Comments on September 15 and 17 Working Group

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

AWEA-CA urges CAISO to rethink its approach to UCAP for hybrid resources, specifically to eliminate or modify the application Dynamic Limit tool limitations to Hybrid UCAPs, such that Hybrid resources have assurances they will not be “double penalized.” While CAISO states that outages will not be “double-counted” under the proposed Hybrid UCAP methodology because it relies on the Pmax of the Hybrid resource, stakeholders have no specificity on how CAISO will ensure that Hybrids’ QC are, in fact, the Pmax of the resource. Thus, we remain concerned that the end result of the proposed UCAP calculation for Hybrids may be that these resources are “double penalized” under the RA program by first having a QC reduction based on the CPUC’s methodology for Hybrid resources (and their underlying components) and then having those same resource characteristics further reduce the resource’s UCAP, because of Dynamic Limit tool submissions. Stakeholders require a clear understanding of how UCAP will work for Hybrids, especially as Hybrid and Co-Located resources are expected to make up the majority of resource additions to the CAISO system in the coming years. CAISO should provide more specificity around its calculation of UCAP for Hybrids, including some examples based on historical analyses. CAISO should also provide additional information on how it plans to ensure that Hybrids will achieve a QC equal to their Pmax, including an alternative UCAP approach in the event the QC methodology for Hybrids is not modified by the CPUC (or other LRAs).  

With respect to RA imports, it is imperative that CAISO provide clarity around the treatment of resource-specific dynamic transfers to CAISO, specifically assuring that they will be treated the same as internal-CAISO resources for RA value and must-offer obligations. There is already significant uncertainty in the import RA market and the sooner the market can be stabilized, the better. There are a number of dynamically scheduled and pseudo-tied resources, which are Variable Energy Resources (VERs) that provide RA capacity and other valuable services to CAISO. CAISO should ensure any proposal around RA imports does not inadvertently disadvantage or harm these resources which provide dependable RA imports and valuable clean-resource diversity to the system. CAISO should also ensure its approach to verifying that there is firm capacity for RA imports does not overlook the underlying contracts that support most of the dependable, resource-specific, dynamically transferred RA imports are PPAs. While CAISO discussed use of WSPP Schedule C as a standard contract that might ensure the RA import source is dedicated to CAISO, most dynamically transferred resources today utilize a PPA to do so and are not necessarily tied to a WSPP schedule. The underlying PPAs are likely to provide the assurances CAISO is looking for  and they should not be required to be modified to fit some other contractual form. If CAISO requires additional information on the contractual arrangements for dynamically transferred resources used for RA imports, it should specify the elements it is looking for. Following stakeholder review and acceptance of those elements, CAISO should ask seek attestation that the underlying contract meets the outlined requirements.

AWEA-CA looks forward to continued work with CAISO on the RA Enhancements initiative. While there is an increased interest in moving RA reforms forward, getting these RA enhancements “right” is also imperative. Additional thought regarding the treatment of Hybrid resources’ UCAP and the treatment of dynamically transferred RA imports is necessary before this proposal moves forward.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

AWEA-California is concerned about CAISO’s proposed UCAP calculation for Hybrid Resources. Previously, CAISO had indicated that Hybrid Resources that submitted outage cards (as proposed in the Hybrid Resources initiative) would have those outages factored in to the calculation of the resource’s UCAP. The Hybrid Resource initiative is moving away from the use of outage cards for Hybrid resources and these resources will instead utilize a Dynamic Limit tool to indicate resource availability to the CAISO. While this is an improvement for Hybrid Resource functionality (as proposed in the Hybrid Resources initiative), it does not resolve the underlying concerns around double penalizing Hybrid resources in UCAP.

CAISO’s proposed approach to calculating a Hybrid resource’s UCAP would count Dynamic Limit impacts against the Hybrid’s UCAP. We appreciate that CAISO has indicated this approach assumes that the QC would equal the Pmax of the Hybrid resource. Unfortunately, that is not how the CPUC’s QC methodology for Hybrids works today. Instead, today Hybrid resources’ QC is reduced for the variable energy resource component and for charging restrictions for the storage component, resulting in a QC less than the resource’s PMax. Thus, the QC of Hybrid resources today is not the Pmax of the resource. We appreciate that CAISO has recognized the need for “regulatory coordination” on this topic, but additional details on the plan for changing the existing Hybrid QC methodology are necessary. CAISO has not provided any information or specific plans for coordinating with the CPUC on this important issue. Plans for addressing this could be provided to stakeholders and the implementation of this UCAP approach for Hybrids must be conditioned on successful modification of the existing CPUC QC methodology. Additionally, CAISO should consider providing an alternative, back-up UCAP calculation for Hybrid resources that would apply in the event that the CPUC’s QC for Hybrid resources remains the same as it is today.

We also request that CAISO provide additional specificity around the calculation of UCAP for Hybrid resources. It is imperative that stakeholders have a clear understanding of the impacts of this proposal before it moves forward. It would be highly valuable for CAISO to provide some specific examples around the likely UCAP calculations for a Hybrid resource. This could be done through a historical analysis of the 20% of the tightest supply cushion hours compared to likely dispatch and dynamic limit impacts for a hypothetical Hybrid resource. Seeing this type of calculation would allow stakeholders to understand whether this approach to UCAP is appropriate or not. It would also help CAISO to understand the likely incentives that would be created to become a Hybrid resource (as opposed to a Co-Located resource) under this calculation approach. CAISO should be mindful of whether its RA policies, and UCAP methodology, are strongly incenting one type of resource participation model over another. The only way for CAISO and stakeholders to adequately evaluate this is through example calculations. Thus, we urge CAISO to conduct these sample calculations and provide them to stakeholders for review and consideration.

Absent additional specificity, examples, and contingency plans for changing the QC of Hybrid resources to their Pmax, AWEA-CA strongly opposes the incorporation of Dynamic Limit impacts into Hybrid’s UCAP calculation. Despite CAISO’s assurances that this approach will not “double count” outages, there are a number of ways that may happen, most notably if Hybrid resources QC values are not changed by the CPUC. We note that the outcome of the hybrid UCAP methodology must be clear to stakeholders in advance of the proposal moving forward, which is why CAISO must provide examples of likely hybrid UCAP calculations and its plans for addressing Hybrid QC values with the CPUC. Many stakeholders will need to make decisions on whether to move forward with upcoming project as a Hybrid Resource configuration or a Co-Located configuration. CAISO’s current approach may have unintended consequences, pushing resources towards or away from the Hybrid configuration, and CAISO should be mindful of the incentives it may be creating through its proposed UCAP approach for Hybrid Resources.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

These comments are focused on resource-specific dynamically transferred resources that are transmitted to CAISO either through a pseudo-tie or a dynamic schedule. Most of these dynamic transfers today are Variable Energy Resources (VERs), but in the future they may be VERs, storage or Hybrids. Dynamically transferred RA imports provide a dedicated source of energy to CAISO and their delivery is assured. Thus, these types of resources do not seem to be the target of CAISO’s proposed revisions to its RA import rules. CAISO should ensure that the implementation of rules around the contracts for RA imports do not overlook the value and assurances provided by the underlying PPAs on which most dynamically transferred resource RA contracts are based. It is also important that the RA Enhancements proposal is clear that these resources will be treated the same as internal resources for purposes of RA credit and must-offer obligations.

Resource-specific dynamically transferred resources provide a dedicated source of energy and capacity to CAISO and their delivery is assured through the underlying resource contracts and transmission service arrangements. The contract structures for these types of dynamically transferred resources are generally are centered around PPAs, rather than a WSPP schedule or another type of schedule/contract that is more specifically focused on RA. CAISO should be mindful that, in implementing attestation or contract structure requirements, its rules do not undermine or overlook the PPAs and contract structures used to deliver most dynamically transferred resources. These PPA contracts likely provide more assurances regarding a dedicated source and delivery assurance than other types of contracts. Thus, CAISO should not require these contracts to be modified to some “standardized” contract that CAISO has identified as useful for other types of RA imports. If CAISO wishes to provide a list of characteristics that it would like to see in underlying contracts, and provide an opportunity for stakeholder review and comment, that may be a preferable approach. CAISO could then seek attestations that existing contracts meet these underlying requirements.

It is also imperative that CAISO clarify that dynamically transferred (via a pseudo tie or dynamic schedule) resources will be treated the same as internal RA imports for RA credit and must offer obligations. That is the case today and, consistent with CAISO’s goal of treating internal and external resources similarly, should continue to be the case under the RA Enhancements and the implementation of UCAP. CAISO should make crystal clear that, for dynamically transferred resource-specific RA imports, RA credit and must-offer obligations will remain the same as internal resources.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

In summary, BPA agrees with the CAISO’s approach to Import RA and applauds its effort to distinguish specified “aggregate” resources from non-resource specific resources.  BPA feels strongly that an aggregate group of resources managed in concert, from a single BAA is more reliable than any one resource.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Bonneville agrees (page 51) that for imports, transmission cuts causing forced outages should not be considered in a resource’s UCAP evaluation unless that resource was using non-firm transmission.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

BPA is in agreement with the CAISO’s theme in this section.  Resource-Specific RA Imports should be from a dedicated source, providing firm energy, i.e. WSPP Schedule C, backed by reserves, and demonstrating firm transmission to the CAISO point of interconnection.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

 No additional comments.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

 No additional comments.

6. Additional comments on the September 15 and 17, 2020 working groups:

 No additional comments.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

Brookfield Renewable Trading and Marketing LP (Brookfield Renewable) continues to support the CAISO’s proposal to transition to an unforced capacity (UCAP) RA regime and agrees that such a regime will support the procurement of reliable resources to provide RA and will permit the CAISO to eliminate, or reduce reliance on, the existing RA availability incentive mechanism (RAAIM) and the related complex resource substitution rules. As detailed below, Brookfield Renewable recommends that the CAISO employ a flexible approach for determining UCAP values for hydro resources and that it establish a verification process wherein resources new to the market can establish initial UCAP values. With respect to import RA rules, Brookfield Renewable supports elements of the CAISO's alternative "last line in" proposal. While Brookfield Renewable supports a requirement to secure firm service over the identified "last lines in", it does not support the CAISO's proposal that import RA suppliers procure monthly non-firm transmission over the other transmission legs. In addition, Brookfield Renewable recommends that the UCAP determinations for import RA be assessed at the resource level, rather than the scheduling coordinator level, as proposed by the CAISO. Finally, Brookfield Renewable supports, as now proposed by the CAISO, the continued qualification of Western Systems Power Pool Schedule C contracts as import RA resources but views the attestation requirements as unnecessary.    

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Consistent with Brookfield Renewable’s earlier comments, Brookfield Renewable recommends that the CAISO permit application of different methodologies for hydro with storage and run-of-river hydro and that the CAISO permit resource owners to select the methodology that best represent their resource’s historic functionality and availability. For example, the CAISO’s 10-year historic assessment may be appropriate for run-of-river hydro so as to capture a range of years that reflect varying water availability. On the other hand, the standard 3-yr. default UCAP methodology may be appropriate for hydro with storage, which typically functions more like a conventional resource. In addition, for external resources that may be new to the market, Brookfield Renewable recommends that the CAISO establish a UCAP verification process wherein new resources can provide the CAISO with historical data to demonstrate availability and to establish an initial UCAP value.

