that this tool would not require a tariff change. Please confirm this, in particular as it pertains to bid cost recovery (BCR) sections (see next question).
- The requirement would be expected to result in lost opportunities to discharge when in the money, which are not subject to BCR. Could it also result in charging instructions that were out of the money, which would be subject to BCR?
In addition to these questions, PG&E has the following two comments:
- The CAISO should commit to informing scheduling coordinators/resource owners as to when the MSOC requirement criteria is met and for which hours it is enforced.
- To support its case for accelerating this proposal, the CAISO should provide historical data which demonstrates how many times the MSOC would have been used over the past three years (i.e. when non-storage supply failed to meet 110% of net load).
Lastly, it was pointed out that this topic will be discussed further in the RA Enhancements initiative on February 23rd. The CAISO should clarify how this February 23 meeting aligns with the Summer 2021 Readiness initiative timeline as comments are due on the Summer Readiness draft final proposal and tariff language just two days later on February 25th.
PG&E supports CAISO’s continued efforts to implement storage measures and hopes to continue to work constructively with the CAISO on this matter.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
Summary of PG&E's position
- PG&E supports the CAISO moving forward with the implementation of system market power mitigation (SMPM). Phase 1 of the system market power mitigation initiative for the real-time markets has undergone a full stakeholder process, culminating in a revised draft final proposal in September 2020. While PG&E continues to support changes to make the latest SMPM proposal more effective, we support CAISO’s goal to move this topic forward for implementation in summer 2021.
- As a matter of process, PG&E does not believe SMPM needs to be tied to the scarcity pricing proposal and should move forward independently of that topic.
- PG&E recognizes that there will be a significant implementation process required to ensure a smooth rollout and asks the CAISO to work with stakeholders on this immediately.
- CAISO’s efforts on the “Import and Export Market Incentives during tight system conditions” topic to provide price certainty to intertie block scheduling should ease concerns related to putting SMPM measures in place.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
Independent Study Process Interconnection Enhancements – Slide 41
Executive Summary
- PG&E believes the CAISO’s current interconnection enhancements proposal is too narrow to provide incremental capacity of any significance.
- CAISO should expand the scope of its current proposal by 1) using existing tariff authority to expedite its Independent Study Process for new and existing resources and 2) initiate another PMAX clean-up effort to identify generating resources with the ability to increase their output.
Detailed Summary of PG&E’s Position
CAISO has proposed two enhancements to the Independent study process (ISP) to allow customers to interconnect faster than the cluster study process:
- Remove 100 MW/125% cap on behind-the-meter expansion requests
- Enable the CAISO to award available deliverability temporarily to online projects until earlier-queued project comes online
PG&E believes the CAISO's proposal is too narrow in scope to add material additional capacity. Our concerns include the following:
- The temporary deliverability is not likely to produce any material results since few resources will fit the narrow criteria
- The proposal only focuses on existing resources within the interconnection queue or are presently interconnected
- The proposal only focuses on unused portions of an interconnection and does not add any incremental capacity beyond what was originally studied.
- The proposal does not provide an accelerated path to add incremental capacity to grid.
To provide additional capacity for summer 2021, PG&E offers two recommendations to expand the scope of this topic:
- The CAISO should utilize its tariff authority to issue emergency authorization to expedite its Independent Study Process for new and existing resources. The most recent Resource Interconnection Forum indicates that eligible resources that qualify for the Independent Study Process (ISP) have an interconnection timeline of “eight months without deliverability”[1] which would not be useful for the Summer 2021 challenges if there is a need to construct any interconnection facilities. The CAISO has the Tariff Authority to waive the “timelines in the GIDAP to meet the schedule required by an order, ruling, or regulation of the Governor of the State of California, the CPUC, or the CEC.”[2] In addition to the tariff changes being envisioned with interim deliverability, it would be critically important to develop an expedited interconnection study process that could be evaluated in a timeline that supports the Summer 2021 needs. This same expedited ISP could be used to support the possibility of new resources seeking an interconnection and could be used to support the process for existing resources to install behind-the-meter expansion.
- The CAISO should initiate another PMAX cleanup effort to identify generating resources with the ability to increase their output. The PMAX cleanup effort was used to identify resources that were regularly exceeding their interconnection limit and became candidates to increase the point of interconnection limit with the interconnection agreement after an engineering evaluation. This same effort could also be used to identify resources that do not appear to be fully utilizing their interconnection capabilities. This information could then be used to confirm if this is due to a plant condition that can be repaired or real-time operating grid conditions that limit the output. This is a prudent step to ensure that existing resources interconnected to the grid can provide as much capacity as possible in support of the capacity efforts.
Changes to Resource Adequacy Availability Incentive Mechanism (RAAIM) – slide 42.
Executive Summary
PG&E has several concerns with the changes to RAAIM proposal and believes CAISO should focus on market design changes that have 1) direct impact on availability and 2) are easy to implement by the summer 2021 with minor dollar impact on yearly program requirements that have been set months ago.
Detailed Summary of PG&E’s Position
PG&E believes the RAAIM proposal has many implications that need to be further assessed.
On the change of the availability hours (to include weekends and weekdays) and the increase of the RAAIM penalty, PG&E believes this proposal is not easy to implement by summer 2021 and may have a significant dollar impact. As recognized by CAISO, implementing these potential changes in the middle of an RA operational year would have a significant impact on existing contracts. It would likely increase the expected RAAIM exposure for each MW sold and would increase the minimum prices at which entities are willing to sell RA in many cases. In addition, some existing sales already in place may no longer be economic if they were originally transacted at prices that are no longer sufficient to cover increased risk of RAAIM penalties.
On the removal of the RAAIM exemptions (e.g., for resources < 1 MW) proposal, PG&E requests CAISO provide clarifications on how many MWs will be freed up by this measure and if it will have significant impact on summer availability. From a quick assessment, PG&E does not believe significant capacity will be added by this measure.
On the review of the outage substitution rules to allow for more flexibility (e.g., between imports and internal resources) or publish a list of resources that have available non-RA capacity to make it easier for SCs to find substitution proposal, PG&E would welcome such a substitution proposal. As pointed out by the CAISO, the planned outage and substitution rules are addressed within the RA Enhancements initiative, requesting to provide full substitution for RA resources on planned outages. PG&E has provided detailed comments on the implementation challenges of this proposal and refers CAISO to the PG&E’s comments submitted on 1/21/2021 (answer to question 4).
Also related to the RA Enhancements initiative, CAISO’s UCAP proposal considers removing RAAIM in 2022 for RA year 2023. PG&E wonders what the benefits of changing RAAIM for less than a year would be.
[1] http://www.caiso.com/Documents/Presentation-1-InterconnectionApplicationOptions-Process.pdf , page 6.
[2] http://www.caiso.com/Documents/AppendixDD-GeneratorInterconnectionDeliverabilityAllocationProcedures-asof-Sep9-2020.pdf , Appendix DD, Section 8.6
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
PG&E does not oppose the classifications proposed on slide 45. The proposed classifications appear to be consistent with current practice and are appropriate for this initiative.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
As stated in response to question 1, PG&E supports moving forward with further consideration of the proposals in:
- Export and Load Priorities (specifically the aspects deprioritizing wheels and LPT exports below load and import rules that prohibit them from serving exports)
- Import and Export Market Incentives
- System Market Power Mitigation
- Reliability Demand Response Resources (RDRR) Dispatch
- Independent Study Process (ISP)
And PG&E currently opposes moving forward with the topics below within the scope of this expedited initiative:
- Export and Load Priorities (specifically the aspects reprioritizing PT exports above CAISO load)
- Real-time Scarcity Pricing
- Management of Storage Resources
- EIM Resource Sufficiency Evaluation
- Changes to RA Availability Incentive Mechanism (RAAIM)
These topics raise valid market design issues, but PG&E believes they do not meet enough of the following criteria to continue to be considered as part of the Summer 2021 Readiness initiative: 1) clear reliability benefits for the 2021 summer, 2) implementable through the CAISO’s software and business rules and/or tariff change by June 1st, 3) a focus on discrete changes that address operational and market design flaws, and 4) with sunsetting provisions.
PacifiCorp
Submitted 02/04/2021, 03:07 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
PacifiCorp appreciates the opportunity to comment on the CAISO’s straw proposal for the Summer 2021 market enhancements. In general, PacifiCorp is supportive of a few of CAISO’s proposals and concerned that other proposals do not consider the impacts on the neighboring Balancing Authority Areas (BAAs) in the EIM.
PacifiCorp requests that the CAISO provide a designation for each proposal specifying which proposals require tariff revisions and which proposals will be implemented through business practice revisions. This information would be helpful for stakeholders to follow this initiative as we progress through the stakeholder process.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
PacifiCorp understands that CAISO is proposing to update the scheduling priorities of exports with respect to the priority of load. Additionally, PacifiCorp recognizes that the proposed scheduling priorities are similar to the scheduling priorities that currently exist within the CAISO market. However, the events from the summer of 2020 and the explanation of the current scheduling priorities have brought to light the reliability issues that can arise in the neighboring balancing authority areas from these current and proposed priorities that do not currently align with the west.
Regarding firm versus non-firm inter-BAA transactions, PacifiCorp proposes that the CAISO align their practices and priorities to those in the west as practicable to help maintain reliability throughout the West. CAISO has stated that it does not have the same processes in place to determine whether or not exports are feasible prior to issuing the market award. While PacifiCorp understands that CAISO’s processes might be different than those of the other balancing authorities within the West, we do not agree that CAISO does not have a method to determine the feasibility of exports. Specifically, the Business Practice Manual (BPM) update that went into effect on September 5, 2020 instituted a process for CAISO to check the feasibility of exports by utilizing the Reliability Unit Commitment (RUC) process. The RUC process runs the CAISO day-ahead forecast against the physical schedules to determine the ability for CAISO to meet load and exports. Additionally, CAISO operators can load bias within the RUC market run to account for and ensure excess system capacity.
CAISO proposes to update the export priorities in the day-ahead and real-time markets to only allow exports that have a (PT) specified non-RA self-scheduled resource to have a higher priority than load. PacifiCorp considers priorities above or equal to load to be a similar designation to WSPP Schedule C (firm energy). The utilization of firm energy maintains reliability, because it reduces the likelihood that exports are cut to serve load which would only shift the issues of scarcity to another balancing authority. In addition, the proposal prioritizes all exports that are (LPT) non-specified non-RA self-scheduled resources below load. PacifiCorp considers this prioritization to be similar to a non-firm reservation. Furthermore, CAISO proposes to allow the optimization to replace the (PT) specified non-RA resource with less expensive energy meaning the resource will not necessarily supply the export. In light of these proposals, PacifiCorp does not understand the necessity for the export to be a (PT) specified non-RA self-scheduled resource in order to be prioritized above load. It is important to note that WSPP Schedule C does not require the energy to be specified from a specific resource in order to be considered firm. The priorities included in the latest proposal appear to indicate that that unspecified non-RA exports should be retracted to serve California load when needed. This treatment does not align with the most commonly utilized product of WSPP Schedule C to serve load reliably. Therefore, PacifiCorp proposes that any (PT and LPT) non-RA self-schedule export be prioritized above or equal to load to closely align with the practices within the west.
Finally, PacifiCorp requests that the CAISO provide an indication of the export type (PT, LPT, or economic) as a token in the miscellaneous information field located within the e-Tag. This will allow balancing authority areas to establish a reliability plan for the imports associated from purchases within CAISO. This identification is vitally important for balancing authorities to know the priority level of the imports to appropriately account for additional reserves if determined to be needed. For instance, a customer within a PacifiCorp Balancing Authority Area may purchase energy within CAISO to serve their load. This CAISO export might have a priority lower than load and may be cut in real-time to serve California load. If this case were to occur, then PacifiCorp would have to make up this energy to maintain reliability within its Balancing Authority. Ideally, PacifiCorp would like know how much capacity is being imported to serve load as non-firm.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
While PacifiCorp understands the limitation of changes that may be made to the resource sufficiency test in advance of summer 2021, PacifiCorp continues to urge the CAISO to highly prioritize evaluating enhancements to the resource sufficiency test to ensure that it is meeting its purpose of ensuring that each EIM entity can adequately balance their own supply and demand prior to participating in the EIM. As noted in prior comments, PacifiCorp believes that the events of Summer 2020 brought to the forefront a serious concern that the resource sufficiency test is not being equitably applied across all EIM Entities. If so, there are significant operational and financial consequences for EIM Entities. A review of the resource sufficiency test and specifically its application to the CAISO BAA should be commenced as soon as possible even where changes may not be implementable in advance of Summer 2021.
PacifiCorp supports the CAISO’s proposals to the account for resource de-rates within the capacity test and to eliminate the double counting of mirror resources. Once CAISO implements these proposed enhancements, PacifiCorp requests visibility of these changes in BAAOP > EIM > System > Base Schedule Test Results > Bid Range Capacity Test. All inputs to the new Capacity Test requirement calculation should be displayed (similar to the existing Flex Ramp Sufficiency Test display). This would allow PacifiCorp and other EIM Entities to review the new requirement calculations and have the requisite information required to mitigate failures.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
No Comment.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
PacifiCorp supports CAISO’s proposal to release contingency reserves at the bid cap, because releasing contingency reserves should only occur during scarcity conditions. Therefore, it is understandable to increase prices to the bid cap when scarcity conditions occur. While PacifiCorp supports CAISO’s proposal to release contingency reserves at the bid cap, PacifiCorp does not support the proposal to increase the real-time market scarcity prices during the proposed conditions. The proposal to increase the real-time market scarcity price unravels the work that was accomplished during the FERC Order 831 – import bidding and market parameters stakeholder initiative that was approved by the Board of Governors on October 1, 2020. This stakeholder initiative scaled the penalty prices only when verified energy costs are greater than $1,000/MWh either through a CAISO calculation for import bid costs or through a resource specific cost verified bid.
CAISO’s proposal to increase only the real-time market scarcity prices to $2,000/MWh during dates when CAISO issues alerts, warnings, or the day-ahead market clears at $800/MWh or greater increases the risk of extreme prices within the Energy Imbalance Market (EIM). PacifiCorp objects to this proposal as inequitable and biased. The CAISO is proposing to modify prices throughout the EIM footprint when scarcity is present in the CAISO BAA and only the CAISO BAA. No consideration is given towards scarcity within other EIM BAAs. Consequently, PacifiCorp proposes as another option that if the decision is made to increase the real-time market scarcity prices, the CAISO confine the real-time market scarcity price increases to within the CAISO BAA and maintain the status quo in the remainder of the EIM footprint. However, it is important to note that PacifiCorp opposes the CAISO’s proposal to increase the real-time market scarcity prices during specific conditions in its entirety. This proposal could potentially result in an unnecessary procurement of excess capacity in both the day-ahead and bilateral markets throughout the West in order to avoid the risk of extreme real-time prices resulting in a reduction of the realized EIM benefits. Therefore, PacifiCorp strongly opposes the CAISO’s proposal to increase the real-time market scarcity price because it shifts risks onto EIM Entities.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
PacifiCorp has been actively working on registering one of our DR programs as a PDR resource with CAISO. CAISO’s proposal states that in order to eliminate the potential of double counting RDRR, it intends to make changes to how RDRR dispatch can be incorporated into the load forecast and that the same changes will also apply to PDR. Please outline what specific changes will be made to both programs and how these changes might differ in their respective impacts on RDRR and PDR processes and/or requirements of DR Providers. For PDRs, please also highlight how any intended changes may or may not impact EIM entities vs. California-based DRPs.
The Demand Response BPM states the following: “Settlements for energy provided by PDRs and RDRRs shall be based on the Demand Response Energy Measurement which is calculated using an approved Performance Evaluation Methodology (see CAISO Tariff Sections 4.13.4 and section 5 of this BPM. The Demand Response Energy Measurement applicable to use of the Performance Evaluation Methodology (PEM) is the resulting Energy quantity calculated by comparing the Customer Baseline of a PDR, RDRR or PDR-LSR (Curtailment) against its actual underlying Load for a Demand Response Event” Pg. 10, Section 2.1: Product Overview”. In its latest proposal CAISO states that it has observed that performance of RDRR resources often different significantly from credited/dispatched amounts and states that CAISO will make changes in how it estimates expected performance. Please explain, in detail, what changes CAISO intends to make to address these issues. Specifically, does CAISO intend to change one or multiple performance evaluation methodologies? If so, which PEMs will be impacted and what changes are proposed and why. Given that both RDRRs and PDRs use the same options for PEMs, how will CAISO assess the potential impact of the proposed changes to PDR resources?
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
No Comment.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
PacifiCorp has a concern about the quick turnaround and implementation of the system market power mitigation enhancements. There are risks when quickly implementing complicated market enhancements which have been realized in the past. Therefore, PacifiCorp urges CAISO to remove the system market power mitigation enhancements from this initiative and defer the implementation until that separate stakeholder process has been finalized. The system market power mitigation stakeholder initiative is too complex and important to rush for an implementation during the Summer of 2021.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
No Comment.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
PacifiCorp believes that the resource sufficiency, scarcity pricing, and the import and export priority enhancements proposed in this stakeholder initiative are a prime example that a joint EIM Governing Body and CAISO Board of Governor authority role is necessary. The proposals in these enhancements are driven by the CAISO’s preparation for the Summer of 2021 and yet impact the balancing authority areas of the EIM Entities in terms of reliability and the market benefits that are achieved through the EIM. Nevertheless, PacifiCorp understands that this joint authority has not been established but proposes an expanded role for the EIM Governing Body in this stakeholder initiative.
PacifiCorp supports the proposal to designate the primary authority role to the EIM Governing Body for the resource sufficiency enhancements and the proposed advisory role for the scarcity enhancements. However, PacifiCorp does not support the proposed EIM Governing Body role for the export and load priority enhancements. The proposal in this market enhancement impacts the reliability of the balancing authority areas within the EIM as explained above. Therefore, PacifiCorp proposes that the EIM Governing Body have an advisory role for this market enhancement.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
No Comment.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
No Comment.
Public Generating Pool
Submitted 02/03/2021, 03:25 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
The Public Generating Pool (PGP[1]) appreciates the opportunity to comment on the Market Enhancements for Summer 2021 Readiness Straw Proposal. PGP takes great interest in this initiative as there are PGP members who are EIM participants that were impacted by actions taken by CAISO during the high load conditions of Summer 2020, and we look forward to participating in a collaborative stakeholder process.
PGP supports the creation of this initiative and shares the sense of urgency that measurable progress needs to be made on these topics prior to Summer 2021. The stakeholder discussion on the straw proposal was helpful and productive. PGP’s summary comments on a subset of the specific proposals are as follows:
Export and Load Priorities: PGP supports the conceptual prioritization of exports and the desire to set the priority of wheel through transactions to the highest level. However, PGP does not support the Summer 2021 proposal prioritizing CAISO demand higher than wheel-through transactions.
EIM Resource Sufficiency Test: PGP supports the proposed improvements to the capacity test. However, PGP believes there is still work required to increase the accuracy of the RSE tests and to ensure the consequences for failing the tests discourages leaning. PGP recognizes that a longer-term initiative will be required to resolve these outstanding issues and would like CAISO to commit to completing such an initiative by spring 2022.
Real-Time Scarcity Price Enhancements: PGP would like CAISO to explore a more direct incentive for more accurate day-ahead scheduling rather than adjusting prices – something like requiring load schedules to be at least 95% of the forecast when conditions are expected to be tight.
System Market Power: PGP continues to believe that system level market power is most appropriately analyzed alongside a comprehensive price formation initiative and recommends that implementation of system market power be delayed until that time.
In addition, PGP offers these general comments.
- The straw proposal appears to offer some promising ideas that address reliability and market equity issues. However, it is difficult to determine whether or not support can be provided given the high-level information provided in the presentation. PGP encourages CAISO to issue an updated straw proposal that provides greater detail in a narrative form followed by additional stakeholder comments.
- During the straw proposal workshop, there were several participants who advised caution on implementing changes that may have unintended consequences (impacts to forward hedging markets, for example). PGP agrees with this caution and encourages CAISO to avoid solutions that may be overly complex and have unintended consequences that risk reliability and market equity.
[1] PGP represents eleven consumer-owned utilities in Washington and Oregon that own almost 8,000 MW of generation, approximately 7,000 MW of which is hydro and over 97% of which is carbon free. Four of the PGP members operate their own balancing authority areas (BAAs), while the remaining members have service territories within the Bonneville Power Administration’s (BPA) BAA. As a group, PGP members also purchase over 45 percent of BPA’s preference power.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
PGP appreciates CAISO attempting to provide firm and non-firm scheduling practices that are comparable to non-CAISO market participants that engage in bilateral trading. PGP supports the proposed approach outlined on Slide 10[1] as a way to set CAISO scheduling priorities to get closer to bilateral practices. However, it became clear during the workshop conversation that additional details needed to be worked out, so PGP is looking forward to seeing more information.
While PGP agrees with CAISO’s objective to allow wheel through schedules to be treated similar to Price Taker (PT) exports, PGP does not support the Summer 2021 proposal, which would prioritize CAISO demand over wheel through transactions. CAISO has indicated that a policy catalog initiative is required to achieve this objective, but has not explained why this is necessary while other proposed changes to the scheduling priorities do not require a policy catalog initiative. PGP would like to see wheel through schedules treated similarly to CAISO load in Summer 2021 rather than Lower Price Taker (LPT) exports with the expectation that there will be treatment similar to PT exports once the initiative is completed. This approach would balance reliability needs of CAISO along with the needs of BAs who may need wheel through transactions for their own reliability needs.
[1] http://www.caiso.com/InitiativeDocuments/Presentation-MarketEnhancements-2021SummerReadiness-StrawProposal.pdf
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
PGP appreciates the efforts CAISO is making to improve the accuracy and consistent application of the EIM resource sufficiency evaluations (RSE). During the informational workshop on these topics, PGP noted the concern Powerex shared on the accuracy of the RSE capacity test. In comparing Powerex’s proposed method with CAISO’s existing method, it is apparent that there were two major components of CAISO’s capacity test that were missing:
- CAISO’s incremental capacity requirement does not sufficiently account for uncertainty
- CAISO allows all bid-in resources to contribute to passing the capacity test regardless of whether the resources can actually perform at these levels
PGP supports CAISO’s proposal to add uncertainty requirements to the capacity test and to exclude resources with a lengthy start-up time as a step to address these missing components. CAISO had already identified two issues with the capacity tests that they are addressing related to reflecting resource derates and eliminating double counting of mirror resources, and PGP hopes that all of these improvements will result in a more accurate capacity test. However, it is not clear whether these improvements would have clarified what occurred last summer when market participants passed RSE but ended up in an Energy Emergency Alert (EEA), and PGP would like CAISO to provide an estimate of how all of these changes would have impacted the RSE capacity tests during the periods of EEA-2 and EEA-3 in August 2020. It also became clear during the workshop conversation that additional details need to be worked out, so PGP is looking forward to seeing more information.
In addition to these improvements, PGP recommends that CAISO make two additional enhancements for Summer 2021:
- Align market participants’ RSE and EEA status by forcing a market participant to fail the RSE capacity test when that market participant is in an EEA-2 or EEA-3.
- CAISO has indicated that they do not need to perform an RSE balancing test since the day-ahead market process ensures balanced scheduled in real-time, PGP is not convinced that this is always the case – especially when conditions occur that may result in a breakdown of the day-ahead market process. As a result, PGP encourages CAISO to apply the balancing test to themselves to ensure consistent application of RSE tests between CAISO and non-CAISO market participants.
Another important issue related to the EIM RSE is the treatment of failure consequences. PGP was surprised to see CAISO state at the straw proposal workshop that a foundational element of the EIM was balancing “between leaning and EIM economic benefits”. Later in the presentation, CAISO states that the “primary purpose of the RSE is to prevent leaning”. PGP was under the impression that the importance of “preventing leaning” as part of a well-designed market was agreed upon, and the notion that some leaning may be okay if it results in a balance of EIM economic benefits is very concerning. PGP would like CAISO to better articulate what is meant by balancing “between leaning and EIM economic benefits” and whether or not this dilutes the importance of “preventing leaning”.
Any entity that relies on the EIM to meet its energy and capacity needs rather than forward procuring sufficient resources to meet those needs is “leaning” on the EIM. PGP has never supported nor believed that the EIM should allow for leaning among EIM participants. In fact, PGP has supported an RSE that assures that all market participants come into the hour sufficient. PGP recommends any RSE initiative re-evaluate the consequences of failure for the RSE to ensure that failure is not simply an economic decision. It may be appropriate to provide access to EIM transfers during times of stress conditions, but that access should come with additional financial or other requirements.