With respect to the application of UCAP to RA imports, the CAISO proposes to apply UCAP at the scheduling coordinator (SC) level rather than at the resource level. The CAISO reasons that the SC-level approach enables the CAISO to track availability for RA imports with unique transaction IDs created when such resources are scheduled, as opposed to resource IDs. The CAISO states that UCAP would be assessed on an SC level using the SC’s shown RA and forced outages, including transmission cuts if the SC utilizes the alternative non-firm transmission option discussed below. Brookfield Renewable recommends that the CAISO apply UCAP to imports on a resource-specific and resource ID basis. While Brookfield Renewable appreciates the CAISO’s argument that it may be easier to assess an SC’s import RA portfolio on an aggregate basis, the fact remains that each import RA arrangement is unique, including the transmission arrangements, and thus it is best to assess these resources on a resource-specific ID basis

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

The CAISO proposes a modified version of its previously outlined “last line in” alternative proposal wherein import RA resources would have to secure firm transmission (7F) over certain identified interties (“last lines into CA”) but could procure monthly non-firm service (Priority 5, NM) over, for example, the northern portions of the Bonneville Power Administration’s (BPA’s) system (see slide 86 of CAISO presentation). Such non-firm service would have to be procured by T-45 (forty-five days prior to the delivery month) so that a supplier could include it in the supplier’s RA showing. Brookfield Renewable continues to support the “last line in” proposal but recommends that the CAISO permit import RA suppliers to procure as-available short-term firm transmission service on a day-prior basis or, if necessary, as-available non-firm transmission service wherein, if the non- firm service was curtailed, the import RA resource could either take a forced outage (which would count towards its UCAP value) or provide a substitute import RA resource that is deliverable (firm) to the intertie point. As shown in the data provided by the CAISO at the working group meeting, it is typically the last line into CA that is constrained (see NOB graph on slide 97 of CAISO presentation) and that the flowgates on the northern BPA system typically have available capacity and are infrequently curtailed (see North of John Day graph on slide 100 of CAISO presentation). As the data indicates, even under peak load conditions, these paths were not constrained. Moreover, Brookfield Renewable observes that, in a change from historical practice, with the CAISO serving as reliability coordinator, unscheduled flow (USF) cuts only occur on the path contributing to the USF and not all transmission legs, thus further reducing the likelihood of transmission curtailments on the unconstrained paths in the northern portion of the BPA system.

Most importantly, Brookfield Renewable points out that, based on its experience, BPA does not offer non-firm or conditional firm service over these flowgates until the day prior (10PM release), once it knows what existing firm transmission capacity may be released/unused. It is our understanding that, in accordance with its established business practices, BPA calculates available transmission (ATC) by first deducting firm transmission requirements to determine available daily and hourly non-firm transmission.  Importantly, it is Brookfield Renewable’s experience that, from an RA perspective, non-firm service is largely not available during the peak months, July through September.  Brookfield Renewable remains concerned that stringent transmission requirements, including a requirement to procure monthly non-firm transmission many weeks in advance of the delivery month, may disqualify a large number of energy contracts from qualifying as RA and may discourage external entities from selling RA to CA, especially as regional market/capacity conditions tighten and markets/entities outside of CA are seeking supply.

In addition to the above transmission requirements, the CAISO proposes that import RA be backed by either a single identified resource, a specified portfolio of resources from within a single balancing authority area (BAA), or a BAA’s pool of resources, and that such resources be backed by Western Systems Power Pool (WSPP) Schedule B or C or equivalent agreements. Importantly, the CAISO also now proposes that WSPP Schedule C firm energy contracts would count towards RA requirements (as an aggregate or BAA system resource), as necessarily supported by an affidavit that the resources are excess capacity to the host BAA’s needs. Consistent with its earlier comments, Brookfield Renewable supports the continued use of WSPP Schedule C contracts as qualified import RA resources. However, Brookfield Renewable views the T-45 attestation requirements as unnecessary since the WSPP Schedule C contracts are, as noted by the CAISO, backed by reserves and thus identification of a WSPP Schedule C contract as the source is, in effect, attesting to its availability.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

Brookfield Renewable has no comments on this topic at this time.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

Brookfield Renewable has no comments on this topic at this time.

6. Additional comments on the September 15 and 17, 2020 working groups:

Brookfield Renewable has no additional comments.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

CalCCA continues to support CAISO’s RA Enhancements in general, but opposes certain elements:

• Hybrid resource UCAP should not be adjusted based on the availability of the VER component, including due to use of the dynamic limit tool to reflect availability due to fuel limitations.
• CAISO’s proposal to continue the current planned outage process with a replacement requirement will lead to greater amounts of replacement capacity than would be required if CAISO were to implement a planned outage replacement margin and has significant problems for local capacity resources that have limited replacement resources available.
• CAISO should not implement a source-to-sink firm transmission requirement for Import RA resources and should address potential market power issues before implementing a last leg firm transmission requirement.
• CalCCA believes CAISO’s approach for applying UCAP for local capacity resources after identifying the LCR need based on NQC could work, but questions whether doing so actually adds any value given that the current pool of available local resources is limited and is already constrained both by resources’ effectiveness factors and their forced outage rates. CalCCA also notes that CAISO’s maintenance outage replacement requirement will create problems for local capacity resources, and also urges CAISO to coordinate with the Central Procurement Entities to ensure that the UCAP requirement does not result in an increase in local capacity procurement requirements without balancing costs and benefits.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Co-Located UCAP

CalCCA supports CAISO’s proposal to apply the UCAP methodology to co-located resource storage components, while using the ELCC for the solar component. We note that as the CAISO transitions to assessing resource adequacy on a more granular level via the portfolio assessment, it may make sense in the future to revisit the use of ELCC for Variable Energy Resources (in coordination with the CPUC as the LRA), since the impacts of their variability and their contributions toward meeting resource adequacy may be better captured directly by the portfolio assessment. CAISO already appears to be moving in this direction by proposing to model VERs in the portfolio assessment using their expected output profile.

Hybrid UCAP

CalCCA supports CAISO’s proposal in the Hybrid resource Initiative to use outage cards for hybrid resource mechanical outages, while using the dynamic limit tool to communicate ambient derates or absence of the variable component due to fuel limitations. CalCCA is concerned, however, that the CAISO’s proposal to determine the Hourly Unavailability Factor for hybrid resources results in a double- or potentially triple- penalty, despite CAISO’s statement on Slide 54 that it will not double count outages. For both standalone variable renewable resources and the renewable component of co-located resources, ELCC values alone are used to set UCAP values. This is due to the fact that the ELCC methodology takes into account the probability of forced outages for wind and solar resources. Therefore, reductions to hybrid resource counting due to application of forced outages in the Hourly Unavailability Factor calculation will be on top of adjustments that already have been reflected in the hybrid resource’s ELCC. In addition, on Slide 54, CAISO recognizes that there will need to be coordination with the LRA to avoid double counting between the Hourly Unavailability Factor and the QC methodology. But, under the current CPUC QC methodology for hybrid resources with ITC charging limitations, the reliability value of the variable renewable component is discounted by the energy required to charge the storage component before applying the ELCC to the remaining renewable capacity. Thus, the hybrid resource QC has been adjusted downward by the amount of charging energy needed from the VER component.

The dynamic limit tool proposed by CAISO in the hybrid resources initiative is intended to ensure feasible dispatch schedules despite deviations between forecasted and actual renewable availability. In the Hybrid Resources Draft Final Proposal, CAISO explains that “forecast values from variable energy resource components…will likely be drivers to how much energy the resource can deliver to the market.”[1] CAISO’s proposal to use the dynamic limit impacts to determine the Hourly Unavailability Factor for hybrid resources in the RA Enhancements initiative would therefore result in an additional penalty, as the renewable component of hybrid resources would be subject to both ELCC, which accounts for intermittency of VERs, as well as application of the dynamic limit tool to account for fuel availability. As discussed above, the CPUC’s QC methodology would further reduce UCAP hybrid resources. The reliability value of variable renewable resources in a hybrid configuration would therefore be undercounted relative to co-located and standalone renewables despite no difference in the underlying factors driving their availability. CalCCA therefore recommends that adjustments to hybrid resources UCAP values reflect only forced outages to the storage component and not include dynamic limit adjustments related to the VER component.

[1] Hybrid Resources Draft Final Proposal, pg 10.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

While CalCCA continues to support the proposed resource specific (including aggregations) import RA requirements, we continue to oppose a source-to-sink firm transmission requirement for import RA. As an initial matter, while CAISO states on Slide 84 that there is precedent for firm transmission requirements for RA imports in other ISOs and RTOs, CAISO ignores the direct existing precedent that no such requirement currently exists for CAISO’s import RA. Creating such a requirement without first addressing the potential market power issues that would be created by the requirement would harm California consumers. The way that market power is addressed in the Open Access Transmission Tariff (OATT) is by requiring unused long-term transmission rights be released prior to real-time. If CAISO requires import RA to demonstrate firm transmission prior to real-time, CAISO will have voluntarily created a requirement that thwarts this critical market power mitigation tool. To blithely suggest that CAISO market participants should raise concerns about market power that does not yet exist under a transmission provider’s OATT shirks CAISO’s responsibility to take a reasoned approach in evaluating the potential impacts of changes to its Tariff; those impacts include the potential seams issues and rules misalignment, including the possibility that the neighboring OATT transmission release rules would no longer protect CAISO market participants against the exercise of market power.

BPA’s own data illustrates the paucity of long-term transmission that has been released by the parties holding expiring long-term firm transmission rights.[1] Table 1.1 and Table 1.2 extracted from BPA’s Southern Intertie Data report provide a clear indication that parties that do not currently hold long-term rights on BPA’s Southern Intertie are not likely to be able to obtain expiring long-term firm transmission rights. Between 2012 and 2018, in five of the seven years none of the megawatts up for renewal were released. In the two years that megawatts were released, only 20 MW and 148 MW, 4% and 31% were released. Put another way, Table 1.2 shows that typically 100% of Transmission Service Requests (TSRs) were renewed and in one case the TSR that was not renewed was replaced by a new original request from the same party that had the expiring TSR. While some long-term firm transmission rights are not subject to renewal priority, these amounts are small in comparison to the potential Import RA amounts needed. What the BPA data suggests is that parties that do not currently hold BPA Southern Intertie long-term transmission rights are extremely unlikely to be able to obtain those rights from BPA at BPA’s cost-based tariff rates to support their RA imports.  Instead, they will have to obtain the rights from the current holders, who have priority renewal rights and who are not required to release any unsold rights until just prior to real-time.

The good news is that the data CAISO included in Slides 116 and 117 demonstrate that even during extremely stressed system conditions from August 15, 2020 through August 20, 2020, the amount of power flow on the California-Oregon Interface and the Nevada-Oregon Border intertie were near (or even slightly above) the respective Total Transfer Capability of those interties. This was the case even without the more stringent firm transmission requirements that CAISO is considering implementing.­­­­ In contrast, the flowgate data CAISO included on Slides 98 – 100 show that those flowgates were not binding during stressed conditions. If CAISO is concerned about the deliverability of import RA resources, CAISO could put limits on the amount of RA import resources shown that are located on the constrained side of the most critical flowgates.

Further, it is important for CAISO to recognize that the COB and NOB interties are managed paths; the total transfer capability on the California side of the interties aligns with the TTC on the BPA Southern Intertie. Whatever transmission is available within California is matched by transmission on the BPA system. This is true whether or not California parties have contracted with BPA for long-term transmission rights.

[1] Southern Intertie Data as of FY 2018, Bonneville Power Administration, January 28, 2019.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

CalCCA is disappointed that CAISO has decided not to implement the planned outage reserve margin and to instead maintain the existing planned outage replacement requirements with minor enhancements. First, we believe the statement on Slide 122 that the planned outage reserve margin was generally opposed by the stakeholder community mischaracterizes the comments submitted on CAISO’s 5^th Revised Straw Proposal. The majority of commenters did not comment on this aspect of the 5^th Revised Straw Proposal (18 out of a total on 30 parties). Of those that did, seven entities either supported or conditionally supported the planned outage reserve margin (CalCCA, Calpine, Middle River Power, NRG support; NCPA, National Hydropower Association and Yuba County Water Agency would support if planned outages were not prohibited in October), while five opposed it (DMM, Public Advocates Office, PG&E, SDG&E, Six Cities). CalCCA represents 22 operational LSEs that serve more CAISO load than the bundled load of PG&E and SDG&E combined. Allowance for hydroelectric resource maintenance outages in Summer months will need to be addressed with either the planned outage reserve margin approach or if the current process is maintained. That is, either approach will need to recognize the limited window available for hydroelectric resource operators to perform their required maintenance due to water availability and weather conditions.  CalCCA acknowledges that the planned outage reserve margin approach provides slightly less incentive for parties to minimize the duration of their planned outages, but we believe that the potential lost revenues and the costs associated with performing maintenance outages already provide sufficient incentive for resources owners to minimize the duration of their maintenance outages.

By continuing the current maintenance outage process, CAISO will miss an opportunity to reduce the aggregate amount of replacement capacity that will be required to cover the maintenance outages. Under CAISO’s latest proposal to prohibit RA resource maintenance outages absent a replacement resource being provided, resource operators likely will need to acquire replacement capacity for an entire month, even if their maintenance outage is expected to last a single week. Worse, if the maintenance outage were to span two calendar months (even if it lasts only a single week), replacement capacity would need to be procured for two months. The planned outage reserve margin approach would allow for less replacement capacity in aggregate, and would reduce the amount of potential RA capacity that resource owners may hold in reserve to self-supply the increased amount of replacement capacity. Further, it will be extremely difficult, if not impossible, for owners of local capacity resources to obtain replacement capacity so that their maintenance outages will be approved. In many local capacity areas, all of the local resources are needed to satisfy local area or sub-area requirements. Absent a well-defined waiver process, the proposed prohibition on maintenance outages without replacement capacity will make it impossible for these resources to receive authorization for required maintenance. Reliance on opportunity outages will make it difficult for resources to plan for outages and is likely to increase costs. Treating the outages as forced outages will lower the UCAP for the local area without changing the required NQC or the pool of resources that can meet the requirement. For other local capacity areas, with limited resources that can provide replacement capacity for that specific local area or subarea, it seems likely that a resource owner seeking replacement capacity for maintenance outages would be exposed to the exercise of market power without any means for the market power to be mitigated. These issues will need to be addressed for the CAISO’s proposed approach to become workable. For the above reasons, CalCCA urges the CAISO to reconsider its decision to reject the planned outage reserve margin approach.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

CalCCA believes CAISO’s approach for applying UCAP for local capacity resources after identifying the LCR need based on NQC could work, but questions whether doing so actually adds any value given that the current pool of available local resources is limited and is already constrained both by resources’ effectiveness factors and their forced outage rates. As new resources are added, incorporating forced outage rates into the local RA evaluation will incentivize increased reliability, but we are concerned that overlaying the UCAP requirement on local capacity resources may unnecessarily complicate the local capacity procurement process. Further, as noted in our comments above about the challenges presented by CAISO’s proposal to require replacement capacity for all maintenance outages, CAISO will need to address this issue explicitly for local capacity resources if it doesn’t adopt a planned outage reserve margin approach. Finally, CAISO should coordinate with the Central Procurement Entities to ensure that the UCAP requirement does not result in an increase in local capacity procurement requirements without balancing costs and benefits.

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

N/A

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

The California Efficiency + Demand Management Council (Council) continues to have strong objections to using an Effective Load Carrying Capability (ELCC) methodology to calculate the Unforced Capacity (UCAP) value of DR programs and resources.  The CAISO has not demonstrated that using ELCC will yield a more accurate RA value than any other method, nor has it considered the impact of using ELCC on the supply of DR capacity.  The Council notes that during the recent heat storms in August and early September, DR resources played a significant role in avoiding more blackouts than otherwise would have occurred in the absence of these resources.  It would be unnecessarily risky to devalue existing DR and disincentivize the entry of new DR.  As the Market Surveillance Committee (MSC) stated in its draft Opinion of Energy Storage and Distributed Energy Resources Phase 4, “If too little credit is given to a particular resource type compared to its actual contribution to system adequacy, there will be too little investment in it, all other things being equal.” 

The CAISO should forego using an ELCC methodology to determine the UCAP value of DR resources and instead adopt the Council’s alternate proposal put forth in its August 7 comments.  During the September 15 call, the CAISO indicated that it was still considering the Council’s alternative proposal.  The Council appreciates this consideration and is certainly willing to work with the CAISO to develop a more detailed proposal.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

The Council reserves comment.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

The Council reserves comment.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

The Council reserves comment.

6. Additional comments on the September 15 and 17, 2020 working groups:

N/A

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

CESA appreciates the work of the ISO on this initiative as well as the opportunity to provide feedback and recommendations related to it. As CESA has stated previously within this initiative, the ISO must look at the modifications to its RA tariff with an essential principle in mind: primum non nocere - first, do no harm. Considering the potential impacts of the ISO’s proposals on the Western electric power sector, the ISO should engage with stakeholders on a variety of issues within the scope of this initiative, including those that were not considered in the agenda for the September 15 and 17 working group calls.

In these comments, CESA focuses on issues raised during the working group discussion on the subject of Unforced Capacity Evaluations. In addition, considering the ISO did not include the minimum charge requirement (MCR) proposal in the working group’s agenda, CESA presents its position and alternative proposal as additional comments. CESA’s comments can be summarized as follows:

• The ISO should modify the proposed outage definitions in order to account for the potential of resources being unable due to transmission outages beyond their control.
• The ISO should consider calculating UCAP values based on the top 15% of hours with the tightest supply cushion, by season.
• The ISO should determine the UCAP value of new resources based on their net qualifying capacity, per Option 2 of those described in the Fifth Revised Straw Proposal.
• The ISO should modify its MCR proposal to consider this solution interim and revise it as follows:
  • The MCR must not be binding for all days and criteria for its use must be equal to that of exceptional dispatch (ED).
  • For the purposes of future product development, the ISO shall track MCR use in a manner consistent to ED.
  • The MCR proposal must include clear settlement rules that include opportunity costs. ?
  • In parallel to this interim solution, the ISO should focus on developing an energy shifting product within the next phase of the Energy Storage and Distributed Energy Resources (ESDER) initiative.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

During the September 15 working group call, the ISO clarified that urgent outages, defined as situations when a facility/equipment is known to be operable yet carries an increased risk of a forced outage occurring, would not affect a resource’s UCAP unless they are taken, at which point they would be forced outages. Moreover, the ISO noted that they are considering ways to modify their outage exemption proposal to remove transmission-induced outages from UCAP evaluation. CESA supports and appreciates these clarifications. Regarding the latter, as CESA has noted previously, the current set of causes for outage exemption is problematic because it could inappropriately or excessively derate a unit when the unit otherwise was ready to perform.[1] A UCAP derate under these conditions, and considering the growing occurrence of transmission outages due to increasing wildfire risks, is thus inappropriate. Hence, CESA recommends the ISO includes an additional outage definition to be exempt from UCAP, a “Forced Transmission Outage” in line with the definition used in the Midcontinent Independent System Operator’s (MISO) footprint.

On the subject of UCAP calculation, the ISO commented on the stakeholder feedback it has received regarding the number of hours considered within their methodology. Specifically, the ISO provided data on the potential impacts of Calpine’s proposal to base UCAP off the top 10% of hours with the tightest supply cushion, regardless of season. The ISO concluded this proposal would not improve on their methodology, as it would consider too many hours from off-peak months and would not reflect availability in the mornings, or other periods of known grid stress. While CESA is supportive of a seasonal approach to determine UCAP, the number of hours proposed currently by the ISO (the top 20% of hours with the tightest supply cushion, by season) continues to be excessive in comparison to the practices of other ISO/RTOs. The New York ISO (NYISO), for example, bases its UCAP-equivalent process on an analysis of the performance of assets during the Summer and Winter Peak Hours, totaling about 736 hours per year.[2] As such, CESA recommends that the ISO consider a methodology based on the top 15% of hours with the tightest supply cushion, by season. This methodology could be preferable to both the ISO’s and Calpine’s proposal since it will decrease the number of hours considered while theoretically maintaining the likelihood to select more hours within the on-peak season, and more hours of known grid stress due its high correlation with net load. Such a cushion level will ensure reliable operations with more cost-efficient outcomes.

Finally, it is noteworthy that the subject of UCAP values for new resources was not addressed within the working group calls. During the September 15 call, CESA commented on this issue, showing support for a modified version of Option 2, which values new resources at their NQC and quickly derates them given their operational record. CESA included this proposal in its comments on the Fifth Revised Straw Proposal. Essentially, CESA recommends adopting Option 2 with a modification to the weighting to read as follows:

• Year 0 (i.e. before actual operational data is available): NQC
• Year 1: 60% year 0 performance, 40% NQC
• Year 2: 55% year 1 performance, 35% year 0 performance, 10% NQC
• Year 3: 45% year 2 performance, 35% year 1 performance, 20% year 0 performance

This modification is reasonable as resources should not be unduly derated for actions not undertaken by their operators. By this logic, CESA opposes Option 1 as it would derate the reliability contributions of brand-new assets based solely on the operational history of assets loosely considered within the same class. Moreover, CESA supports this modified version of Option 2 since (1) it would apply disproportionately to storage assets due to the current status of the interconnection queue; and (2) the ISO’s data analyses on UCAP show minimal derates for energy storage, with values between 94% and 97% depending on the season. Thus, CESA considers basing the UCAP value of new resources on their NQC is fair and reasonable while carrying marginal overcounting risks.

[1] Fifth Revised Straw Proposal, at 17.

[2] See NYISO, “Installed Capacity Manual”, updated June 2020, at 57.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

CESA offers no comments at this time.  

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

CESA offers no comments at this time.  

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

CESA offers no comments at this time.  

6. Additional comments on the September 15 and 17, 2020 working groups:

CESA is concerned with the ISO’s continued consideration of the MCR within this initiative. While understanding of the CAISO’s intent, CESA has clearly stated that this proposal will: (1) seriously hinder market participation; (2) increase reliability risks by constraining flexible RA supply; and, (3) potentially discriminate against storage resources while running afoul of CAISO principles of competition and efficient market-oriented policy.

Due to these concerns, CESA has actively and respectfully tried to engage with the ISO and other stakeholders to address this issue formally and find solutions that are well suited for the future of the grid. In this spirit, CESA requested the ISO to include MCR within the scope of the September 15 and 17 working group calls. However, despite our efforts and those of other stakeholders, the ISO did not consider our request and noted this topic would be addressed at the October 9^th Market Surveillance Committee (MSC) meeting. This is yet another example of the series of procedural issues which surround the MCR proposal, after it was: 1) not scoped into this initiative; 2) removed from the initiative and taken to the ESDER initiative; 3) removed from the ESDER initiative;4) returned back to this initiative later in its development cycle; and 5) not considered in the recent working group calls, leading to limited opportunity to address this issue before the ISO’s plan to submit to the Board of Governors for approval. Given the lack of stakeholder discussion on this subject, CESA includes its position and recommendations on the MCR as additional comments.

The MCR, as proposed, is unduly restrictive to asset operations, well beyond the de rigueur requirements of must-offer obligations. As such, CESA believes different market-oriented solutions should be developed to address CAISO’s concerns in more efficient and flexible ways that do not limit participation. In this spirit, even as the ISO has not provided or conducted sufficient analysis on the issue necessitating an MCR-like solution, CESA proposes the ISO consider the following interim reforms to serve as a bridge solution to address the ISO’s concerns while longer-term market products are developed.

First, given the limitations inherent to the MCR construct, the ISO must consider any non-market-based solutions to be interim. If adopted, the MCR proposal should be contingent on the ISO engaging with stakeholders to develop an energy shifting product that captures energy and regulation opportunity costs, enabling resources to bid at the price they would be willing to take to forego all revenues in order to shift energy on a daily basis. The ESDER initiative could be an adequate venue to define such a product. Once the MCR is identified as a temporal solution, the ISO should modify it to include clear utilization criteria, tracking and reporting requirements, and settlement rules.

As CESA has previously pointed out in this initiative, the MCR construct as proposed could seriously hinder the flexibility of the electric grid. In order to mitigate this risk, CESA recommends the ISO modify the MCR framework so that it would not be binding for all days. Instead, the ISO should treat MCR use just as exceptional dispatch (ED). As such, CESA recommends that the MCR must only become binding during a System Emergency, to prevent an imminent System Emergency, or in a situation that threatens System reliability and cannot be addressed by the RTM optimization and system modeling. This set of criteria mirrors the one applicable to ED per section 34.11 of the ISO Tariff. This modification is reasonable as the criteria defined is broad enough to enable MCR use when the ISO deems it necessary while ensuring asset owners that the MCR would not be used excessively. This latter point is strengthened by CESA’s tracking and reporting requirements proposal, described in more detail below.

In order to disincentivize excessive reliance on the MCR and to continue the development of future market products, CESA recommends the ISO report MCR use in a manner consistent to ED. As such, the ISO must record the circumstances that have led to the use of the MCR, as done for ED per section 34.11 of the ISO Tariff. Moreover, on the fifteenth day of each month, the CAISO shall file with the Commission and post to the CAISO Website an initial report concerning the use of MCR that occurred in the month two months prior to the month in which the report is filed. The report shall identify the frequency, volume, costs, causes, and degree of mitigation of MCR during such period to the extent such data are available. These recommendations are consistent to the current treatment of ED, per section 34.11.4 of the ISO Tariff.