To resolve failure consequences and other outstanding issues related to the EIM RSE, PGP continues to recommend that CAISO specifically include EIM RSE Improvements in the scope of an existing initiative or create a new initiative. It is understood that a comprehensive evaluation of the EIM RSE is not feasible by summer 2021, but PGP recommends CAISO make a commitment to undertake this evaluation to be fully completed and implemented by spring 2022. The outcome of this initiative should result in an accurate RSE with failure consequences that are consistently applied to all market participants.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
On the surface, PGP believes that Option 1 is preferred since it is incorporated within market optimization rather than treated as an out-of-market administrative pricing adjustment. However, additional information would be helpful to be able to better evaluate the two proposed options.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
PGP agrees with stakeholders who stated during the workshop that these enhancements don’t really feel like scarcity pricing enhancements. To some extent, CAISO staff agreed and referred to these as “scarcity pricing-lite”.
The first proposed enhancement seeks a method to incent more accurate day-ahead scheduling during tight conditions by scaling real-time penalty prices. While there was not much detail provided on how this would work, there was a great deal of discussion at the stakeholder meeting on potential unintended consequences (such as impacting prices in other physical and financial markets). While this proposal may incent more accurate day-ahead scheduling, it doesn’t appear to PGP that this will always result in the desired outcome. It was suggested at the stakeholder call that a more direct approach, such as requiring that loads schedule at least 95% of their forecasted demand during tight conditions, would achieve the desired result without creating much risk for unintended outcomes.
The second proposed enhancement involves setting prices at the offer cap when there is insufficient generation to meet both energy and contingency reserve requirements and load is armed to carry a portion of the contingency reserve requirement. On the surface, PGP believes that this price adjustment makes sense, and PGP is looking forward to seeing more information.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
While at a high-level, the discussion on the barriers to market dispatch faced by Reliability Demand Response Resources (RDRR) was very informative. The proposals to include RDRRs in Real-time Price Dispatch (RTPD) and to allow RDRR’s to set the clearing price appear to make sense, and PGP is looking forward to more information on these details of this proposal. The proposal to include RDRR and Proxy Demand Response (PDR) dispatch into the load forecast also appears to make sense, but careful monitoring of actual and forecasted RDRR and PDR forecast will be necessary to make sure load forecast accuracy is not compromised.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
PGP has no comments on this topic.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
PGP continues to believe that system level market power is most appropriately analyzed alongside a comprehensive price formation initiative and recommends that implementation of system market power be delayed until that time.
As discussed earlier, the current price formation enhancements for the summer 2021 readiness proposal are described as “scarcity pricing-lite” and would not appear to trigger scarcity pricing in a meaningful or consistent manner due to being limited in scope and heavily influenced by out of market activity by system operators. Further, the delay of Order 831 erodes the ability for the CAISO and market participants to assess whether an increased offer cap will allow market prices to respond to tight supply conditions. PGP suggests that any scarcity-pricing lite provisions should be implemented and their performance assessed in tandem with Order 831 prior to moving forward with system market power. Further, PGP believes the additional complexity associated with implementing system market power mid-summer 2021, amidst the many market changes that are being contemplated for summer 2021 has the potential to result in unintended consequences and detract from reliability.
PGP requests that CAISO provide further explanation and any relevant data that would help support the rationale behind moving forward with system market power. Specifically, is there any data CAISO can point to regarding the structural competitiveness of the CAISO BAA in recent months that points to addressing system level market power now? PGP is concerned with prioritizing an initiative that does not appear to have data supporting the need to address it, while other issues in scope of the summer 2021 readiness initiative, such as a comprehensive evaluation of the EIM RSE, are not currently being prioritized.
If CAISO does decide to move forward with system market power at this time, PGP requests, at a minimum, that CAISO provide the opportunity and process to consider further revisions to the current draft final SMP proposal. PGP believes the current framework, as designed, would result in mitigation false positives which would result in numerous harms as discussed at length in PGP’s comments in the system market power initiative.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
PGP has no comments on this topic
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
PGP concurs that the EIM Governing Body should have primary authority in the approval of the Resource Sufficiency Evaluation enhancements and advisory authority for any scarcity pricing recommendations associated with this initiative.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
PGP appreciates the efforts CAISO has taken to initiate this stakeholder process to address these urgent matters prior to Summer 2021. To efficiently and effectively move this initiative forward, PGP suggests the following:
- CAISO should provide a more detailed proposal and allow for another round of stakeholder comments
- CAISO should describe which of these enhancements will require tariff changes and which will not
- CAISO should specifically include EIM RSE Improvements in the scope of an existing initiative or create a new initiative and commit to implementation of any changes no later than spring 2022.
- CAISO should stick with the original plan established last fall to address SMPM along with a new comprehensive scarcity pricing initiative
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
PGP believes that the highest priority items for Summer 2021 are:
- Implementing the proposed improvements to the EIM capacity test
- Committing to a resource sufficiency stakeholder initiative to be completed and implemented by spring 2022
- Implementing the proposed export and load priorities (with wheel through transactions prioritized equally with CAISO demand)
- Achieving more accurate day-ahead schedules during tight conditions
- Eliminating barriers to market dispatch faced by Reliability Demand Response Resources (RDRR)
Public Power Council
Submitted 02/03/2021, 02:12 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
PPC[1] appreciates the opportunity to comment on the Market Enhancements for Summer 2021 Readiness Straw Proposal. PPC supports CAISO’s efforts to make modifications to its market designs and policies in preparation for Summer 2021. Given the condensed timeline and wide-ranging scope, CAISO should focus on initiatives that are implementable and can address issues that came to light during August 2020.
PPC’s comments can be summarized as follows:
- The proposed modifications to the Resource Sufficiency Evaluation are incremental improvements but do not address stakeholder’s foundational concerns regarding the resource sufficiency test. CAISO should strive to address concerns regarding the resource sufficiency test prior to summer 2021 and commit to revisiting the sufficiency evaluation in a longer-term stakeholder initiative.
- The proposal to implement system level market power in August 2021 is unjustified and not appropriate. The proposal should be reviewed in conjunction with a full scarcity pricing framework as previously contemplated. The proposal to implement system level market power with the “scarcity light” proposal is an unbalanced proposal that could have serious unintended consequences.
- PPC supports CAISO’s proposal to raise the priority of non-RA supported RUC export schedules. Changes to the priority of wheel through schedules should not be made for summer 2021. This is a significant change and should be addressed in a longer-term stakeholder initiative.
- PPC supports modifications to the settlement of hourly block imports and exports to create proper incentives during times of tight grid conditions.
[1] PPC represents the common interests of consumer-owned electric utilities in the Pacific Northwest. PPC’s members range from small rural distribution utilities that do not own generation to very large urban utilities that own both generation and transmission facilities. All PPC members are statutory preference customers of the Bonneville Power Administration (BPA) and represent over 90 percent of BPA’s Tier 1 sales. Overall, Northwest public power is the largest purchaser of BPA’s power products and services and is among the largest purchasers of BPA’s transmission products and services, funding nearly 70 percent of the agency’s total power and transmission costs.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
PPC supports CAISO’s proposal to raise the priority of non-RA supported RUC export schedules. PPC believes, as a principle, CAISO’s market process and rules should not prioritize the CAISO BAA’s access to resources not committed under resource adequacy ahead of access of other BAAs. Entities across the west should compete through their bids to have access to non-RA import, non-RA CAISO resources supply and access the transmission system. This is consistent with Western BAAs outside CAISO and would result in the most competitive market outcome.
PPC does not support the CAISO changing the priority of wheel-through schedules for summer 2021 and believes CAISO should address this issue through a more thorough stakeholder process. The proposal appears to give CAISO load priority access to intertie import capacity in times of tight grid conditions. This is a large deviation from how the broader WECC operates and could have large impacts to entities outside of CAISO.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
PPC is supportive of the modifications to the capacity bid range test to address issues with the double counting of mirror resources and the test recognizing the correct pmax and pmin of resources. PPC also is generally supportive of modifying the bid range capacity test to include uncertainty requirements and to account for more accurate resource availability. These changes may improve the resource sufficiency evaluation. However, the straw proposal does not address the fundamental concerns raised by EIM entities and other stakeholders.
The resource sufficiency evaluation is a key component of the Energy Imbalance Market and intended to ensure each EIM entity can adequately balance their own supply and demand prior to participating in the EIM. This test is designed to prevent EIM entities from leaning on other EIM entities’ capacity and flexibility. PPC is concerned the current resource sufficiency evaluation is not effective at preventing one EIM entity from leaning on other EIM entities. Historic data from August 2020 shows that the CAISO BAA was passing the resource sufficiency evaluation during energy emergency situations and importing significant volumes of energy despite failing the RS test. The events of August 2020 show that the resource sufficiency evaluation, as currently formulated, is allowing EIM entities to pass the evaluation despite clearly not having sufficient resources to balance their own supply and demand. The August events also illustrate the current practice of freezing net transfer limits is not a sufficient incentive to procure necessary capacity on a forward basis. These shortcomings of the resource sufficiency evaluation appear to be principally benefiting the CAISO BAA and can have significant economic and reliability impacts on other EIM entities. Taken together, it is clear the resource sufficiency evaluation is not meeting its objectives.
In response to the previous workshop, there was significant support voiced by the EIM entities, BPA, and NW stakeholders -- including PPC -- that the EIM resource sufficiency test is not functioning as needed and needs to be revisited. The EIM Governing Body also voiced concerns about the performance of the test and whether it was creating an uneven playing field. These concerns are not new and have been voiced by stakeholders repeatedly over the previous years. CAISO’s response to the previous workshop did not seem to acknowledge the concerns raised by a wide range of stakeholders. PPC understands the concerns raised are foundational to the EIM resources sufficiency evaluation. That is why it is imperative to address the stakeholder concerns regarding the resource sufficiency evaluation. EIM entities and prospective EIM participants need confidence that the resource sufficiency test is meeting the agreed upon objectives and not creating economic and reliability risks. PPC encourages that CAISO prioritize and pursue modifications to the RS test that can be implemented by summer 2021 and to commit to further explore the issue in a stakeholder initiative.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
PPC supports CAISO efforts to revisit the settlement of hourly block imports that are awarded in HASP and settled in the FMM. PPC supports option 1 as a method to create the proper incentives for import supply during tight grid conditions.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
PPC believes additional work on this topic is necessary to understand the potential outcomes and unintended consequences. There may be better approaches to address under scheduling of load for summer 2021 than the “scarcity light” framework outlined in the straw proposal. This topic, in conjunction with system level market power mitigation should be explored in the more robust stakeholder process planned for scarcity pricing.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
No comments.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
No comments.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
PPC does not support CAISO’s proposal to implement the previous System Level Market Power (SMPM) mitigation in August 2021. Previously, CAISO had stated that after careful consideration of stakeholder and Market Surveillance Committee feedback, and in light of the August heat wave events, CAISO believed the SMPM initiative would be best implemented in concert with scarcity pricing. CAISO further clarified that it was developing a contingency plan to implement SMPM in Summer 2021 if further analysis showed a strong need for the proposal.
CAISO now states that implementing the SMPM in conjunction with their “scarcity light” proposal is necessary, even though to date there has been little to no market power exercised at the system level. During the stakeholder meeting, CAISO presented no new analysis that SMPM is necessary at this time, or that it should be implemented in August 2021 when the potential consequences of over mitigation or implementation issues would have the greatest consequences. CAISO reasons this is a balanced approach designed to ensure efficient outcomes.
PPC believes the last iteration of the SMPM framework in conjunction with the “scarcity light” proposal is not a balanced approach and would result in over mitigation. The “scarcity light” proposal as designed will trigger very infrequently. The proposal is limited to when DAM prices clear above $800/MWh, a flex-alert is issued in the day-ahead or CAISO issues warning or emergency in real-time. In contrast, the SMPM trigger criteria was an area where stakeholders expressed repeated concern that the proposal was far too conservative and not a good indicator of when CAISO was potentially uncompetitive. System level market power should be explored as part of the more complete scarcity pricing enhancements workstream planned for the future.