In addition, the ISO must revise the MCR proposal to include clear settlement rules for the periods when it is binding. To do so, CESA recommends basing settlement on the ED construct. In this case, CESA considers the settlement prices for resource i on interval t should be derived as follows:

For charging:

Settlement Price_i.t=MIN(FMM or RTD LMP_i.t, Energy Bid_i.t, DEB if mitigated_i.t)

For discharging:

Settlement Price_i.t=MAX(FMM or RTD LMP_i.t, Energy Bid_i.t, DEB if mitigated_i.t)

This definition of settlement, while useful and viable as it is applicable for ED, is not fully equipped for MCR use as it cannot integrate the opportunity costs faced by a storage asset that has been subjected to forego market revenues in order to ensure later, potentially uneconomic, dispatch. As a result, CESA recommends the ISO focus its attention within the RA Enhancements initiative to develop means to account for energy and regulation opportunity costs within the MCR construct. Given the complexity of estimating different counterfactual operating scenarios, focusing on RT energy arbitrage would enable a viable opportunity cost framework. To initiate this conversation, CESA suggests the ISO considers its work on storage opportunity costs within the ESDER initiative. For the development of default energy bids (DEBs) for storage, the ISO simplified opportunity costs as the assumption that a resource would deplete its total charge during the period with the 4th highest price (assuming a 4-hour resource). For example, if prices are $45, $35, $32, $30, $27, $31, $40; the fourth highest hour would be $32?. Since the MCR methodology currently does not capture potential RT energy and regulation revenues? and in order to maintain simplicity, CESA recommends using a methodology similar to that of ESDER but using the highest priced hour (in the case of the example above, that would be $45?). The opportunity cost proxy thus would be defined as:

            Opportunity Cost_i=highest priced hour*Pmax_i*4 hours

This definition would allow the ISO to compare the net revenue associated with settlement via the formulae described above to that assumption of complete discharge during a 4-hour period priced as the highest priced hour. Thus, the ISO should pay the resource the maximum of either the settlement amount or the opportunity cost:

            Compensation over MCR use=MAX[Q*Settlement Price, Opportunity Cost]

With these modifications adopted, the ISO shall then work with stakeholders to replace the limited MCR/ED tool with a sustainable market product to provide the intended and needed reliable grid operations from storage. Specifically, the ISO should define an energy shifting market product that energy storage assets can bid into to provide daily arbitrage. The data collected from MCR use could be extremely helpful, as it would enable the ISO to better understand the grid conditions that lead to MCR need, as well as the opportunity costs faced by storage resources. Thus, adopting a modified MCR would be a catalyst for a comprehensive and reasonable review of the role of storage within reliability planning.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

Please see DMM Comments here:

http://www.caiso.com/Documents/DMMComments-ResourceAdequecyEnhancementsWorkingGroupSept15and17-Oct12020.pdf

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Please see link in Section 1 for comments.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

Please see link in Section 1 for comments.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

Please see link in Section 1 for comments.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

Please see link in Section 1 for comments.

6. Additional comments on the September 15 and 17, 2020 working groups:

Please see link in Section 1 for comments.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

The Public Advocates Office (Cal Advocates) at the California Public Utilities Commission (CPUC) opposes implementation of the Unforced Capacity (UCAP) system because it is likely to increase ratepayer costs through additional Resource Adequacy (RA) procurement by load serving entities (LSEs), shifts costs from generators to ratepayers, and has not been demonstrated to provide cost efficient reliability benefits compared to the status quo or alternatives such as a modification of the RA Availability Incentive Mechanism (RAAIM).[1]  Nevertheless, Cal Advocates provides the following comments on certain features of this initiative which was presented and discussed at the California Independent System Operator’s (CAISO’s) September 15 and 17, 2020 RA Enhancements Working Group (Working Group):

• Cal Advocates supports the alignment of off-peak and on-peak months to CPUC-adopted definitions.
• Cal Advocates supports the CAISO’s reconsideration of outage exemptions.  The CAISO should not derate a resource’s UCAP due to reasons beyond the resource owner’s control.
• The CAISO’s proposed changes requiring firm transmission and resource specification should be removed.  Import rules should align with existing CPUC import rules.
• Application of UCAP to local RA showings and requirements provides no demonstrated improvements to reliability and has the potential to increase ratepayer costs.
• The CAISO should coordinate with the CPUC, California Energy Commission (CEC), and all stakeholders to develop a UCAP-specific Planning Reserve Margin.

[1] Cal Advocates Comments on the Fifth Revised Straw Proposal of the RA Enhancements Initiative, August 7, 2020, pp. 1-6.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

The CAISO previously proposed to define Peak Months as May through September and Off-Peak Months as October through April.[1]  In the recent Working Group, the CAISO revised the Peak Months to include October, thereby aligning the calendar with the CPUC's definition of Peak Months.[2]  Cal Advocates supports this alignment.

Cal Advocates supports the CAISO's decision to reconsider its outage exemption proposal.[3]  As Cal Advocates noted in previous comments, excluding wildfires from exempt outages could lead to a structural penalty being imposed on resources that provide valuable services in transmission-constrained areas such as local RA.[4]  Likewise, including transmission-induced outages or any other factor outside of a generator's control in their UCAP calculation would not create an incentive for the generator owner to improve performance and would lead to increased procurement and ratepayer costs due to existing resources being penalized for such an outage through a UCAP derate.

[1] CAISO RA Enhancements Fifth Revised Straw Proposal, July 7, 2020, p. 19.

[2] Working Group Presentation, p. 32.

[3] Working Group Presentation, p. 26.

[4] Comments of the Public Advocates Office on the CAISO RA Enhancements Fifth Revised Straw Proposal, pp. 7-8.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

Cal Advocates does not support the CAISO’s proposed changes to RA import provisions.  The CAISO is seeking solutions to attempt “to balance the CAISO’s need for reliable and dependable RA imports, with the need for efficient and liquid markets recognizing that California competes for imported energy and transmission….”[1]  The Working Group proposes that RA import capacity shown by LSEs should identify to the CAISO a single resource or a pool of resources  which represent the source of the imported capacity.[2]  The CAISO also proposes that the identified single resources or pool of resources should be accompanied with firm transmission service from source to final CAISO interconnection or alternatively for the “last leg” of transmission delivery to a CAISO interconnection.[3]  These proposed requirements provide no clear benefit as they would result in disallowing non-resource specific imports that have historically provided RA capacity which would shrink the supply of imports able or willing to continue providing RA capacity to California, thereby increasing ratepayer costs.  Requirements to acquire transmission rights would worsen ratepayer costs by raising the cost of imports that must transact for transmission rights as well as decreasing RA supply for current imports that are unable or unwilling to secure those rights.

The CAISO’s proposal also fails to address bidding behavior that would avoid actual dispatch, a concern raised by the CPUC,[4] while decreasing the pool of resources able to qualify for RA due to additional proposed requirements.[5]  The CAISO should align its rules for RA imports to those recently developed and implemented by the CPUC which require non-specified imports to self-schedule delivery during availability assessment hours without  requiring that firm transmission accompany the imports.[6]

[1] CAISO RA Enhancements Fifth Revised Straw Proposal, July 7, 2020, p. 58.

[2] Working Group Presentation, p. 76.

[3] Working Group Presentation, pp. 89-90.

[4] California Public Utilities Commission Decision 20-06-028, Ordering Paragraphs 1-4 and p. 57.

[5] Comments of the Public Advocates Office on RA Proposals for Imports, March 6, 2020, pp. 5-6.

[6] California Public Utilities Commission Decision 20-06-028, Ordering Paragraphs 1-4 and p. 57.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

Cal Advocates does not have feedback on this topic at this time.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

The CAISO proposes to continue using resource NQC values to create NQC requirements for use in the local capacity technical (LCT) studies.[1]  However, the CAISO proposes to allocate a UCAP compliance requirement to LSEs that would be calculated using the NQC requirement of all Local Capacity Areas (LCAs) per each Transmission Access Charge (TAC) area.[2]  This UCAP local RA requirement would exist on top of current LCA-specific local RA requirements.  The CAISO also proposes that LSE compliance would be defined in terms of NQC which can be converted out from the UCAP value of local area resources.[3] 

In addition, the CAISO proposes to modify its existing tariff to have authority to procure backstop capacity for deficiencies in local RA areas in terms of the UCAP energy sufficiency test at a Transmission Access Charge (TAC) area level.[4]  It is currently unclear if this authority would replace or be in addition to the CAISO’s existing authority to backstop for local RA deficiencies in terms of NQC at the LCA level.[5]  In its next proposal, the CAISO should make clear precisely how its Tariff would be modified (pending Federal Energy Regulatory Commission approval) in terms of backstop capability.

In order to include forced outage assumptions of resources used to meet Local Capacity Requirements (LCR) requirements in general, the CAISO’s proposal attempts to apply UCAP consideration to local RA NQC requirements.  The LCT study determines the minimum NQC requirements in LCAs and sub-areas necessary to meet reliability needs and also determines the effectiveness of existing available resources to meet those needs.  Forced outage assumptions would be independent from a resource’s effectiveness to meet reliability needs.  These NQC requirements are not adjusted for forced outage assumptions beyond reliability contingencies due to transmission and infrastructure failures.[6]  The LCT also uses a 1-in-10 year summer peak load forecast[7] rather than the 1-in-2 peak load forecast in place and recently used by the CAISO in UCAP analysis.[8]  The CAISO’s proposal does not appear to increase efficiency and may result in additional uncertainty.[9]

The CAISO’s proposal to create an additional level of compliance for local RA UCAP showings at the TAC area[10] would create a new RA requirement for LSEs on top of existing CAISO and CPUC local RA requirements.  This new RA requirement could result in additional procurement need or drive up the price of RA, which will likely increase ratepayer costs.  Before considering this new RA requirement, the CAISO should demonstrate how it enhances reliability in a cost-efficient manner beyond the enhancements in reliability provided by the proposed system UCAP and continuing local NQC requirements.

[1] CAISO RA Enhancements Fifth Revised Straw Proposal, July 7, 2020, p. 80.

[2] Working Group Presentation, p. 128.

[3] Working Group Presentation, p. 131.

[4] CAISO RA Enhancements Fifth Revised Straw Proposal, July 7, 2020, p. 82.

[5] The CAISO’s authority is currently derived from CAISO Tariff 43A.2.1. and 43A2.2.

[6] LCR is the “minimum quantity of local capacity necessary to meet the LCR criteria.” CAISO 2021 Local Capacity Technical Study Final Report, May 1, 2020 (2021 LCT Study), p. 1

[7] 2021 LCT Study, p. 8.

[8] The CAISO has not yet decided on what type of forecast to use nor the nature of a planning reserve margin to derive systemwide UCAP requirements.  CAISO RA Enhancements Fifth Revised Straw Proposal, July 7, 2020, pp. 9-13.

[9] The Department of Market Monitoring (DMM) has already commented that “The UCAP conversion process does not appear to add efficiency to the local procurement process [and] may even add uncertainty to the local procurement process if UCAP and NQC values diverge significantly in local areas.”  Comments on RA Enhancements Fifth Revised Straw Proposal, DMM, August 13, 2020, p. 11.

[10] Working Group Presentation, pp. 128, 130, 138.

6. Additional comments on the September 15 and 17, 2020 working groups:

The CAISO did not discuss the System RA UCAP requirement at the Working Group but this is a critical component of the UCAP proposal.  The Fifth Revised Straw Proposal discussed adjusting the Planning Reserve Margin (PRM) to account for forecast error, reserves, and forecast load.[1]  Adjustments to the PRM used for system RA requirements would have substantial impacts on procurement and require a re-evaluation of major reliability assumptions.  Cal Advocates encourages the CAISO to coordinate with the CPUC, CEC, and all stakeholders extensively prior to any proposal to re-evaluate the PRM in addition to during the typical CAISO proposal process.

[1] CAISO RA Enhancements Fifth Revised Straw Proposal, July 7, 2020, p. 13 and p. 38.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

Calpine generally supports the direction of the RA Enhancements proposal.  As discussed below, Calpine suggests that the CAISO consider including unavailability due to the exhaustion of use limits in its unforced capacity evaluation and/or implement strong performance penalties that include the exhaustion of use limits in the determination of availability.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Under the CAISO proposal, a resource’s unavailability due to the exhaustion of a use limit would not affect the difference between its NQC and its UCAP.  Calpine suggests that reflecting the exhaustion of use limits in UCAP would ensure that resources count in a manner that reflects how they actually perform.  For example, if a period of significant supply tightness exceeds 4 hours, a 4 hour battery would not be able to serve load for the entire period.  Calpine recommends that availability for a use-limited resource during UCAP assessment/tight supply cushion hour should be based on either generating or providing energy and AS up to its full capacity or entering the hour with sufficient energy/remaining use availability to generate for the full hour, e.g., if not generating or providing AS, a 100 MW battery should have 100 MWh SOC to be deemed available.  In assessing whether a battery, for example, was available, the CAISO might focus on a narrower set of hours in which the resource was clearly needed, e.g., emergency hours, rather than the full set of low supply cushion hours.

Alternatively or in addition, the CAISO might consider high-powered incentives for availability such as New England’s Pay-for-Performance (PfP) incentives.[1] (In this initiative, Calpine originally proposed this type of incentive as an alternative to UCAP, but Calpine believes that it could work in concert with UCAP as well, as a similar construct, Capacity Performance, does in PJM.)   Under PfP, for every hour of an emergency, each capacity resource receives an additional payment or is assessed a charge that is the product of a very high administrative price (e.g., $2000/MWh) and the difference between how it actually performs, in terms of providing energy or AS, and the amount of capacity that has been committed from it (adjusted to account for the fact that the entire fleet of capacity resources may not be needed in a particular emergency).

Incentives such as PfP have several important benefits:  First and most obviously, they provide strong incentives for resources to provide capacity up to the amount that they have sold during emergencies without direct cost consequences to load because, as with RAAIM, they involve payments from underperforming to overperforming suppliers.  Second, they encourage suppliers to be realistic about the capability of their own resources in determining how much capacity to sell and consequently minimize the importance of counting rules, which may or may not accurately reflect how resources will perform.

In order to realize this last benefit comprehensively, it is critical that implementation of something like PfP encompass all resources under all conditions, e.g., it should not exempt solar for the absence of sun or batteries for exhausting their limited energy. Instead, it should shift the risk of the potential unavailability of these resources away from load and to suppliers themselves.

In addition, Calpine has one minor concern about the application of UCAP to resource-specific system imports (at slide 52).  If UCAP for these resources is calculated at the SC level, is there the potential for a set of underperforming resources to be remarketed by a new SC with no UCAP consequences for the underperformance?

[1] https://www.iso-ne.com/static-assets/documents/2018/06/2018-06-14-egoc-a4.0-iso-ne-fcm-pay-for-performance.pdf

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

Calpine believes that the CAISO’s proposal to require substitute capacity for all outages provides helpful clarity to the planned outage process.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

As the presentation illustrates, translating local requirements, which are inherently in terms of NQC, to UCAP raises potential distortions, e.g., the possibility that local UCAP without sufficient associated NQC could be procured to meet local requirements.  Consequently, it may be preferable to leave local requirements in terms of NQC. 

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

EDF-R appreciates the CAISO’s willingness to devote time and staff resources to the working group. The two-day working group provoked important and valuable discussions. As discussed in detail in these comments, EDF-R encourages the CAISO to consider significant refinements to the proposal as it pertains to calculating UCAP for hybrids and co-located resources, and to additional qualitative analysis similar to what was presented in the working group.  

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

More RA showings converted to UCAP 

EDF-R greatly appreciates the CAISO providing the June 2020 RA showings converted to UCAP, and requests that CAISO provide additional examples of historical months as they would convert to UCAP, specifically August 2020 and October 2019. With the transition to UCAP the CAISO is proposing a major undertaking for all parties (buyers, sellers, and oversight agencies) and the ripple effects and required effort to implement new contracts and transition existing contracts cannot be understated. This information is an analytically strong approach to quantifying the proposal’s overall benefits. CAISO’s analysis indicates the whole effort of rehauling the RA program nets a 3,000 MW difference, and EDF-R would like to better understand if that outcome is consistent across the year and under extreme conditions.  

QC or ACC should be used to calculate HUF 

EDF-R encourages the CAISO to more thoroughly review specific use-case outcomes for hybrid and co-located resources, and reconsider if or where it is appropriate to use PMAX values. In the CAISO’s proposal Hourly Unavailability Factors (HUF) for hybrid and co-located resources assumes QC equals the PMAX of the hybrid resource (or, presumably, the combined PMAX of co-located resources), but PMAX for QC MW amounts are significantly different for hybrid and co-located generators.  

In Decision 20-06-031 June 25, 2020, the CPUC decided that “the total capacity of the hybrid or co-located QC values shall be capped at the point of interconnection limit.” So, while the Point of Interconnection limit also is not a perfect substitute for QC, it is a more appropriate proxy for QC than PMAX. In December of this year, the CAISO will implement Phase 1 of the Hybrid Resources initiative, which will include system modeling of the Aggregate Capability Constraint (ACC). The ACC is an adjusted maximum operating limit when a co-located resources’ aggregate PMAX is greater than the effective PMAX created by the point of interconnection (POI) limit. It is not clear to EDF-R if the ACC as implemented by Hybrid Phase 1 applies to hybrid resources or traditional resources (as written, the policy seems to only affect co-located resources). The ACC is a graceful solution, if imperfect, and the ACC functionality should be expanded to be available to any resource if the functionality would provide a closer approximation to QC for the purposes of calculating HUF. 

Example 1: 

• Gross install/ Combined PMAX: 400 MW = 200 MW Storage + 200 MW PV 
• POI limit/ ACC: 200 MW 
• QC: 288 MW (assuming 44% PV ELCC, using June 2019 as an example month1 + 200 MW storage) 
• In this example ACC is a much closer approximation of QC than PMAX. This example is representative of ~ 50% of proposed or online hybrid and co-located generation in the CAISO interconnection queue as of Sep 29, 2020.  

Example 2: 

• Gross install/ Combined PMAX: 250 MW (50 MW Storage + 200 MW PV) 
• POI limit/ACC: 200 MW 
• QC: 138 MW (assuming 44% PV ELCC, using June 2019 as an example month + 200 MW storage) 
• In this example this example ACC is a much closer approximation of QC than PMAX. This example is representative of ~ 25% of proposed or online hybrid and co-located generation in the CAISO interconnection queue as of Sep 29, 2020.  

Additionally, in facility configurations where the PV is being used to charge the storage, the PMAX is even more disparate from QC than the ACC.   

The CAISO has information on resources’ QC amounts and uses this information to calculate resources’ NQC. It is hard to understand why the CAISO would choose to use any proxy for PMAX where precise accurate information is available. During the working group the CAISO mentioned outages are based on PMAX and so the correct ratio is derived when using PMAX.  That logic is a good case for not using the QC or NQC values the CAISO has, but EDF-R would still contend that using ACC is more appropriate than PMAX. The vast majority of hybrid and co-located generation install MW above their POI limit. And while the CAISO’s tariff appendix A lists PMAX as effectively “net to POI MW” the implementation of the ACC acknowledges that PMAX is actually a unit’s maximum operating limit, or gross MW installed.  EDF-R recommends the CAISO build on the good ideas that the ACC approach offers, collect maximum capability as PMAX and POI limits as ACC on all generation coming online, and that the best solution to be had a solution that knows and considers both points of information.  

Further consideration for deliverability  

The CAISO studies and designates deliverability status for resources, and ultimately uses that deliverability to calculate the resource’s NQC. A resource seeking to receive an NQC designation can select Full Capacity Deliverability Status for 100% of the generating facility’s POI limit, or Partial Capacity Deliverability Status for a MW # or a % of the generating facility. In broad strokes, a 20 MW storage resource with FCDS might be attempting to contract 20 MW RA, and a 20 MW resource with PCDS at 50% would not seek to contract more than 10 MW RA. To further complicate the matter, resources are also eligible to transfer deliverability to other resources that share its POI. This begs the questions 1) how will UCAP be calculated for resources with deliverability less than 100%, and 2) when deliverability is transferred between resources, how will the CAISO proceed with calculating UCAP for those resources?  

For question 1) how will UCAP be calculated for resources with deliverability less than 100%? The CAISO could use the resources existing NQC value, which innately contains deliverability ratios as well as performance testing. EDF-R notes that the solution to this item may necessitate the CAISO also adopting “Option 2” for the transition to UCAP, since it would literally be impossible to create NQC while using NQC.  

Calculating UCAP for new resources 

With respect to calculating UCAP for new storage resource, EDF-R suggests that the duration of the storage resource should be considered during this evaluation due to the inherent ability of a storage resource with more duration to provide the awarded capacity for a longer period of time. The CAISO should also consider the generating facility’s ELCC resource -to- storage resource ratio when calculating the class average for new resources. For example, a generator that has 50/50 storage/PV ratio is not appropriately grouped with a generator that has a 10/90 ratio.   

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

EDF-R acknowledges that in some instances it is appropriate for the CAISO to treat import RA differently than in state RA. However, EDF-R believes that transmission considerations between the RA types are analogous.  The CAISO proposes that import RA that has its firm transmission cut but is otherwise available should not be penalized under UCAP. EDF-R supports this logic. Furthermore, the CAISO should apply the same logic to in state generation. In state generation that is unavailable because of a transmission outage out of its control should not be penalized under the UCAP paradigm.  

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

EDF-R acknowledges that in some instances it is appropriate for the CAISO to treat import RA differently than in state RA. However, EDF-R believes that transmission considerations between the RA types are analogous.  The CAISO proposes that import RA that has its firm transmission cut but is otherwise available should not be penalized under UCAP. EDF-R supports this logic. Furthermore, the CAISO should apply the same logic to in state generation. In state generation that is unavailable because of a transmission outage out of its control should not be penalized under the UCAP paradigm.  

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

LS Power appreciates the opportunity to provide comments on the recent Working Group discussions. While CAISO continues to make progress on this initiative, several issues from previous stakeholder discussions remain unresolved and we recommend CAISO to address these before proceeding with a final proposal. At this time, LS Power is not in a position to support CAISO’s current proposal on topics listed below.

1. Minimum Charge Requirements (MCR):

CAISO’s fifth revised straw proposal pushed forward MCR for storage projects, though MCR has been widely opposed by the stakeholder community. We understand the operational desire for a tool such as MCR for extreme days and periods with low reserve margins. However, taking one asset class, in this case storage, essentially out of the real time market to provide a reliability service every day and without compensation is discriminatory. It will hinder storage market participation, reduce needed investment in new storage resources, and will unintentionally lead CAISO to picking winners (conventional plants) & losers (NGRs). During the recent heat waves, our experience has been that CAISO has been sending frequent Exceptional Dispatches (ED) to NGRs, which effectively takes these resources out of the market. MCR as proposed looks exactly like EDs that we have recently seen for our operational storage assets. Codifying this non-market treatment of energy storage resources as normal day-to-day operations (through MCR) goes against CAISO’s stated market principles and is discriminatory to this asset class. LS Power can support MCR implementation in the interim only if the use of this is treated ED & settlement rules for using MCR are developed such that in addition to settling MCR as ED get settle, storage should also be able to recoup the opportunity cost for staying out of market. LS Power also recommends that CAISO focus on real long-term solutions that can minimize the need for the MCR. The next phase of the Energy Storage and Distributed Energy Resources (ESDER) initiative may be a good place for discussions on this long-term solution.

1. Unforced Capacity (UCAP) for Storage resources:

1. CAISO should not use class average forced outage rates for calculating UCAP for new technology resources like Storage.  Currently, there is limited megawatts (MWs) of storage resources operating in the market so the sample set is too small for class average purposes. Consistent with comments we previously filed, we recommend UCAP to be 100% of net qualifying capacity (NQC) for storage resources for the first year followed by subsequent years utilizing forced outage rates of individual resource.