PPC does support the proposal to release contingency reserves at the bid cap when arming load to meet BAL requirements.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
No comments.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
No comments.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
The straw proposal and stakeholder dialogue have demonstrated that there is still significant uncertainty around the proposals. Many proposals have not been fully vetted and there are outstanding concerns on whether the proposals are feasible or if there will be unintended consequences. The performance of modifications made in this stakeholder initiative should be reviewed after the summer in a more complete traditional stakeholder process.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
Salt River Project
Submitted 02/03/2021, 04:58 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Salt River Project Agricultural Improvement and Power District (SRP) understands the importance of this initiative and respects that CAISO must address concerns expeditiously. In addition to commenting as part of the EIM Entities, SRP is providing comments for items 2, 3, 9, 10, and 12.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
In addition to the comments in the paragraphs below, which mirror those prepared by the EIM Entities, SRP would like to highlight concerns with the CAISO proposed reprioritization of loads and exports. The reprioritization results in a significant modification to previous scheduling priorities and can directly impact the Desert Southwest load serving entities’ ability to import power contracted to serve load. SRP regularly contracts for energy with the northwest, whether for resource adequacy, month ahead, day ahead or bilateral trades. With the proposed reprioritization of exports and loads for next summer, firm energy purchased from the northwest could be curtailed by the CAISO to address the insufficient supply within its own Balancing Authority Area (BAA), leaving the Desert Southwest short. SRP has observed curtailments of firm energy purchased from the northwest following CAISO’s September 5 emergency business practice change.
With the exception of the concern noted above and discussed further below, SRP appreciates and supports the CAISO’s proposal to modify scheduling priorities to better align CAISO’s priority practices with those of other Balancing Authorities (BAs) across the West. By establishing Price Taker (PT) Exports as a primary priority within the Day Ahead and Real-Time market runs, CAISO would help to ensure that it does not inadvertently transfer any reliability issues it may face to other BAAs across the West.
However, in proposing to differentiate Residual Unit Commitment (RUC) exports without generation, CAISO’s proposal fails to consider how curtailment of generation originating outside of its BAA, transported through the CAISO BAA, and delivered to another BAA for firm load (wheel-through generation) would be consistent and aligned with practices and protocols across other utilities in the West. CAISO’s proposal to lower the priority of wheel-through schedules in favor of CAISO Resource Adequacy schedules in the RUC process fails to consider how curtailment wheel-through would be inconsistent with practices and protocols across other utilities in the West and would likely pass along reliability issues from CAISO to Desert Southwest entities. Throughout the West, wheel-through transactions are afforded the same opportunity to acquire and use firm transmission service to deliver energy from one BA to another as import transactions, and BAs are unable to selectively de-prioritize and/or curtail wheel-through schedules to address a supply shortfall in their own BAA. This concept is also reflected within the EIM, where some entities experience a significant volume of wheel-through transactions across their areas. When an EIM Entity BA fails to pass relevant sufficiency tests, net imports or net exports to and from that BA are frozen, but wheel-through transactions can continue unaffected. This reflects the principle of not passing along issues from a deficient EIM participant to other participants. The inconsistency between EIM wheel-through practices and CAISO’s current proposal, indicates that CAISO wishes to have it both ways – limiting wheel-through when it is detrimental for its own system but establishing rules to ensure wheeling through other BAAs is fundamentally available when beneficial to CAISO. This is especially concerning in light of CAISO’s own challenges in meeting EIM sufficiency tests and becoming dependent upon wheel-through within the EIM environment.
CAISO’s proposal is problematic in two ways. First, CAISO’s proposal does not consider the many opportunities and competitive practices that occur in a forward environment. Load serving entities across the west routinely compete for forward products to ensure resource adequacy needs are met. For many entities, including SRP, deliverability is a foundational component of and consideration for forward contracts. CAISO does not offer firm transmission rights due to the nature of the ISO; however, when SRP must secure capacity that would wheel through CAISO, we primarily deal with entities that can ensure that energy is highly expected to flow, and require that firm rights for transmission are present both up to and at the point of injection into CAISO, as well as at the point of export to our BAA. Such practices ensure that capacity and energy secured will have priority to flow in all instances except for within CAISO’s boundaries. CAISO’s historical priorities for wheeling combined with these firm rights provided significant certainty that they should flow.
SRP understands the challenges CAISO faces with respect to congestion for imports of capacity and products at its northern injection points. However, wheel-through issues are symptomatic of an entirely separate issue with the Resource Adequacy product pursued by load serving entities within the CAISO BAA. Competitive processes exist for capacity and energy in the forward markets and allow entities to ensure deliverability attributes and firmness of transmission. Such products often come at a premium price in the marketplace due to the deliverability attributes – load serving entities across the Western Interconnection willingly compete in these processes. CAISO’s proposal would fundamentally upend competitive practices for energy and capacity across the West. SRP views the congestion issues faced by CAISO as resulting from deficiencies of forward products procured by load serving entities within CAISO, and such entities should further consider the deliverability of the product and not merely the economics of the product. Making changes such as those CAISO is currently proposing should not occur last minute through a rushed process. The proposed changes materially affect planning processes across the West and should be engaged through a more robust stakeholder process that includes notifications and timing that can better fit broader planning efforts in the West.
The second manner in which CAISO’s proposal to deprioritize RUC without generation is problematic is that it is likely to result in fundamentally affecting the products, priorities, and customers of other transmission service providers. For example, if CAISO were to curtail a wheel-through generation import provided by an entity with firm point-to-point transmission up to CAISO’s BAA in favor of generation supply with lesser non-firm transmission rights (such as Hourly or Daily Service), CAISO will have materially affected the priority and product firmness of the transmission service provider adjacent to CAISO’s BAA, potentially overriding established North American Electric Reliability (NERC) Transmission Service Priorities[1] as well as the Open Access Transmission Tariff (OATT) priorities established by the transmission provider for CAISO’s own benefit and priority.
Such an action would upend current transmission pricing and products, as well as substantially disincentivize long-term investment in transmission if an entity could no longer ensure the service offered and sold is fundamentally met. In addition, it creates questions of reciprocity and fairness, as open access and fair treatment requirements would substantially limit a transmission provider’s ability to modify its product offerings as result of these changes.
SRP urges CAISO to reconsider the approach it is taking to implement these proposed changes. Such significant changes should not be effectuated through modifications to procedures or the Business Practice Manual but should only be made through the more rigorous tariff revision process.
[1] https://www.nerc.com/pa/rrm/TLR/Pages/Transmission-Service-Reservation-Priorities-.aspx
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
SRP appreciates the opportunity to comment regarding the EIM coordination and resource sufficiency test. SRP supports the joint comments prepared by the EIM Entities but also would like to provide its own comments below.
SRP does not oppose the changes CAISO is proposing for summer 2021 regarding resource sufficiency but is concerned that these enhancements will not be adequate to correct the underlying issue of EIM not including an accurate capacity test.
SRP appreciates CAISO’s efforts to bridge the current gap in the resource sufficiency evaluation (RSE) with a proposal that includes generating resource de-rates and mirror resources in the capacity test and also CAISO’s efforts to improve upon the capacity test calculations. SRP requests that CAISO provide a detailed proposal on what it plans to achieve for this summer and how it will be implemented. The very brief slides presented at the January 27 workshop are not detailed enough for SRP to assess whether there is value in drastically changing the current RSE ahead of this summer.
SRP strongly supports adjusting the current policy roadmap to prioritize a robust stakeholder initiative to examine what the RSE capacity test is intended to achieve. Avoidance of leaning is foundational for EIM, and SRP suggests the stakeholder process include critically examining the definition of leaning.
During recent workshops, CAISO staff mentioned that the balancing test of RSE is not applicable to the CAISO BA because it is balanced from a day-ahead perspective. The balancing test should apply consistently to all participants of EIM. Similar to CAISO and consistent with practices across the West, SRP fundamentally establishes balanced plans that depend upon solely deliverable energy. To the extent CAISO would desire to pass EIM resource sufficiency tests on the basis of day ahead balanced schedules, SRP would very likely never fail resource sufficiency tests. However, this approach would inherently obligate leaning as unplanned outages and load forecast error fundamentally change real-time resource requirements. As an EIM footprint entity, SRP does not gain the benefits of leaning on a day-ahead balanced plan, but rather must acquire and secure energy to respond to changes in load and resource availability. This energy often comes at a premium to day-ahead bilateral transactions and under most circumstances is significantly higher than locational marginal price (LMP) pricing for EIM. The net effect is that SRP as an EIM entity fundamentally becomes obligated to secure energy to meet its need at higher prices to ensure that CAISO can access that same energy at lower cost through the EIM without having to go through similar efforts.
This was evidenced throughout multiple days during the summer 2020 heat wave event, when the CAISO BA was not able to demonstrate hourly balancing due to loss of resources and/or ramping limitations. EIM requires a mechanism that puts every BA, including the CAISO BA, on equal footing for an hourly balancing test. That test should be developed through a comprehensive stakeholder process that provides the transparency necessary for each BA to fully understand how the test will function.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
SRP is requesting the CAISO focus future efforts on resolving the lack of guidance in the EIM community related to System Emergencies and market operations. Currently, there are no operating practices or guidelines on this topic. CAISO should engage the EIM community through a stakeholder process to develop and understand such operating practices.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
CAISO’s proposal to exclude the EIM Governing Body from discussions regarding wheel-through priority issues may seem to be reasonable but misses the inconsistency with CAISO’s own dependence on leaning in the EIM through resource sufficiency that is largely dependent on wheel-through across participating EIM entities. While the two issues can be identified as separate, they are clearly similar and should be raised comprehensively through EIM as it begins to beg questions about reciprocal treatment of transmission within an EIM context. As such, the EIM Governing Body should have an opportunity to review and comment on export prioritization.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
SRP believes that schedule priority is a significant issue that should take priority, but changes must entail a robust stakeholder process.
San Diego Gas & Electric
Submitted 02/03/2021, 06:18 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
-Export and Load Priorities: SDG&E is concerned that CAISO seems to be proposing to place California load below exports in some instances.
-Non-RA: SDG&E is concerned that the CAISO’s definition of “non-RA” could be allowing resources contracted for by California Load Serving Entities (Load) receive priority export treatment.
-RSE: SDG&E supports CAISO’s limited fix.
-Import and Export Incentives: SDG&E supports Option 2 as a temporary measure, over Option 1.
-Scarcity Pricing: SDG&E supports the idea of scarcity pricing, but due to the limited timelines here, this proposal should be more limited.
-RDRR: this is fine as long as CAISO can still provide the early notifications discussed in the Slow DR initiative.
-Storage: SDG&E supports this as a temporary fix.
-SMPM: SDG&E supports the idea, but this needs to be fleshed out.
-Other: SDG&E supports fast-tracking interconnection.
-Comments on S21R: SDG&E supports limited fixes to minimize unintended consequences.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
SDG&E opposes the proposal to prioritize price taker (PT) exports above Load in this initiative. Currently, PT exports and Load have the same priority in both day-ahead and real time markets. However, the CAISO proposes to prioritize exports above Load and that is deeply concerning because that occurred during the August 2020 reliability events. SDG&E believes that the CAISO should at a minimum maintain the current priority of PT exports and CAISO load or consider prioritizing native load above exports.
SDG&E’s concern partially stems from the CAISO’s definition of non-RA resources or capacity being used to serve exports. One of the problems during the August reliability events was the amount of exports cleared because of how non-RA resources were calculated where any capacity above the net qualifying capacity (NQC) value of the resource was considered non-RA. The difference between the resource’s NQC and its Pmax should not be considered non-RA. SDG&E recommends the CAISO reformulate how it calculates the non-RA portion of various resource types. The CAISO should validate the non-RA capacity of PT exports based on the following formula.
non-RA capacity=1-shownRANQC*Pmax-min?(NQC,shownRA)
This would provide an estimated quantity of non-RA capacity. The CAISO should provide its methodology of its validation process to clear PT exports that identify the non-RA resource to provide clarity.
SDG&E is also concerned that under this proposal, energy only resources identified to support PT exports will have higher priority than native load. In situations of high congestion, the energy only resources may have priority and not be cut because it must support the PT export over that of other RA resources that are supporting native load.
SDG&E requests the CAISO to reprioritize native load to be the same as PT exports at a minimum or prioritize it to be above it.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
SDG&E supports refinements to the resource sufficiency evaluation as an interim solution. However, the CAISO should be cautious when adding uncertainty requirements without fully testing the impacts of this proposal. SDG&E is concerned that the CAISO will implement changes without fully knowing how it may impact other parts of the CAISO’s market and optimization. A good example is the price inconsistency market enhancement and its impacts on the Residual Unit Commitment process during the August reliability events. SDG&E agrees with the CAISO that this initiative should not consider longer term structural modifications without fully considering the impacts to reliability.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
SDG&E generally supports improving liquidity of import energy, especially during tight system conditions. However, SDG&E is concerned with Option 1 unfairly allows imports or exports to receive a higher LMP that internal generation are not capable of receiving. SDG&E finds option 2 to be more implementable and fairer when compared to option 1, given the short time frame, but requests this option to only be implemented as a temporary solution and only applicable for summer 2021.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
While SDG&E supports development of scarcity pricing mechanisms, the CAISO’s proposal needs additional development and discussion because of the multitude of impacts such a change would have on other aspects of the market that the CAISO has not reviewed. SDG&E believes that for summer 2021, the CAISO should consider real-time market incentives when grid operators arm load to meet contingency reserves only.