1. CAISO should not use End of Hour State of Charge (EOH SOC) in calculating UCAP for storage resources. SOC for storage resources will continue to vary throughout the hours of the real time market, which could be all market driven. Using this to de-rate a resource goes against the fundamentals of UCAP, which is based on forced outage rates.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

UCAP calculation for new technology resources:

While CAISO did not directly discuss this topic at the recent working group meetings, LS Power would like to reiterate that it does not support Option 1 for calculating UCAP for new resources especially for newer technology resources, such as Battery storage as presented in CAISO’s 4th & 5th straw proposals. The limited amount of battery storage capacity that is currently operational is not a sufficiently large sample to establish UCAP for this technology. Using this limited sample will not accurately reflect the improving performance of new installations and UCAP for new resources will be unnecessarily penalized due to the performance of unrepresentative existing resources if this methodology is used. LS Power supports Option 2. For first full year of its operation, UCAP for new technology projects such as battery storage should be set equal to the resource’s NQC. Subsequent years should factor in that unit’s actual forced outage rates, but not those of unrelated projects, to develop UCAP as proposed by Option 1. LS Power supports CESA’s proposal on this, which recommends adopting Option 2 with a modification to the weighting to read as follows:

• Year 0 (i.e. before actual operational data is available): NQC
• Year 1: 60% year 0 performance, 40% NQC
• Year 2: 55% year 1 performance, 35% year 0 performance, 10% NQC
• Year 3: 45% year 2 performance, 35% year 1 performance, 20% year 0 performance

UCAP de-rate for storage due to EOH SOC constraints

Pg. 62 of the CAISO presentation referred to use of EOH SOC for calculating UCAP for storage. While this topic was not discussed at the working group meetings in September, we don’t believe CAISO has addressed the comments that were previously submitted on this topic. LS Power submitted the following comments in response to the 4th Straw Proposal & then 5th Straw Proposal. We reiterate our comments below and request CAISO to respond to these concerns.

The proposed UCAP formula that accounts for EOH SOC for storage undermines the intent of the EOH SOC tool and is discriminatory against storage. The UCAP calculation for an hour should only consider that single hour with respect to EOH SOC, and should not consider charging capability. Specific issues with proposed formula are:

• Every hour is using a 4 hour calculation, which is discriminatory against storage, as no other resource gets its UCAP reduced in a given hour based on what might happen several hours later.
  • For example, if a resource is expected to be largely discharged after the evening peak in the overnight hours, it is unreasonable to expect it to be full enough for a 4-hour discharge at that time, and to count that low SOC against the unit’s performance in providing RA.
• The math effectively requires storage to bid into Real Time with absolutely no SOC restrictions 24/7 to avoid a UCAP penalty, which is a far higher bar for Resource Adequacy than for any other resource type. For instance, a gas CCGT that does not receive awards and is not committed in the Day Ahead market has no requirements to offer its full Pmin to Pmax range into every RT period, as that would be physically impossible. This, however, is effectively being asked of storage here in order to receive the same payment for Resource Adequacy as the CCGT. Storage should already be incentivized by the market to provide RT bids 24/7, it is unnecessary to penalize its value as a RA resource relative to other resources, especially when it may still be providing more useful operating range to CAISO operators than other resource types with similar NQCs getting no such reduction in value.
• No other type of resource is required to be able to provide the equivalent of “charging” as an option to the market (the capability to decrease output is best addressed by the market through procuring Regulation Down). As such the example in Hour 5 is clearly discriminatory. This resource is providing far more flexibility to market operators than a gas unit with Pmin = 5 and Pmax = 25, and yet will receive a lower UCAP for the same hour because it can’t charge at -1*Pmax?
  Only the unit’s capability in a given hour should affect its UCAP in that hour. Take for instance the CAISO’s example “Hour 3” for a 25 MW storage resource w/ 100 MWh of storage capacity
  Hour 3: The resource is not on outage (+/- 25 MW) in the real-time market, and they are imposing a minimum end of hour SOC of 25 MWh
  Here, if a resource has a SOC anywhere from 50-100 MWh going into Hour 3, it could clearly provide its entire usable capacity to CAISO for the entire hour. Discharging at 25 MW for the whole hour if RT dispatch dictates would still leave energy in the tank and the EOH SOC parameter would be a non-binding constraint, and it makes no sense to penalize resource’s UCAP. Clearly the full capability of the resource is available for the hour, and there should be no impact on UCAP in this hour.
  As discussed above, the whole reason a 100 MWh resource might have an EOH SOC of 25 MWh in a given hour is so that the SC can be confident that it can physically deliver on a Day Ahead schedule in an upcoming hour (perhaps the “Hour 3” of this example is really HE 15, and the resource has a Day Ahead schedule to begin discharging in HE 17). The current UCAP proposal thus undermines the ability of the SC to ensure that this Day Ahead schedule is met.

In the scenario where a NGR has a Day Ahead schedule in Hour 3, and the EOH SOC parameter is such that this schedule cannot be met, then there should rightfully be a reduction in availability in the UCAP calculation, but this is a far more specific scenario than what is proposed.

CAISO should address these concerns before proceeding with this element of the proposal.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

As previously noted, LS Power supports CAISO requiring firm transmission service point to point from source to sink. CAISO needs assurance that transmission will be available before it can count on an Import RA resource. Some exceptions to this may be implemented on a case by case basis such as instances where a resource obtains transmission service from a network system with multiple transmission options that have historically shown to have available non-firm transmission capacity but not enough firm transmission availability. If CAISO implements such exceptions then availability of transmission for such network systems should be visited on an annual basis.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

LS Power understands CAISO’s desire for a tool such as MCR, and takes seriously the need to develop market rules that ensure that energy storage resources are contributing to the reliability of the grid. However, we must restate our position that the current proposal is unworkable, discriminatory against storage resources and contrary to fair market practice. The proposed MCR will disincentivize storage’s participation in Resource Adequacy, Day Ahead & Real Time markets, thereby preventing storage from providing its full capabilities and flexible supply to CAISO grid. In addition to LS Power, several other stakeholders including CPUC, CAISO DMM, SCE, CESA in past have filed comments pointing to several flaws with CAISO’s MCR proposal. Process wise, LS Power and other stakeholders requested some time at the recent working group meetings to address their concerns about the proposal, however no time was allocated for this discussion. CAISO should not proceed with this proposal until further discussions take place with stakeholders on this topic. An interim solution and a long-term solution to address CAISO’s operational needs should be carefully vetted with stakeholders before a proposal is finalized.

Issues with MCR proposal

MCR effectively takes energy storage resources out of the real time market for every MWh these resources have an award for in the Day Ahead market. Every other technology resource receives financially binding Day Ahead awards that can be significantly modified by awards in the Fifteen Minute and Five Minute Real Time markets, and this should remain true for storage. MCR effectively requires storage resources to hold a certain SOC for several hours, which disables it to discharge during times where need and prices may be high, even if there is ample time to charge back up after the high need/price discharge. This runs counter to CAISO’s stated goals under FRACMOO and other stakeholder initiatives that it needs more flexible capacity to be available in the Real Time market to respond to real time grid fluctuations. MCR reduces the ability for storage resources to fully participate in the market and makes these resources unavailable during periods such as the “neck of the duck”, or the sometimes volatile morning periods that occurs when load and solar both begin to ramp on many days. Ultimately, this creates disincentives for energy storage resources to participate in the Day Ahead market so these can fully participate in the Real Time market. CAISO should take the time, develop a holistic view of what changes are required to accomplish its goals through appropriate market signals, and consider making global changes to its market structure and price signals rather than limiting the participation of storage in the Real Time market, which will have negative impact on business case for storage.

The need for MCR is premised on a potential reliability issue should a storage resource not be able to discharge to its Day Ahead awards. While we understand this, the way it is proposed its use is not just limited to reliability events. It is unclear why MCR would be needed if the perceived reliability issue for which CAISO would have held SOC for storage for several hours ahead of its discharge awards never materializes in Real Time. This could be due to multiple reasons such as Load Forecast in Real Time being lower than Day Ahead or additional wind/solar supply available in Real Time than projected by Day Ahead. All of these could lead to sufficient generation capacity supply available in Real Time such that there would be no reliability need to use MCR. Therefore, we question whether holding SOC for storage in Real Time every time it gets a Day Ahead award is necessary. Instead, this SOC requirement should be tied to imminent reliability issues, such as projected tight supply conditions. Excessive use of MCR will create an overall uneconomic outcome for the entire market, thereby increasing wholesale power prices.

If CAISO moves forward with the MCR proposal, we recommend this be considered only an interim tool and be adjusted to consider the following:

• MCR should be treated as Exceptional Dispatch, and used as rarely as possible, only when justified by exceptional grid conditions: We understand that on certain days, under certain operating conditions such as projected tight supply and grid emergencies, CAISO may need to use MCR. We can accept this type of MCR use if MCR is treated just like Exceptional Dispatch. Use of MCR should be tracked and reported just like Exceptional Dispatch to better understand the market conditions that lead to the need for MCR. Perhaps it makes sense to have the MCR implemented as a tool that only kicks in on days when the generation reserve margin net of most or all energy storage resources (an unlikely worst case scenario) is smaller than some pre-determined threshold.
• Settlement rules for MCR should be developed: Settlement rules for MCR should be developed such that when MCR is used, a storage resource is made whole for staying out of market and is able to recover any opportunity cost in addition to the ED settlement. The opportunity cost adder should include any missed Energy arbitrage or Ancillary Service sale opportunity for the resource costs within the MCR construct.

In conclusion, LS Power urges CAISO to not proceed with the current MCR proposal and hold further stakeholder discussions on this topic such as in the ESDER initiative to come to an effective and economic market solution. The LS Power team has experience in operating large battery storage projects in CAISO markets. We stand committed to working with CAISO team in addressing these issues.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

LSA and SEIA’s positions are summarized below and explained in the remainder of this document.

• UCAP exemptions:  CAISO should exempt from UCAP reductions:

• Urgent Outages that CAISO does not grant, or that CAISO grants but are not taken (clarification)

• Hybrid Resource availability reductions reported through the Dynamic Limit (DL) Tool

• Transmission-induced outages

• RA Imports:  The CAISO should clarify that resource-specific Variable Energy Resource (VER) RA Imports would be treated the same as inside-CAISO VERs, for: (1) Resource Adequacy (RA) value (QC, NQC, and UCAP); and (2) Must-Offer Obligations (MOOs).

• Supply cushion data:  CAISO should regularly publish hourly “supply cushion” figures for its markets.

• UCAP treatment of new RA Resources:  CAISO should select either Option 2 (start with NQC, rapidly transition to resource-specific UCAP) or allow developers a choice between Option 1 (start with class-average UCAP, more slowly phase in resource-specific UCAP) and Option 2.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

LSA and SEIA’s comments in this area concern outages that count against UCAP.  We offer comments on three outage types proposed to count against UCAP, as summarized in the table below and explained after that.   

Urgent Outages

Urgent Outages are defined as conditions when:

Facility/equipment that is known to be operable, yet carries an increased risk of a Forced Outage occurring. Facility/equipment remains in service until personnel, equipment and/or system conditions allow the outage to occur. Urgent Outages allow Facilities to be removed from service at an optimal time for overall system reliability. For Urgent Outages, the work may or may not be able to wait for the ShortRange outage window. (p.15)

LSA and SEIA’s earlier comments stated that these outages should not count against UCAP because: (1) Based on the above definition, they are not actually outages; and (2) counting these conditions as a UCAP deduction (i.e., as if they were actually Forced Outages) provides a strong disincentive for suppliers to report them to the CAISO. 

In the recent Workshop, the CAISO verbally clarified its position in this area.  The CAISO said it treats Urgent Outage reports as urgent requests for an outage, since the equipment is on the verge of failure, and not just a notice for the CAISO's information.  These outage reports “must have a justification of its urgency documented” in the report (see slides 20 and 23).  The CAISO prioritizes these requests the same as actual Forced Outages and will allow them if possible.

In the Workshop, the CAISO clarified that Urgent Outages will only count against UCAP if: (1) CAISO gives permission for an outage; and then (2) the facility implements the outage, i.e., takes the equipment out of service.  Urgent Outages will not be counted against UCAP if CAISO doesn’t allow the outage, or if CAISO does allow the outage but it isn’t implemented, i.e., the equipment stays in service.

The CAISO’s clarification made sense and was extremely helpful, and it should be added to the next Proposal version in this initiative.

Hybrid Resources DL Tool submissions

The CAISO earlier stated that submittals through the proposed Hybrid Resources Outage-Card system would count against UCAP for those resources.  That system, along with the proposed Dynamic Limit (DL) Tool, would allow Hybrid Resources to indicate to indicate when the VER component is unavailable because it is charging the storage component (e.g., to comply with grid-charging restrictions related to Investment Tax Credit (ITC) recovery), and perhaps to indicate VER and storage capacity availability otherwise. 

This is apparently a moot point now, since the CAISO has indicated that it will not include the outage-card element in its final Hybrid Resources Initiative proposal except to indicate mechanical outages (like other resources).  However, the CAISO said at the Workshop that availability limitations reported through the new Dynamic Limit (DL) Tool will also count against UCAP.