Additionally, SDG&E believes that Scarcity Pricing should be tied to SMPM to protect consumers.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
SDG&E requests that if the CAISO includes RDRR in RTPD, that it still commit to provide the longer lead times as discussed in the Slow DR initiative. This would help these DR resources to better respond to CAISO’s needs when supply is constrained.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
As SDG&E noted in its comments on the Resource Adequacy Enhancements initiative, the minimum state of charge requirement is only a stop gap measure until the CAISO can overcome its computing power issues. Limiting energy storage resources to state of charge to ensure it can meet its day ahead award at a later hour does not allow these resources to quickly help meet grid reliability and is highly dependent on the accuracy of the CAISO’s forecast in the day ahead process. SDG&E is concerned that such restrictions may actually create reliability issues if other supply options are not available in real time and energy storage resources are standing by to meet a need at a later hour. If other resources are not available, the CAISO would likely intervene and exceptionally dispatch such resources. SDG&E highly recommends the CAISO to reconsider implementing the minimum state of charge requirement for energy storage resources only for the summer of 2021.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
SDG&E agrees that system market power mitigation is necessary with the added scarcity pricing enhancements functionality. However, the CAISO suspended its system market power initiative because it found no evidence of anyone exerting market power during the August 2020 reliability events. SDG&E recommends the CAISO to flesh out this proposal before moving forward as the presentation is devoid of any information.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
SDG&E supports fast tracking the CAISO’s interconnection process to allow additional resources to come online sooner. SDG&E supports refinements to the CAISO’s resource adequacy availability incentive mechanism. Particularly, SDG&E believes the CAISO should further review whether certain local resources may be able to provide real time substitution to other local resources on forced outage even if those resources are not pre-qualified for real time substitution as a compatible resource.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
SDG&E recommends the CAISO to make targeted and implementable refinements for summer 2021. This helps minimize unintended consequences because it is unlikely that the market participants or the CAISO will be able to perform extensive market simulations and any change that isn’t fully tested may potentially create a worse outcome.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
SDG&E believes the CAISO should reconsider the prioritization of native load in its market process.
Shell Energy
Submitted 02/03/2021, 04:20 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Shell Energy supports this expedited stakeholder process in response to the reliability failures of August 2020. The shortened timeframe results in some approaches that are not fully adequate but reflect an improvement over the status-quo. Shell Energy supports much of the CAISO’s straw proposal, including:
- EIM RS test review
- Import/Export market incentives
- RT scarcity enhancements
- RDRR dispatch and RT price impacts
Shell Energy opposes aspects of the following:
- Export and load priorities
- Management of storage
- System market power mitigation
The stakeholder community for this initiative is diverse and represents varied interests. Shell Energy would suggest additional Q&A sessions with staff to answer questions from the stakeholder community. Often, additional details are teased out in Q&A sessions which cannot be included easily in presentations. Clarifications made in the past call held 29 Jan 2020 informed Shell Energy’s positions on the straw proposal. For this reason, Shell Energy urges the CAISO hold additional Q&A calls as this initiative progresses.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
Shell Energy supports the CAISO’s proposed changes to export and load scheduling priorities apart from treatment for wheel transactions. Shell Energy opposes the treatment for wheel transactions on the basis it violates tenets of open-access and non-discriminatory transmission utilization. Giving preferential treatment to one class of resources is problematic and likely opens CAISO to a challenge at FERC. Shell Energy notes this approach will create seams issues between OATT-entities and the CAISO.
Until a relevant initiative to grant import rights to wheels to support PT exports, the CAISO should remove wheels altogether from supporting exports for Summer 2021. While this is certainly inequitable to all classes of resources, the current proposal for wheel transactions offers no improvement over simply submitting an LPT export from the CAISO BAA.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
Shell Energy supports the limited improvements in scope in this Summer 2021 readiness straw proposal. While an improvement on the current RS test framework, a robust review of the RS test must be conducted in a venue where more time is available to vet all approaches.
Shell Energy remains concerned of the optics where the CAISO BAA passed the RS tests while in EEA1 and EEA2 conditions this past summer. The CAISO BAA was definitionally resource deficient during these emergencies. Continued leaning by any BAA upon other BAAs constitutes usurping capacity resources from adjacent entities.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
Shell Energy strongly supports both options as an improvement over the status quo. The potential for net zero deliveries receiving BCR violates the spirit of this enhancement; as such, Shell Energy would support the CAISO’s waiver of a net zero schedule receiving BCR during the settlement process.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
Shell Energy requests the CAISO differentiate nomenclature used in this straw proposal to differentiate from the scarcity pricing stakeholder process to be held later in 2021 to avoid confusion. For this purpose, Shell Energy will refer to the topics in the straw proposal as ‘summer 2021 pricing modifications’.
Shell Energy supports the CAISO’s summer 2021 pricing modifications. Shell Energy asks for clarification on how these modifications would play out under the bifurcated FERC 831 compliance approaches.
In future scarcity pricing stakeholder process, Shell Energy suggests the CAISO move to an operating reserve demand curve that is co-optimized with energy similar to approaches in other RTO/ISOs. Procuring an A/S product designed to manage net-peak VER variability would also be another solution.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
Shell Energy supports both proposals and agrees allowing RDRR to set clearing prices is reasonable as RDRR constitutes unserved demand. The opportunity costs of the RDRR participating loads should be present in clearing prices when RDRR resources are marginal.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
Shell Energy suggests CAISO has new visibility into the battery fleet for summer 2021; a MSOC for energy is not warranted at this time. Shell Energy supports a MSOC only for ancillary services procured in the IFM.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
Shell Energy is concerned system market power mitigation (SMPM) will mute price signals and ultimately degrade reliability during stressed conditions. When the CAISO is energy-deficient, the market is likely uncompetitive; systemwide mitigation of bids during this time would result in fewer resources/imports offering to the CAISO—the opposite of what is needed during tight supply conditions!
Shell Energy agrees with WPTF’s verbal comments that market power on a systemwide and local level is monitored by the DMM and that a separate process for screening the system for market power would be duplicative and comes with additional risks to reliability if implemented in haste. The challenge with implementing scarcity pricing and SMPM together is each initiative has a direct impact on the other. For this reason, Shell Energy would support combining the initiatives into one process to ensure they each comport together.
Shell Energy does not support releasing market upgrades in August 2021—or sooner. The risk of an August deployment is too great for glitches during the peak season. Moving the timeline up would be suboptimal because of less time available for market simulation and implementation processes to be verified.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
For transparency, Shell Energy requests the CAISO compile data on manual operator interventions and publish it in an ongoing basis in existing reports, such as the exceptional dispatch report Publishing the manual action taken (load bias etc.), the hours deployed and the amounts in MWs would be would be most helpful to stakeholders in advance of upcoming in initiatives later in 2021.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
No comment.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
Shell Energy thanks for CAISO staff for the ability to comment on the straw proposal.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
Shell Energy suggests the following prioritization order:
- Import/Export incentives
- Export and load priorities
- RT scarcity price enhancements
- RDRR dispatch
- EIM RS test changes
- Management of storage
- System market power mitigation
Six Cities
Submitted 02/03/2021, 05:18 pm
Submitted on behalf of
Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California
1.
Provide a summary of your organization’s comments on the straw proposal:
The Six Cities very much appreciate the CAISO’s efforts to identify market enhancements that can be implemented in time to reinforce system reliability for the summer of 2021. The challenges to evaluating potential market design changes and putting them in place within a six to eight month time window are daunting. Notwithstanding the urgency of adopting measures to improve system reliability, the CAISO must avoid implementation of design modifications that produce unintended negative consequences outweighing anticipated positive impacts. It is this need to achieve the proper balance between the risks of delayed action versus the risks of unintended negative consequences that guides the Six Cities’ evaluation of the proposals to promote summer 2021 readiness identified thus far.
As described in the comments below, the Six Cities:
SUPPORT - -
- The CAISO’s proposal to approximate the export priorities under an open access framework
- According certain exports a higher priority relative to CAISO Balancing Authority Area (“BAA”) load, but only if such exports are associated with demonstrable commitments to firm off-system sales by non-resource adequacy (“RA”) resources within the CAISO BAA
- The CAISO’s proposal to provide lower priority to wheeling transactions relative to maintaining service to CAISO load
- The CAISO’s determination that comprehensive changes to the Resource Sufficiency Evaluation are infeasible in the timeframe for this initiative and the more discrete proposals related to the Resource Sufficiency Evaluation contained in the Straw Proposal
- The proposal to provide greater price certainty for imports and exports in the Hour Ahead Scheduling Process (“HASP”), with settlement of HASP imports and exports at the HASP clearing price (rather than settlement at the Fifteen Minute Market (“FMM”) price)
- The CAISO’s proposals related to Reliability Demand Response Resources (“RDRRs”) and storage resources
RECOMMEND - -
- Expansion of this initiative to encompass consideration of allowing load serving entities to submit different RA values for a particular resource for days within a month with respect to not only import RA resources but also RA resources located within the CAISO BAA
OPPOSE IN THE ABSENCE OF FURTHER ANALYSIS - -
- The proposal elements related to scarcity pricing
- The proposal elements related to changes to the Resource Adequacy Availability Incentive Mechanism (“RAAIM”)
OPPOSE - -
- Proposals by stakeholders to create a new penalty structure associated with the Resource Sufficiency Evaluation
- The CAISO’s decision to omit consideration of changes in the Maximum Import Capability (“MIC”) allocation process to address issues of unused MIC
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
The Six Cities generally support the CAISO’s proposals with respect to export and load priorities. The Cities agree that the guiding principle should be adoption of export and load priorities that are as consistent as possible with priorities applied by neighboring Balancing Authorities (“BAs”) operating under conventional Open Access Transmission Tariffs (“OATTs”). Based on the presentation by the representative of Idaho Power Company during the January 12, 2021 stakeholder conference, the Six Cities understand that policies implemented under the OATT framework include: (1) reservation of both resources (identified as “network resources”) and network transmission to the extent necessary to serve the demand of native load (“network customers”), (2) firm off-system sales only to the extent supported by resources determined to be in excess of native load needs and separate arrangements for transmission service, (3) energy or supply priority for firm off-system sales (as opposed to transmission priority) higher than priority for service to native load customers, (4) transmission priority for firm transmission service arrangements the same as priority for service to native load customers (i.e., pro rata curtailment when necessary due to transmission contingencies), and (5) priority for non-firm energy sales and/or non-firm transmission service lower than priority for native load customers. The export and load priorities proposed by the CAISO in the Market Enhancements for Summer 2021 Readiness appear to parallel priorities applicable under the OATT construct.
With respect to implementation of the recommended priorities, exports that receive higher priority than CAISO BAA load should be required to demonstrate commitment to a firm off-system sale by a non-RA resource within the CAISO BAA. Expressed differently, there should be a pre-existing commitment of supply from a specific non-RA resource to justify an export priority, as opposed to just sufficient non-RA capacity on an overall basis to support the export. There is no apparent reason why external purchasers from uncommitted supply resources within the CAISO BAA should receive a higher priority than CAISO BAA load.
The Six Cities specifically support the CAISO’s proposal to provide lower priority to wheeling transactions than to maintaining service to CAISO load, including curtailment of wheeling imports to the extent necessary to support imports from RA resources committed to and located outside of the CAISO BAA. Arguments by Powerex that the CAISO’s proposed treatment of wheeling transactions is inconsistent with open access principles are invalid. Transmission providers operating under conventional OATTs are not required to offer firm transmission service when providing such service would undermine their ability to serve network customers or interfere with delivery of off-system network resources. RA import resources are analogous to network resources located outside of the BAA to which such network resources are committed, and the CAISO’s proposal to grant RA imports priority access to import capability is comparable to the ability of an OATT transmission provider to reserve available transfer capability for network resources.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
The Six Cities support the CAISO’s determination that comprehensive changes to the Resource Sufficiency Evaluation are infeasible in the timeframe for this initiative and that addressing more discrete issues should be the focus of CAISO and stakeholder efforts for the summer of 2021. For the reasons articulated by the CAISO, including that the Resource Sufficiency Evaluation reflects a carefully negotiated balance of interests and priorities that are foundational to the EIM, the Six Cities agree that it is not advisable to rush consideration of significant modifications and that efforts to change the EIM Resource Sufficiency Evaluation should not displace other, higher priority initiatives for the CAISO BAA. Allowing consideration of this topic to move forward in the Extended Day Ahead Market initiative reflects the correct prioritization of this issue.
With respect to the items that the CAISO proposes to address within this initiative, those measures appear to be both feasible and appropriate.
The Six Cities affirmatively oppose the proposal by Powerex, which may be supported to varying degrees by other EIM Entities, to impose financial penalties for failure of the Resource Sufficiency Evaluation. This proposal should not receive further consideration in this initiative and is unreasonable outside of a holistic assessment of more comprehensive design changes.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
The Six Cities support the CAISO’s proposal to provide greater price certainty for imports and exports in HASP during tight system conditions. However, rather than settling HASP awards at the higher of the HASP clearing price or the FMM price, the Six Cities urge the CAISO to settle HASP imports and exports at the HASP clearing price. This will ensure that suppliers whose bids clear in the HASP will receive their bid price or more.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
The Six Cities do not support the CAISO’s proposals for real-time scarcity pricing enhancements at this time. In particular, the Six Cities are unable to take a position on the CAISO’s proposals, because too many elements are undefined, leaving the Six Cities without the ability to assess the impacts of the CAISO’s proposals on the CAISO markets generally and on each of the Cities specifically. The complexity of scarcity pricing implementation and the significant potential for unintended adverse market impacts militates in favor of taking a more measured approach and developing scarcity pricing policies in a stakeholder process that does not involve the tight timeframe that is applicable to this initiative.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
The Six Cities generally support the proposals related to RDRRs that are identified on slides 32 and 33 of the Straw Proposal. In particular, evaluating the performance of RDRR when dispatched seems reasonable, as is improving the calibration of expected market performance by RDRR resources in the load forecast adjustment. The Six Cities have not identified any concerns with including RDRRs in the Real Time Pre-Dispatch process. Finally, increasing the granularity of dispatch to RDRRs likewise seems to be reasonable.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
As the Six Cities have informed the CAISO in the RA Enhancements initiative, they do not oppose the items that the CAISO has included in Phase 1 of that initiative for operationalizing storage. It is the Six Cities’ understanding that the CAISO proposes to advance those RA Enhancements Phase 1 items that are focused on the minimum state of charge, and implement them for the summer of 2021 pursuant to the Straw Proposal in this proceeding. (See Straw Proposal at slide 35.) As was also noted in their comments on the RA Enhancements Phase 1 proposals for operationalizing storage, however, the Six Cities have identified implementation questions regarding the minimum state of charge requirements that a summer 2021 implementation date will require the CAISO to address sooner rather than later.
At this time, the Six Cities do not oppose the CAISO’s other proposals related to storage fleet preparedness, including the AGC algorithm changes related to regulation dispatch, the proposal to use Exceptional Dispatch if needed to manage the availability of storage resources, and the proposal to develop new screens to enable CAISO operators to have visibility into the storage resource fleet. (See Straw Proposal at 36.)
The Six Cities do oppose advancement of the CAISO’s proposals related to the Must-Offer Obligation and bid insertion requirements for storage and mixed fuel resources that are under consideration in the CAISO’s RA Enhancements initiative. It is the Six Cities’ understanding, however, that the CAISO is not proposing to advance those elements of the RA Enhancements initiative here, however. If this understanding is not correct, then the Six Cities request that the CAISO provide clarification in the next version of its proposal (or sooner).
With respect to the CAISO’s proposals on storage resource management, the Six Cities urge the CAISO to evaluate the effectiveness of the measures that are implemented this summer once the summer period is over. Depending on the efficacy of these measures and whether the CAISO identifies any need for changes due to adverse market outcomes or other factors, there may be a need to either reevaluate these measures or to revise them as the CAISO gains experience with a growing storage resource fleet. Therefore, the Six Cities support implementation of the measures on an interim basis for summer 2021.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
The Six Cities previously have submitted comments supporting the Revised Draft Final Proposal in the System Market Power Mitigation stakeholder initiative and support implementation of the proposal by June 1, 2021.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
The CAISO proposes at page 39 of the Straw Proposal presentation to make changes to the RAAIM, but the CAISO does not provide any details concerning the anticipated changes. To the extent that the CAISO intends to increase the RAAIM penalty price, what is the level of the proposed increase? What increases in or changes to the existing RAAIM exemptions are contemplated? In short, further detail is needed regarding this element of the CAISO’s Straw Proposal.
Second, the Six Cities are unclear as to why changes in the MIC allocation process to address unused MIC are infeasible within the timeframe for this initiative. This limited revision to the MIC construct does not seem to entail any undue complexity, and it would have an immediate impact of reducing unused MIC amounts, thereby enabling CAISO load serving entities to access additional RA imports. Why does this change need to be deferred?
Finally, as they commented in the RA Enhancements initiative, the Six Cities have identified an additional topic for the CAISO’s consideration. Specifically, the Six Cities urge the CAISO to consider allowing monthly RA showings to include different RA values for a specified resource for different days of the month, subject to the sum of the RA values for each day satisfying the monthly RA requirement for the LSE submitting the showing. As an example, for a resource eligible to provide RA capacity of 100 MW, the Six Cities propose that an LSE be permitted to include variable amounts of capacity from the resource (not to exceed 100 MW) for different days in a monthly showing, provided that the sum of the capacity values for all resources shown by the LSE for a given day equals or exceeds the LSE’s monthly requirement. Such variable showings currently are permitted for import resources, and the Cities request that the CAISO extend the ability to submit different RA values for a resource for days within a month to include not only import RA resources but also RA resources located within the CAISO BAA. Given that this practice is allowed for RA imports at this time, it would seem feasible to implement for internal resources as well.
As the Six Cities explained in the RA Enhancements initiative, there would be significant, reliability-enhancing benefits of allowing variable daily RA values within monthly showings. If LSEs are required to show the same RA value for a given resource for each day of a month, they are likely to omit the resource from a monthly showing for any month in which there is a need to perform maintenance on the resource. By allowing different values to be submitted for RA resources for different days within a month, resources could effectively substitute for each other for different days (with the CAISO having full visibility in advance of the resources relied upon for each day) while maintaining the total RA shown for each day at the level of the LSE’s requirement. This would facilitate performance of regular maintenance, and, as importantly from the CAISO’s perspective, it would reduce incentives for LSEs to hold back RA capacity that has been contracted for by an LSE but is not needed to meet the RA requirement in a given month. It also would support additional bilateral trading of RA capacity among LSEs for substitute capacity purposes. Allowing variable daily RA values within monthly showings is likely to make satisfaction of RA requirements more efficient and thereby make more RA capacity available.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
The Six Cities take no position on the proposed EIM Governing Body role.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
The Six Cities do not have additional comments to provide at this time.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
The Six Cities support prioritization of the following proposals for implementation by the summer of 2021:
- Revisions to export and load priorities (Topic 2 above)
- Revisions to provide greater price certainty for imports and exports in HASP during tight system conditions (Topic 4 above)
- Phase 1 elements in the Resource Adequacy Enhancements initiative relating to management of storage resources (Topic 7 above)
- Implementation of the Revised Draft Final Proposal in the System Market Power Mitigation stakeholder initiative (Topic 8 above)
- Proposals related to Reliability Demand Response Resources (Topic 6 above)
With respect to other potential market design enhancements that may be considered to reinforce reliability for the summer of 2021, the Six Cities urge the CAISO to prioritize any such enhancements that are both easy to implement and unlikely to create risks of unintended negative consequences.
The Balancing Authority of Northern California (BANC)
Submitted 02/04/2021, 03:05 pm
Submitted on behalf of
The Balancing Authority of Northern California (BANC)
1.
Provide a summary of your organization’s comments on the straw proposal:
The Balancing Authority of Northern California (BANC) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) January 27, 2021, “Market Enhancements for 2021 Summer Readiness Straw Proposal” (Straw Proposal). BANC is limiting these comments to three issues: (1) the issue of treatment of export and load priorities, which the CAISO has revised in this proposal; (2) Resource Sufficiency; and (3) System Market Power/Scarcity Pricing.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
We appreciate the efforts of the CAISO to examine and add transparency to how its market processes treat exports and wheeling transactions. At first blush, BANC viewed the revised proposal on the priority of certain exports from the CAISO Balancing Authority Area (BAA) to be an improvement. However, on further examination, it appears not to be the case. More specifically, while the current proposal appears to afford higher priority to export transactions supported by a non-Resource Adequacy (RA) “supporting resource,” as described further below, it in fact appears to diminish certainty with respect to these supported exports. This is a significant and fundamental change from the current commercial and reliability relationship created under the CAISO Tariff. While we look forward to continued engagement on this issue, our current view is that it will disrupt existing agreements and harm reliability. Therefore, BANC opposes this change, particularly on such short notice and in advance of Summer 2021.
BANC members, like all responsible utilities, have RA obligations they abide by. They have prudently planned by building or entering into, in most cases, multi-year agreements with resources both inside and outside of the CAISO BAA. For those resources owned or contracted for by BANC members and which reside inside the CAISO, this is for available non-RA capacity. Non-RA capacity is supply that is not under contract with internal CAISO load serving entities (LSE) to meet their own RA obligations. In other words, it is in excess of a CAISO RA Must Offer Obligations (MOO) and therefore has no contractual obligation to an internal CAISO LSE. BANC purchase these capacity arrangements at the prevailing market rates under bilateral contracts, just as any CAISO internal LSE, and in some cases BANC members have ownership interests in the resources on which they rely on to meet load serving obligations. The cost of these resources (owned or under contract) can amount to millions of dollars per month to secure the capacity resource and accompanying export priority. In short, these commitments for resources in the CAISO BAA serve as resource adequacy for BANC members, and are critical to serve BANC member load. They are therefore an essential element in our portfolio to reliably serve California load.
Since the commencement of the current LMP-based market paradigm for the CAISO, this arrangement has been recognized as providing a scheduling and curtailment priority equal to CAISO internal demand. Thus, if a cut is necessary to an export “supported by” non-RA resources in the CAISO BAA, it is done proportionately to internal CAISO load. This made perfect sense. The non-RA is being paid for by the external LSE to ensure export firmness and is reserved for this purpose. And indeed, every BAA has mechanisms to secure firm exports. Moreover, this arrangement was affirmed by the Federal Energy Regulatory Commission (FERC) in its orders accepting the LMP-based, or Market Redesign and Technology Upgrade, filings at FERC. (See e.g., “Order Granting in Part and Denying in Part Requests for Clarification and Rehearing,” 119 FERC ¶61,076, at 81, ¶202, April 20, 2007 (April 2007 MRTU Order)).
The fundamental tenet of the non-RA supporting resource concept is that the unit is available day ahead optimization, but there is no linkage between the physical dispatch of the unit and the ability to support the export, a premise that has been known and accepted by the CAISO for over a decade. In essence, it has always been a system sale, since there is no specific transmission path under the CAISO’s market paradigm that could be paid for and reserved by the external LSE, and no physical linkage between the non-RA unit and the self-scheduled export. This is handled through the CAISO’s market optimization, allowing the CAISO to support the export from its system in accordance this optimization to ensure least cost dispatch. As long the export is supported from a non-RA resource and available to the CAISO in the relevant time frame (day ahead or real time), it can support the export, whether the non-RA unit runs or not. That is, once the day ahead market closes, including the Residual Unit Commitment (RUC), and the export is validated by the CAISO as being supported by non-RA, it is regarded as firm. Thus, it can be relied upon by the exporting LSE. This is similar to other BAAs, which would back system sales without cutting exports, an approach that many of the LSE’s within the CAISO footprint rely on for imports procured from adjacent BAAs. Given that the CAISO has no process for transmission reservations or other mechanisms to firm exports, the supporting resource construct is the only mechanism to create something approaching equivalence with other BAAs.
Thus, while on the surface the Straw Proposal appears to maintain (even increase) this long-held treatment of export priority tied to non-RA supporting resources, it also adds a significant additional step. By requiring that after passing through the RUC day ahead process, that the resource that is non-RA to CAISO BAA load remain available all the way until the real time market, this adds considerable additional requirements and erodes the firmness of the export when it matters most. By linking the performance of the generating unit to the priority of the export, the CAISO’s proposal is transmuting the existing non-RA supporting resource power supply contracts into unit contingent arrangements. This is particularly troubling because, in the event of the unit failing after the day ahead, there is likely no available procurement option that can backfill the “lost” supporting resource, since there is no liquid market for such products after the day ahead closes. This creates a significant reliability issue for neighboring systems interconnected to the CAISO, which has been noted by FERC: “[T]o the extent that an entity relies on the capacity from a partial RA generating unit for its own resource adequacy needs, curtailment of such generation can create reliability impacts for such an entity.” April 2007 MRTU Order at 81, ¶202. In this Order, FERC agreed that the neighboring BAA should be able to rely upon such exports out of the CAISO system on a “firm basis.” Id.