This is the first time that CAISO has articulated such a proposal related to the DL Tool.  LSA and SEIA strongly oppose this proposal, particularly with respect to the VER component of the resource.  Contrary to the statement on Workshop slide 54, applying DL Tool availability reductions would be “double-counting" – in fact, the CAISO proposal would actually constitute three different forms of double-counting, i.e.:

• • •  
• For forced outages.  Even though Hybrid Resources are not considered to be VERs, the Qualifying Capacity (QC) of the VER component is established through an ELCC method, which the CAISO has acknowledged already accounts for forced outages.  Thus, counting DL Tool submissions for VER forced outages against UCAP would be double-counting for forced outages.

(Moreover, other resources with ELCC-based QCs (including stand-alone and Co-located VERs) would not be subject to UCAP reductions, adding an element of inequity and policy inconsistency to the double-counting argument.  The CPUC has explicitly determined the Hybrid and Co-Located Resources should be treated the same with respect to Resource Adequacy, and the CAISO proposal would contradict that determination.) 

• • •  
• For weather-related intermittency.  The ELCC-based QC of the VER component already reflects the intermittency of that portion of the resource, so reducing UCAP based on weather-related availability reductions reported through the DL Tool would be double-counting for the intermittency.

• For VER injections into storage.  The VER component QC would already be reduced under the new CPUC QC methodology to account for capacity needed to fill storage, so reducing it again based on reduced availability for that same purpose, as reported through the DL Tool, would be yet another form of double-counting.

Instead, the CAISO should apply UCAP only to the storage component of Hybrid Resources, as it would for stand-alone and Co-located storage resources.  Thus, the Hybrid Resource UCAP would equal the sum (subject to POI limitations) of:

• The ELCC-based VER component NQC; and
• The storage component UCAP, i.e., storage NQC adjusted for Outage Cards for storage capacity mecahnical outages. 

Transmission-induced outages

Aside from Planned and Opportunity Outages, the CAISO also proposed UCAP exemptions for “UCAP Exempt Outages,” defined as:

An outage caused by a natural disaster, act of the public enemy, war, or insurrection. The cause must occur at the plant location and directly affect operability of a generating unit for 5 consecutive days or longer, has not occurred in the previous three years, and could not be avoided through the exercise of Good Utility Practice.

This definition would exclude, for example, outages caused by wildfires causing transmission outages or for PSPS shutdowns, or other outages that take transmission lines out of service.  Apparently, there was widespread opposition in stakeholder comments to exclusion of transmission-induced outages, because this exclusion would:

• Be inconsistent with cost causation principles, i.e., even a properly maintained facility could be taken out of service;

• Fail to provide appropriate incentives to address and mitigate transmission outages, e.g., the UCAP reduction would lead to additional LSE resource procurement when the proper fix could be additional transmission investment; and

• Penalize resources for outages outside their control.

LSA and SEIA agree with all of these points.  In addition, LSA and SEIA note that resource-specific imports with firm transmission would not be penalized if their energy deliveries to CAISO were interrupted due to transmission problems.  Thus, the CAISO’s proposed treatment of transmission-induced outages on its own system would unduly discriminate against resources in its own area.

For all of the reasons described above, LSA and SEIA urge the CAISO to revise this proposal and provide that transmission-induced outages not count against UCAP.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

LSA and SEIA continue to urge CAISO to clarify where the “Import RA” provisions in the Proposal refer to non-resource specific RA imports and not resource-specific imports, and that VER RA imports will be treated like inside-CAISO resources with respect to RA value and Must-Offer Obligations (MOOs).  For example, for import VERs:

• • • • The NQC values will be set the same as inside-CAISO VERs.

• • • • The UCAP values will be set at the NQC.

• • • • The MOOs will be the same as inside-CAISO VERs, i.e., a RT Market MOO but no DA Market MOO, with the RT MOO set at the forecasted value and not the NQC.

These clarifications are necessary due to statements implying otherwise in the Proposal, which have caused significant stakeholder confusion.  For example, the Proposal states (at p.63) that RA Imports would have a Day Ahead Market MOO, and:

As an interim step, and until the CAISO implements the Day Ahead Market Enhancements initiative, RA imports will have a real-time must offer obligation as applicable to that RA import type. With implementation of the extended suite of day-ahead market products contemplated in that initiative, the CAISO expects all RA imports will then have only a day-ahead market must offer obligation. Real-time market bidding obligations will then depend solely on the day-ahead market award and will apply regardless of RA status. (p.70)

…imports “must offer full RA capacity into the Day Ahead Market.”  (pp.71-12)

None of these statements applies to import RA VERs, and the CAISO should clarify that.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

Information on hourly supply cushion

LSA and SEIA continue to oppose the CAISO’s proposal not to publish UCAP-applicable hours in advance, and instead apply UCAP reductions for forced outages in the 20% tightest “supply cushion” hours.  However, if the CAISO retains the proposed after-the-fact approach, the CAISO definitely should publish hourly supply-cushion figures on a regular basis.  (We understand that the CAISO cannot tell which hours will be in the group of 20% tightest until after the season.)

The CAISO stated at the workshop that it does not want to provide any supply-cushion information, because keeping Market Participants ignorant will reinforce the continuing incentive for resources to minimize or avoid outages, because they would “never know” with certainty which hours will count for UCAP.  In other words, “removing that uncertainty might be beneficial” to the CAISO’s UCAP objectives.

With all due respect, withholding useful information that the CAISO already has will not be beneficial.  There is often some degree of discretion in short-term management of forced outages (e.g., submission of Urgent Outage requests), and Market Participants should be given incentives to avoid hours likely to be tight-cushion hours, when the CAISO can least afford those outages.

UCAP for new resources

The CAISO proposed these options in the Proposal document:

Option 1: Start w/class average (similarly designed resources, same technology)

Year 0: 45% class avg., 35% class avg., 20% class avg.

Year 1: 45% year 0 performance, 35% class avg., 20% class avg.

Year 2: 45% year 1 performance, 35% year 0 performance, 20% class avg.

Year 3: 45% year 2 performance, 35% year 1 performance, 20% year 0

Option 2: Start with NQC, place heavy emphasis on initial actual performance

Year 0: (i.e. before actual operational data): NQC

Year 1: 70% year 0 performance, 30% NQC

Year 2: 55% year 1 performance, 35% year 0 performance, 10% NQC

Year 3: 45% year 2 performance, 35% year 1 performance, 20% year 0

LSA and SEIA’s earlier written comments favored Option 2, because (given their interest in energy storage), a “class average” UCAP would understate likely better performance of new vs. older resources.  However, they believe that developers should be allowed to choose options, e.g., via a one-time election when a new facility reaches COD. 

Option 1 would probably work for resources with a well-defined class and mature, uniform technology, e.g., natural gas turbines.

However, Option 2 would be much fairer for storage than Option 1, because large, new projects in the queue are likely to be very different from older projects now operating.  For battery storage, there are few operating installations (especially with at least 3 years of data), and those that exist are likely much smaller than upcoming new projects. 

The CAISO said in the Workshop that it is leaning toward Option 1 but in the discussion acknowledged issues for battery storage.  LSA and SEIA urge the CAISO to reconsider this position, for the reasons discussed above, and either select Option 2 for battery storage or allow project developers to choose between the two options. 

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

Middle River Power, LLC (“MRP”) thanks the CAISO for the opportunity to provide these comments.

In sum:

• MRP holds that adding a UCAP paradigm to California’s bilateral procurement structure introduces significant challenges and burdens and undermines what MRP understood to be a CAISO goal, namely, multi-year forward system RA requirements.   Should the CAISO believe that UCAP is the essential modification to California’s RA program, the CAISO must also pursue market structures, such as centralized capacity markets with reconfiguration opportunities, that allow suppliers to better manage the risks associated with changing RA values. 
• MRP questions the CAISO’s proposal to set the UCAP values for variable energy resources and offers a discussion as to why using any single value as the RA value for such resources is proper. 
• MRP opposes the CAISO proposal regarding RA imports.  Allowing RA imports to (1) use monthly non-firm transmission and (2) tag firm transmission only in the DA market processes  permits RA imports to supply RA capacity with far fewer conditions than those placed on internal RA suppliers. 
• MRP observes that the CAISO’s proposal to require RA suppliers to provide substitute capacity for all planned outages is likely to drive up RA costs.  MRP urges the CAISO to advocate for the adoption of annual or system RA requirements consistent with (1) the best practices of other ISOs and RTOs and (2) the reality of how generators incur costs.   MRP also recommends several modifications should the CAISO adopt the requirement for substitute capacity for all planned outages.

Addressing Commercial Implications of Changing UCAP values

In several iterations of prior comments (e.g., http://www.caiso.com/InitiativeDocuments/MRPComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf; http://www.caiso.com/InitiativeDocuments/MRPComments-ResourceAdequacyEnhancementsWorkingGroup-Jun102020.pdf, MRP noted the commercial challenges associated with implementing a paradigm in which UCAP values change year-to-year while also contracting to sell RA multiple years forward.    While, during the September 15 and 17 working group calls, the CAISO presented a lot of information regarding the technical aspects of implementing UCAP (e.g., regarding UCAP assessment hours and projected UCAP values by technology), the CAISO did not discuss or even acknowledge these commercial issues.    While MRP appreciates that the CAISO has been an advocate for multi-year forward system RA requirements, MRP respectfully requests the CAISO also discuss how changing UCAP values can be integrated into a multi-year forward bilateral procurement framework.  

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

UCAP Exemptions

MRP greatly appreciates the CAISO’s willingness to have further discussion about UCAP exemptions for outages beyond a generating unit owner’s control (Slides 24-26) instead of insisting that generators bear the effects of such outages.    

Using ELCC Values as UCAP Values for Wind and Solar Resources

While the CAISO’s desire to create a paradigm which encourages a generating resource’s availability performance is apparent and understandable, the events from the August 2020 heat wave suggest that assigning a single RA capacity value to some resources (e.g., intermittent and energy-limited resources) will not and cannot reflect those resources’ contributions to reliability across a single day, let alone across a month. 

In the graphs below (Figures 1 and 2), MRP has overlaid the distribution of the CAISO’s proposed UCAP assessment hours on hourly average solar and wind production for 2019:

[SEE SEPARATELY SUBMITTED FIGURES] 

In both graphs, the “UCAP Assessment” distribution shown is for the on-peak months (May-October distribution, though the “off-peak” distribution does not vary significantly from the “on-peak” distribution.  The average hourly production data is from all 12 months.

These graphs show that solar production is mis-aligned with the distribution of the CAISO’s proposed UCAP assessment hours.  As a result, using solar’s ELCC value as its UCAP value is likely to overstate solar’s effectiveness with regards to serving load in the tightest supply cushion hours – the hours in which the CAISO is trying to create incentives for improved availability performance.   

And while the graphs also show that average wind production is better aligned with the CAISO’s proposed UCAP assessment hours, the graphs also show that average wind production during the summer months drops off substantially in the mid-day hours, when load is high and ELCC analysis would ascribe significant value to serving load.  

In both cases, using a single ELCC-based value as the RA capacity value fails to capture these resources’ diurnal variation.  A single number would also fail to capture the potential for these resources to have lower production related to instantaneous conditions (not diurnal variation) on any given day.  The graphs below show solar (Figure 3) and wind (Figure 4) production across the August 2020 high demand days (August 14-18), with the CAISO Availability Assessment Hours shown as shaded background.  On August 15, solar production was substantially lower across the high demand hours than on other days.  Additional, on August 15, wind production dropped off substantially just before the net load peak demand:

[SEE SEPARATELY SUBMITTED FIGURES] 

Perhaps the best conclusion to draw from this comparison is that it does not makes sense to use a single capacity value – especially one based on averages across a relatively long period -  as the RA capacity for resources whose output both varies across the day and is prone to substantial change due to instantaneous conditions. 

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

Source specification

The CAISO has proposed to require that RA imports must specify their source (from a single unit or a specified portfolio of resources, backed by WPCC Schedule B or Schedule C) and attest that the associated capacity is dedicated to the CAISO.   MRP supports these requirements, with these caveats:

On Slide 77, the CAISO notes that Schedule B (Unit Commitment) service “may be curtailed based upon mutually agreed to recall provisions”.   While the CAISO also notes that stipulated damages provisions apply to the failure to deliver power, it is not clear if or how the recall provisions would supersede any liquidated damages provisions.   Resources that can be recalled by the sending BAA are not “dedicated” to California, at least not unconditionally dedicated.   The recall provisions should be clarified to ensure that such resources are truly dedicated to California. 