As a net importer, CAISO needs to be cognizant of the fact that it relies on firm imports to serve its own native load obligations. If the CAISO’s export proposals were to propagate regionally and be applied to its own RA Imports, this may have detrimental impacts to the ability of the CAISO BAA to rely upon those RA Imports. The near-term expediency of this approach to firm exports appears to move in exactly the opposite direction that would benefit California over the longer term, and it erodes the ability of the region to rely on capacity and energy transfers to meet resource adequacy requirements across the market footprint.
The market rules that emanated and evolved out of the MRTU orders from FERC are those which BANC members have relied upon to deliver owned or purchased resources out of the CAISO BAA. Indeed, certain BANC members have jointly invested in steel-in-the-ground in the CAISO BAA. The proposal potentially negates the capacity value of those investments exactly when they are most needed. If we understand the CAISO’s proposal correctly, it would not only necessitate amendments to our commercial arrangements, which may not be achievable in the short months before Summer 2021, it would also undermine multi-year or ownership interests in generation in the CAISO BAA.
Given that there are only a few months prior to Summer 2021, it is simply too late to for this significant pivot from what was always a system-type export sale associated with a non-RA supporting resource. BANC urges, at a minimum, that the CAISO consider maintaining status quo through next summer. If additional processes and procedures need to be developed to further address non-RA exports and develop a new framework, we are more than willing to discuss a more durable solution. But this is not something that can be done in a couple of months. Moreover, any longer term solution must take into account those investments that have been made and commercial arrangements that have already been entered into by the exporting LSEs in reliance on the existing CAISO Tariff rules.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
BANC supports the CAISO’s efforts to improve coordination between BAs during tight supply conditions, including updates to ensure that auto-mirroring is implemented on all mirrors and additional advisory dispatches are available to the market operator. These are important steps that need to be taken by the CAISO and all EIM Entity BAAs to help ensure reliable operation of the Western grid.
The issue of individual EIM Entity capacity sufficiency as a foundational principle is critical. It has been emphasized in the EIM Entities communications with the CAISO, the CAISO’s own documentation, and the market rules themselves as encompassed in the “RS Test.”
From a high-level examination, it appears application of the RS Test may require re-examination. Questions have been raised with respect to patterns of transfers during emergency conditions and whether there was systemic “leaning” on the EIM energy market to supply capacity provided by other BAAs in the EIM footprint. This question and issue must be addressed expeditiously. BANC cannot comment on whether systems implementation and regulatory requirements allow changes to be made by Summer 2021. However, at a minimum, the CAISO should tee up a stand-alone initiative to explore this issue as soon as possible with speedy implementation if problems are found. The RS Test is a fundamental tenet of the market and a foundational principle which was core to BANC’s decision to be an EIM Entity. BANC takes no position on whether the RS Test is flawed but notes that even the perception that the RS Test is failing to prevent systemic leaning damages the ability to sustain and grow regional market collaboration. The CAISO must address this issue transparently and head-on.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
No response at this time.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
No response at this time.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
No response at this time.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
No response at this time.
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
System Market Power Mitigation and Scarcity Pricing are critical and interconnected issues that require extensive dialogue in a comprehensive stakeholder process. It is difficult to conceive how these complex matters could be adequately considered on the current Summer 2021 Readiness track. As such, BANC urges a more deliberate approach to these issues as they are too important to the long-term success of the market to rush.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
No response at this time.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
No response at this time.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
No response at this time.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
No response at this time.
Vistra Corp.
Submitted 02/04/2021, 04:37 pm
1.
Provide a summary of your organization’s comments on the straw proposal:
Vistra appreciates the opportunity to submit comments on the CAISO’s Summer 2021 Readiness straw proposal slides discussed January 27, 2020. The CAISO should restrict the scope to elements necessary to support reliable grid operations only for Summer 2021. Currently, certain elements of the CAISO’s straw proposal appear to be pursuing “nice to have” changes rather than “necessary” changes. Given the expedited nature of this stakeholder process that only allows vetting of proposals for around 16 days, elements that do not directly respond to an issue identified in the Final Root Cause Analysis should not be in scope of this project.
Vistra continues to believe that any proposed changes should be filed with a sunset date in the CAISO Tariff to explicitly commit to reviewing and refiling any elements deemed appropriate to be included in the market design on a long-term basis. However, we understand from the CAISO straw proposal response to stakeholder requests that the CAISO will propose any changes to be amended as a permanent Tariff change. With this clarity, Vistra provides the remainder of our comments considering the CAISO determination to pursue proposals on a permanent basis. Our feedback and priorities are based on weighing both short-term and long-term effects of any proposed changes on overall market health and reliability, including the potential for unintended consequences.
Vistra identifies in our response to question no. 12 the five items that Vistra supports the CAISO pursuing since they will provide value to market participants as well as the CAISO to better support reliability in summer 2021. The five items are:
- Vistra suggested addition to the RDRR item to include effect of load shed on the demand and supply side of market
- Reliability Demand Response Resources proposal
- “Scarcity” proposal that would value swapping reserves for armed load at offer cap
- Making available additional intertie data in OASIS reports
- Enhancing ISP to make interim deliverability available temporarily until earlier projects come online
Each of these items can directly improve pricing to signal adverse conditions necessitating out-of-market actions signaling need for energy, provide transparency on market data to better inform intertie scheduling consistent with system conditions, and allow additional incremental capacity to be unlocked for summer 2021.
In our response to question no. 12, Vistra also identifies elements in the straw proposal that should be excluded. The seven elements are unnecessary to ensure reliability or may interfere with either reliable operations or efficient market signals.
The remainder of our responses to CAISO questions will provide rationale behind our recommendation and current positions on the CAISO straw proposal. We appreciate the opportunity to provide our perspective for CAISO consideration.
2.
Provide your organization’s comments on the export and load priorities topic as described in slides 7-15:
Vistra does not support the CAISO pursuing the proposal for changes to export and load priorities. In our comments on the scope, we brainstormed whether a mechanism could be adopted to provide a metric to allow for bilaterally contracted exports to be prioritized comparably with day-ahead awards in the real-time. However, as Vistra followed the stakeholder process and contemplates adverse impacts of applying different priorities to access of the transmission system to support Integrated Forward Market (“IFM”) cleared exports, we have become more convinced that the complexity of ensuring that FERC Order 888 open access rules are maintained cannot be done in a back of the envelope manner. It must be done through a robust stakeholder process.
The CAISO is subject to FERC Order 888 requirement for all public utilities to file open access non-discriminatory transmission tariffs that contain minimum terms and conditions of non-discriminatory service. CAISO Tariff Section 23 detailing the categories of transmission capacity specifies that there are four types of transmission categories under the current tariff and the scheduling priority for curtailment purposes (i.e. curtailment priority) today is a function of transmission service with which the transaction is associated. Transactions associated with transmission capacity that must be reserved for firm Existing Rights, may be allocated by the CAISO for conditional firm Existing Rights, and may remain non-firm Existing Rights for which the Responsible PTO has no discretion over whether to provide such non-firm service are prioritized using penalty prices significantly higher than the penalty prices for transmission constraints and power balance. Market awards receive their allocation of CAISO transmission service (“i.e. new firm uses”) through its binding energy dispatch instruction and in part pay for that “new firm use” through congestion management charges.
A short-term solution should not be pursued that could result in discriminatory access to transmission system for certain types of intertie transactions over others where the transaction has not paid for a higher priority treatment. The most appropriate and efficient way to prioritize intertie transactions access to the transmission system is based on forward procurement of a higher priority transmission service with which the bid-in intertie transactions are associated. This is how MISO and PJM approach this prioritization. Based on our experience in these markets, selling of transmission reservations allows for prioritization of the transfer capability to those transactions that have paid to reserve the higher priority service. While adopting and supporting a transmission service reservation system will require a comprehensive stakeholder effort, it can be done and would result in non-discriminatory prioritization for exports, wheel throughs, and imports. Respectfully, open access is foundational to well-functioning, competitive markets and short cuts to ensuring open access will likely harm overall market health both in CAISO and the wider WECC. Further, proposals that violate FERC open access requirements subject CAISO’s entire filing to rejection given FERC’s limited ability to reject individual components of a section 205 filing. CAISO should remove this element and re-prioritize stakeholder efforts to hold a comprehensive process to establish forward transmission service reservations or the equivalent to be used for scheduling prioritization.
3.
Provide your organization’s comments on the EIM coordination and resource sufficiency test review topic as described in slides 16-20:
Vistra supports the CAISO proposal on slide 17 that would implement changes to address defects discussed in the workshop such as accounting for de-rates and eliminating double counting of mirror resources. We also support the CAISO proposal to adopt improvements to capacity test that would exclude offline resources whose start-up time is greater than one hour on slide 18. These seem reasonable and within the confines of existing policy. We urge the CAISO to make these improvements.
Vistra opposes adding uncertainty requirements to the capacity test. As mentioned in our comments on the stakeholder call, the CAISO currently tests for uncertainty in the flexible ramping sufficiency test. The merits of changing the policy and approach to these tests that would measure uncertainty in both the capacity and flexibility test is complex and would require reviewing the intent of these tests and exploring whether the initial policy and method should be modified. The time available in this effort will not allow this review or sufficient stakeholder engagement. Additionally, we are concerned this proposal does not address the underlying concern that was raised by entities that resulted in this scope item. Specifically, Vistra has not heard that this proposal will address Powerex’s concern that the CAISO came into real-time unbalanced. While we can sympathize with the concerns raised about whether there is sufficient penalty to incentivize the BAA to come into real-time balanced, we are not convinced this proposal will provide that incentive and we believe other actions will address that concern. Specifically, having two load shed events has provided a great deal of incentive triggering state-wide efforts to spur development to bring additional capacity online to avoid CAISO being unbalanced in summer 2021. If the CAISO remains focused on reducing road blocks for the additional incremental capacity efforts underway, facilitating currently planned resources scheduled to exit the queue to achieve their commercial operation date, and incenting imports through valuing out-of-market actions, it is likely the concern will be largely mitigated for summer 2021 and resolved for summer 2022.
4.
Provide your organization’s comments on the import and export market incentives during tight system conditions topic as described in slides 21-25:
Vistra does not find the explanation put forward by the CAISO compelling to necessitate settlement changes in an expedited timeframe to settle intertie transactions based on Hour Ahead Scheduling Process (“HASP”) prices that were higher than Fifteen Minute Market (“FMM”) prices. We request the CAISO provide data to support whether during the periods of tightness observed in August and September HASP prices were significantly higher than FMM prices. Further, we request the CAISO provide data to compare HASP prices to Electric Quarterly Report (“EQR”) data showing prices for executed trades on those days in the bilateral markets to identify whether being settled at FMM instead of HASP provided a disincentive to participate. Conceptually, if the bilateral markets were trading near or above $1,000/MWh and the HASP or FMM prices were significantly lower, this effort to compensate based on HASP prices will not result in any compelling incentive to deliver energy to California versus the surrounding areas. Vistra is skeptical that the data will support the need for the CAISO to pursue this element. Additionally, we are skeptical that changes to the settlement configuration guides are doable for summer 2021. CAISO should remove this element from scope if it determines that either the data does not support that it would incentivize additional imports during another extreme regional heat wave or that implementation is infeasible.
5.
Provide your organization’s comments on the real-time scarcity price enhancements topic as described in slides 26-30:
The CAISO proposal for “scarcity price enhancements” in slides 26-30 includes two proposals, the merits of which differ. The two proposals are:
- Impose real-time market penalty prices at $2,000/MWh under certain conditions that introduces systemic difference between day-ahead and real-time to penalize under-scheduling of load during tight conditions as well as increase convergence bidding risks
- Value swapping reserves for armed load at hard energy offer cap to signal to market that out-of-market action was taken
First, CAISO proposal to increase penalty prices in real-time would create a systemic difference between day-ahead and real-time so that loads and convergence bids are incentivized to offer in the day-ahead. From another lens, the goal is to introduce a risk that if loads under-schedule and have to procure energy in real-time during tight conditions the price risk is significantly higher, effectively serving as a penalty for delay. We are concerned that while this would likely incentivize some of the behavior the CAISO would like to see, it may also incentivize undesired bidding behaviors. For instance, the inverse is true where there would be a disincentivize for supply, including imports, to offer into the day-ahead market on days when there is an expectation that the system would be tight enough to trigger this rule. This undesired outcome will make it more difficult for CAISO operations to set the system up through the day-ahead market to prepare for real-time operations. While the supply will show up in real-time, it increases grid operations challenges and risks while waiting to see the needed supply materialize. Additionally, it would remove the ability for convergence bids to “converge” day-ahead and real-time (“DART”) spreads. This proposal raises many questions about the ability of convergence bids to enhance market efficiency and could incentivize unwanted bidding behaviors. We request the CAISO exclude this proposal as the risk of the unintended consequences is too high. We suggest the CAISO considered a scheduling requirement for loads in day-ahead up to 95% of their load forecast available at the time the day-ahead market closes. This is consistent with the response to under-scheduled load adopted after the early 2000s energy crisis.
Second, Vistra strongly supports the market prices signaling that out-of-market actions have been taken such as arming load to serve as contingency reserves to allow release of reserves for generation-demand balancing. We commend the CAISO for its transparency on the use of this action and pursuing an approach to represent the action in the market.
6.
Provide your organization’s comments on the reliability demand response dispatch and real-time price impacts topic as described in slides 31-33:
Vistra supports efforts to improve dispatch and pricing of Reliability Demand Response Resources where the market can more easily model the release of demand response through adding the out of market action to the load forecast so that the RDRR offers released due to operator action can clear against the forecast. By including the impact of the out of market action more clearly in the market, price signals will better reflect the higher prices in the RDRR offers signaling that the emergency action was used to balance the market. We note that this improvement in price formation will provide an incentive to resources that are operating during these tight conditions to remain in operation.
Vistra strongly supports these types of efforts to include out of market action in the market clearing prices so that participants understand the market is in tight conditions. We requested the CAISO consider how a similar approach might be done for load shed by for example representing an artificial resource offer for the load shed so that clearing prices will be set based on the artificial offer being marginal to meet the added back demand in the load forecast. For example, the artificial resource offer could be set at the hard energy offer cap price in $/MW. The market prices showing the scarcity even though the out of market action is bringing the system into balance will ensure market prices do not inadvertently send low prices signaling the tight condition has been resolved. The high clearing price will also allow the market to signal need for additional supply. Our proposal will also provide an incentive to resources that are operating during these tight conditions to remain in operation. This is an important additional proposal that should be incorporated into the straw proposal. We believe this suggestion may also be feasible because it leverages the same concepts described for the RDRR proposal with the addition of also simultaneously introducing a sell offer into the bid stack administratively representing the load shed on the supply side. Since this process would be administered by the CAISO the load forecast add-back and the artificial sell offer can impact the market based on CAISO’s market application timing.
7.
Provide your organization’s comments on the management of storage resources during tight system conditions topic as described in slides 34-36:
Vistra strongly opposes the CAISO pursuing its Minimum Charge Requirement (“MCR”) even under its Resource Adequacy Enhancements effort. In this expedited effort, we are concerned the CAISO is pursuing approval for this controversial element on the basis that it might better support real-time operations without providing any data analysis to show the operational concern from not enforcing a MCR that was experienced in summer 2020. Additionally, the CAISO proposal in its RA Enhancements effort lacks detail on when CAISO would identify the need to enforce the MCR.
Vistra views the minimum charge requirement as contradictory to FERC Order 841, Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators[1]. Specifically, FERC’s determination on State of Charge Management is clear that they “require each RTO/ISO to allow resources using the participation model for electric storage resources to self-manage their state of charge”[2]. In response to the concerns for ISO/RTO to know that resources have adequate state of charge for their commitments, FERC responded “ability of the RTOs/ISOs to use electric storage resources to address any reliability challenges and to know that the resources have an adequate state of charge to perform the service to which they have committed, we note that the RTO/ISO should be able to dispatch a resources using the participation model for electric storage resources in the same manner as any other market participant.”[3]
Even if FERC had not explicitly clarified in its order that FERC would not be supportive of such a proposal, the merit of the proposal could not be supported due to it disadvantaging storage and undermining market efficiency. The MCR would impose a market rule on RA storage resources on days with expected tight conditions where scarcity pricing may result in a real-time market that limits storage participation while allowing other resources to respond to the real-time need. Further, this proposal could prevent energy storage from operating when most needed, reducing available supply when the system most needs it. With implementation of higher valuation of penalty prices, the scarcity pricing could increase relative to what is observed today. Under higher scarcity pricing, storage will have an even greater lost opportunity cost from being restricted from responding to real-time scarcity needs. Where other resources will not be similarly restricted and can benefit from the higher pricing. This proposal on the merits alone appears unduly discriminatory against storage participation and impairs market efficiency. The CAISO should drop this proposal from both this effort and the Resource Adequacy Enhancements effort.
[1] Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators Final Rule, Docket Nos. RM16-23-000; AD16-20-000; Order No. 841, 162 FERC ¶ 61,127, February 15, 2018, 162 FERC ¶ 61,127, https://cms.ferc.gov/sites/default/files/whats-new/comm-meet/2018/021518/E-1.pdf.
[2] Id at 161
[3] Id at 163
8.
Provide your organization’s comments on the system market power mitigation topic as described in slides 37-38:
Vistra understood from previous CAISO communications that the CAISO commitment was that it would not pursue System Market Power Mitigation (“SMPM”) until a long-term scarcity pricing enhancement is implemented.[1] While the notification did include a caveat that SMPM may be pursued if a strong need for it is shown, Vistra has not seen any supporting analysis presented by the CAISO showing a strong need. In fact, our understanding of the reports and analysis so far released is that the CAISO and its DMM have not expressed concerns that system market power was exercised last summer.
We do not view the elements in this proposal as including scarcity pricing enhancements, but instead as trying to penalize loads for failing to schedule in the day-ahead and through reflecting out of market actions in the clearing price. While the latter could be considered scarcity pricing lite, we view it as more akin to incorporating out of market actions into the market at a price associated with that action, pseudo scarcity pricing at best. The elements in this proposal are insufficient to result in scarcity pricing that would offset the potential harm of over-mitigation expected as result of SMPM.
CAISO should remove this element from the proposal. We encourage the CAISO to maintain its earlier commitment to align SMPM with long-term scarcity enhancements since it has not shown a strong need for SMPM to be implemented this summer.
[1] System Market Power Mitigation, Revised Initiative Schedule, California ISO, November 20, 2020, http://www.caiso.com/Documents/SystemMarketPowerMitigationRevisedInitiativeSchedule.html.
9.
Provide your organization’s comments on the other items considered in this initiative based on stakeholder feedback as described in slides 39-42:
CAISO presented the following other items in its straw proposal:
- New OASIS report showing gross exports and imports by intertie
- In its Independent Study Process (“ISP”), remove 100 MW/125% cap on behind-the-meter expansion requests
- In its Independent Study Process (“ISP”), enable the CAISO to award available deliverability temporarily to online projects until earlier-queued project comes online
- Changes to Resource Adequacy Availability Incentive Mechanism (RAAIM) such as adding to weekends and holidays and increasing the RAAIM penalty
First, Vistra strongly supports any CAISO efforts to increase transparency. We support the CAISO reporting additional data not currently available on OASIS including but not limited to the proposed new data feed for “gross exports and imports by intertie”. We commend the CAISO for considering information it can make transparent to better support market participation consistent with system conditions.
Second, Vistra opposes the proposal to remove 100 MW cap on behind-the-meter expansion requests. This proposal is likely to have adverse impacts to reliability with behind-the-meter injections from greater than 100 MW resources. Further, this proposal could disadvantage other projects in the interconnection queue by giving priority to large behind-the-meter requests. CAISO has not sufficiently supported its proposal to change the balance of commercial and reliability interests struck by the current 100 MW/125% cap on behind-the-meter expansion requests.
Third, Vistra supports the CAISO pursuing its proposal to enable CAISO to award interim available deliverability temporarily to online projects until earlier queued projects come online. We view this as a common-sense solution that can meaningfully help bring additional capacity to the CAISO system in the near-term while preserving the foundations of interconnection principles.
Fourth, Vistra opposes the CAISO pursuing changes to increase RAAIM amount and remains unconvinced that extending RAAIM to weekends or holidays would increase resource sufficiency. The CAISO should focus on elements that can improve reliability support for summer 2021 and that respond to challenges identified in reports on summer 2020 rotating outages. Our review and understanding of the Root Cause Analysis Report and messaging from the CAISO and its DMM is that resources not on outage made themselves available. Vistra also understands that there has been no indication that during these conditions there were anything other than good faith actors. Based on the reports, we are struggling to understand how RAAIM changes could incentivize any additional capacity being provided to ensure reliability when the issue was that there was insufficient resource capacity and energy available to meet the coincident needs across the impacted regions. Resource shortages is not an issue that a higher availability penalty can cure. We struggle with the value of spending effort developing any proposals to increase RAAIM penalty risk since it cannot improve resource sufficiency assuming RA resources met their bidding requirements in day-ahead and real-time. On the proposal to add RAAIM to weekend and holidays, we are confused as to how it improves resource sufficiency because RA resources including imports and demand response have a bidding requirement for all days unless on outage consistent with any use limitations or inter-temporal constraints. It is our understanding that CAISO mitigates this risk for RA resources that have generated bids but that RA resources without generated bids may have failed to submit an offer consistent with their must offer obligations. Please provide analysis showing whether RA resources without generated bids were offering consistent with their bidding requirements during the summer rotating outages so stakeholders can evaluate whether extending RAAIM to weekends and holidays for generic RA has value. Further, if CAISO pursues extending to weekends and holidays confirm this would not impact flex RA availability assessments.
10.
Provide your organization’s comments on the proposed EIM Governing Body role as described in slide 45:
None at this time.
11.
Additional comments on the Market Enhancements for Summer 2021 Readiness straw proposal:
None at this time.
12.
Provide your organization's suggestions for how to prioritize the topics included in the proposal:
See below Vistra suggestions for excluding from scope and prioritizing within relevant scope. The first four capture items that Vistra proposes should be pursued since they provide the most value for market participants and CAISO in preparation for summer 2021 in response to challenges identified in the Root Cause Analysis Report, shown in green cells. The seven items at the bottom represent elements that should be excluded from this effort in entirety, shown in red cells.
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Topic
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Vistra Priority
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Load Shed/Scarcity – Vistra Proposal
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High – Root Cause Analyses support that a credible issue is that prices were low during the periods CAISO took out of market action including load shed. Including the load shed in market is desirable to improve signal that CAISO is in shortage and as proposed at the stakeholder call should be feasible for summer 2021 leveraging solution to include load shed in load forecast (like RDRR/PDR) and model a generic load shed resource at a scarcity value, e.g. hard energy cap.
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Reliability Demand Response Resources
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High – Root Cause Analyses support that a credible issue is that prices were low during the periods CAISO took out of market action including manual dispatches of RDRR. Including the out of market actions is desirable to improve signal that CAISO is in shortage.
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Scarcity pricing – value swapping reserves for armed load at offer cap
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High – Root Cause Analyses support that a credible issue is that prices were low during the periods CAISO took out of market action. Including the out of market actions is desirable to improve signal that CAISO is in shortage.
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Transparency – OASIS reports
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High – transparency will provide value.
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ISP – make interim deliverability available temporarily until earlier projects come online
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Medium – seems reasonable.
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RAAIM changes
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Low – seems ineffective
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ISP – remove 100 MW/125% BTM caps
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Exclude, concerns with >100MW BTM generator adversely impacting reliability and upsetting interconnection queue priorities.
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Resource Sufficiency Evaluation
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Exclude, consider EIM sufficiency tests in comprehensive effort
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Import and export incentive – clearing hourly block imports at HASP price if higher than FMM
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Exclude, no support provided that it would incentivize behavior CAISO is hoping for
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Scarcity pricing – RT penalty prices under certain conditions
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Exclude, this proposal would have adverse impacts on market price signals that could disincentivize supply, including imports in day-ahead making it more difficult to prepare the system going into real-time. Additionally, undermines the ability of convergence bids to enhance efficiency.
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Storage Min Charge Requirement
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Exclude, expected to be rejected at FERC since conflicts with Order 841 and impairs market efficiency
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Export and load priorities
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Exclude, expected to be rejected since it would likely be found to impose discriminatory access to transmission system without sufficient basis
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System Market Power Mitigation
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Exclude and remain tied to long-term effort
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