Likewise, the CAISO notes on Slide 78 that Schedule C service “may be curtailed within mutually agreed to recall times, due to force majeure, or to meet public utility or statutory obligations”.   While MRP agrees that force majeure would reasonably lead to an exemption (as it should for all suppliers, including internal suppliers), it is not clear how and why “public utility obligations” would or should lead to a similar exemption.  Such recall provisions run counter the perception that such resources are truly “dedicated to California” and should be further elaborated and discussed. 

Delivery assurance

MRP appreciates the CAISO’s discussion regarding “transmission market power” in the context of entities’ Open Access Transmission Tariffs.   MRP supports the CAISO’s conclusion (Slide 84) that because transmission entities provide transmission service through their Open Access Transmission Tariffs, FERC, not the CAISO, is the proper entity to address concerns about the potential exercise of market power in the provision of transmission service.  MRP also appreciates the CAISO’s acknowledgement that requiring firm transmission service for California RA imports is consistent with the practices of other ISOs and RTOs; MRP will comment on the CAISO’s proposed transmission requirements below. 

With regards to transmission, the CAISO has proposed to require that RA imports secure:

• For all but the last leg into the CAISO BAA, 5-NM monthly non-firm transmission service (slides 86 and 90), for which an e-Tag is to be submitted by the time of the RA showing (T-45 days, slide 93)
• For the last leg, 7-F firm point-to-point service (slide 86 and 90), which is to be e-Tagged before 10 AM consistent with the DA market time frame (slide 93). 

MRP does not support these requirements, which are far less stringent than the deliverability assessment requirements that apply to internal resource providing RA capacity.    Monthly non-firm transmission’s lower priority does not provide comparable assurance that energy from the source units will be able to be delivered to California load under all conditions, especially under high-demand, high-stress conditions.   

With regards to having to e-Tag 7-F transmission in the Day-Ahead time frame: does the CAISO not propose to require that the RA supplier would have to demonstrate that they have secured 7-F transmission in the RA showing time frame?    If not, then the requirement to e-Tag 7-F transmission as late as the DA market timeframe also seems grossly incomparable to the delivery assurance requirements that apply to internal generators; it would allow the demonstration of firm transmission to take place mere hours before the energy from those resources is to be delivered to load. 

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

In the RAE WG Presentation, the CAISO observes that the planned outage reserve margin proposal was “generally opposed by the stakeholder community” (Slide 122).   In response, the CAISO now proposes these modifications to the planned outage process:

• Align the CAISO’s outage definitions with RC West’s outage definitions (Slide 122);
• Address “planned to forced” outages (slide 122);
• Require substitute capacity (in equivalent UCAP amounts) for all planned outages at the time of the RA showing, or, if the outage is requested after the RA showing, when the outage is requested (Slide 124).   

While requiring that substitute capacity be provided for all planned outages would provide an increased measure of certainty, this proposal exacerbates the challenges associated with securing substitute capacity in an increasingly tight and fragmented bilateral RA market.  It also seems likely to drive up costs – costs that will initially be borne by RA suppliers, but which ultimately will be paid by ratepayers.  Further, assuming that substitution is provided at the time of the RA showing, the CAISO’s proposal also does nothing to address the inequitable misalignment between the CAISO’s desire to have planned outages submitted well in advance and the reality that suppliers still won’t know if their planned outages have been approved until after the time of the RA showing.    

The CAISO observes that its planned outage options are constrained by the monthly nature of the RA program, in particular, by the fact that the CAISO does not know which resources will be RA resources until 45 days prior to the month.  (Slide 125)    The CAISO is right - these drawbacks are completely due to the monthly nature of the CPUC’s RA program on which the CAISO depends.   As Slide 125 further notes, the CAISO planned outage process is “uniquely situated” relative to the RA and outage management processes of other ISO and RTOs, but, in this case, it is apparent that this “uniqueness” is neither a benefit nor an advantage.  

For this reason, the most obvious solution to the CAISO’s complicated and burdensome planned outage process would be to adopt annual, or at least, seasonal, capacity requirements – like those used by other ISOs and RTOs – as recommended by the San Diego Gas & Electric Company in its Track 3.B proposal.[1]      Annual system requirements would provide several benefits, including:

• Providing a suitable margin for planned outages (such as in place for local capacity resources) in off-peak months;
• Better aligning the timelines between the RA process and the planned outage process to allow for earlier approval of planned outages; and
• Recognizing that generating resources incur costs on an annual, not a monthly basis (in other words, it seems unlikely that adopting annual requirements add significant costs relative to the other benefits doing so would provide). 

MRP is not yet persuaded that requiring substitution for all planned outages is a workable and cost-effective approach.  MRP expects that requiring substitution for all planned outages will drive up costs, especially in the current bilateral procurement framework.  If the CAISO chooses not to adopt the best practices of other ISOs/RTOs (i.e., move to annual requirements), and instead believes that requiring substitution for all planned outages is necessary, then MRP strongly encourages the CAISO to adopt the following other modifications to make its planned outage processes equitable and effective:

• Adopt a mechanism to allow suppliers to show substitute capacity at the time they request a planned outage, no matter how far in advance the outage is requested.
  • Approve immediately (or within a reasonably short period after the substitution has been provided) all planned outages for which substitution has been provided.  As an example, if a generator owner requests a planned outage 18 months in advance, and demonstrates to the CAISO that it has secured replacement capacity at the time to outage is requested, the CAISO would approve the planned outage within days of it being requested and not wait until after the RA showing at T-45 to approve the planned outage.
• Compensate generators for all cancelled planned outages;
• Adopt RA supply timeframe showing and substitution granularity requirements that align with planned outage timeframes (e.g., weekly instead of monthly).   
• Adopt some means to facilitate suppliers securing substitute capacity.  This could be the CAISO running a market for substitute capacity (as SDG&E proposed) or something less involved, such as a bulletin board for substitute capacity.  

[1] San Diego Gas & Electric Company (U 902 E) Resource Adequacy Track 3.B Proposals, submitted to the California Public Utilities Commission on August 7, 2020 in Rulemaking R.19-11-009 at pages 2-7. 

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

MRP agrees with the CAISO that this topic introduces complexities that have yet to be fully worked through. 

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

CDWR appreciates CAISO efforts and opportunities for  discussions.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

In the current ISO proposal, calculation of Unforced Capacity (UCAP) for  a participating load resource  is not clear. It is not clear if it will be treated like a Demand Response (DR) resource or a generic resource for UCAP calculation. We recommend unique treatment of participating loads for UCAP calculation because these resources provide RA by providing non-spin ancillary service.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

Requirement to meet WSPP schedule B or C for an import and e-tag conforming transmission to either 7-F on all the paths or 7-F on the last leg with 5-NM on rest of the paths is reasonable to ascertain firmness of the import. However, there are contracts without WSPP agreements but have equivalent provisions. For example, some imports are backed by sending BAA pool of resources. Such contracts should be made eligible to provide import RA.

Does a non-dynamic resource-specific system resource with an attestation meet all of CAISO’s proposed dedicated source requirements?  It’s CDWR’s understanding that a WSPP Schedule B, C or any other equivalent agreement is not required in this case.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

CDWR supports retaining the existing planned outage provision in which a resource can take planned outage in any season. As proposed, all planned outages will have planned outage substitution obligation. Currently, a local RA resource on a planned outage can be substituted by a system resource. Will this provision continue? Will a flexible RA resource on a planned outage require substitution?

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

CAISO indicates that it will calculate LSE’s local  load share ratio in terms of UCAP at the TAC level. It is unclear what metrics will be used to calculate LSE’s local load share ratio. Will it use the same TAC area load share ratio (as used for LCR allocations) for LSE’s local load share ratio calculation? LSEs may have load in multiple local areas in the same TAC area; will ISO calculate LSE load share in each local area separately within the same TAC area? If so, how will it be calculated?

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

MSCG appreciates the work the CAISO has put into the RA enhancements stakeholder process and is concentrating its comments on Import RA. We understand the balance CAISO is trying to achieve between reliability and viable market participation / liquidity.

The work to date has led to a workable proposal along with some much needed improvements, specifically, the confirmation that WSPP Schedule B & C imports will continue to count for import RA and the CAISO alternative proposal of only requiring firm transmission on the last line prior to CAISO’s balancing authority.  To summarize, the workable elements of CAISO’s proposal are:

1. Identification of source BA
2. Attestation of source and reasonable expectation of surplus to BA needs
3. Firm transmission only on last line of interest
4. Confirmation that WSPP Schedule B and C schedules will continue to count towards import RA
5. No CAISO source on Import RA schedules
6. UCAP adjustments for non-delivery due to use of short term non-firm transmission - resulting in lower ability to sell import RA going forward

combined with other existing CAISO tariff requirements set to take effect Jan 1, 2021 which include significant financial penalties for non-delivery of intertie energy, as part of intertie deviation settlements. 

Taken together, the above criteria are sufficient to ensure real, physical resources, with highly reliable delivery capability are available to provide import RA to California load serving entities.   The above criteria strike the workable balance between reliability and liquidity and adequate diversity of supply participation in CAISO import RA markets.

Yet, this proposal and all the hard work that went into it, is at risk of being undermined by a late addition of requiring monthly Non-firm transmission on all but the last leg to CAISO. This late addition, with no supporting data or analysis of how it will impact liquidity for Import RA makes the entire proposal unworkable.   MSCG highlights some of the issues with this additional requirement below:

1. Monthly (or weekly) non-firm transmission is not available for purchase in time to enable contracting for critical summer months given the cutoff for the for the annual RA showing. This will eliminate - multiple hundreds of MW of viable supply from contracting for and participating in the annual RA program where 90%+ of RA requirements are contracted.
2. Advance purchase of Monthly non-firm transmission is not necessary on the BPA network for deliveries to California since that portion of the BPA transmission system is seldom near capacity on flows to Big Eddy and John. 
3. Pre FERC 888 Grandfathered contracts on the BPA network are released at 10pm the day prior to flow. Therefore, only a requirement to procure and eTag the day prior to flow is a workable solution on the BPA network in order to maintain the balance between reliability and liquidity.

The CAISO should drop this requirement for deliveries on Monthly (or weekly) non-firm and allow market participants to procure released firm transmission in the day ahead market. Otherwise, CAISO risks undermining an otherwise workable proposal.

MSCG will discuss and refute several myths that have been promulgated regarding the BPA network transmission further below.

1. MYTH NO. 1 – BPA MONTHLY NONFIRM IS WIDELY AVAILABLE IN TIME TO CONTRACT FOR IMPORT RA

During the working group call on September 17^th, MSCG submitted several Monthly non-firm transmission requests to access Big Eddy or John Day. The request below shows that MSCG requested monthly non-firm from Mid C remote (a liquid point on BPA network) to Big Eddy.   Zero (0) MW were returned as granted/available for the peak summer months of July/August/September.

A few days later, MSCG noticed another market participant’s request for Monthly non-firm granted to John Day.  When MSCG followed up with BPA, we were told that the BPA queue is dynamic, always changing and that BPA has to preserve the queue priority and pending long term requests encumber how much and if monthly non-firm is made available.  This uncertainty and the random nature of monthly non-firm availability highlights that the queue can be encumbered with long term requests that sit in pending status, while others are automatically denied service.  Therefore, any requirement for monthly non-firm transmission on the BPA network will prevent suppliers from committing their physical resources to California loads.

Equally troubling, is the duration of the  monthly non-firm product itself.  According to BPA business practises Monthly non-firm can only be bought for a maximum of 364 days. Since monthly transmission is only sold in equal monthly increments this limits the duration of the monthly product to eleven months.[1]  Therefore any supplier looking to offer energy or capacity for the Annual RA program for the following Calendar year will not be able to participate. Similarly, any supplier looking to offer into the critical July, August, September time period for the following year (when California loads are actively looking for supply in the most severe shortage months) will have to wait until September to procure monthly non-firm transmission to span that period (if it is even available) since Monthly non-firm is only offered 60 days before the start of service and then for 11 months (i.e. a request would have to be placed on September 1 2020 for service from  November 2020 through September 2021).   Faced with the uncertainty of whether monthly non-firm will be available or not, the supplier is likely to take the ‘bird in hand’ and commit its supply to Southwest or other utilities that are also looking for reliable capacity. This loss of liquidity will be a detriment to California LSEs.

By making monthly non-firm a tariff requirement in order to participate in its RA program, CAISO is making it difficult for suppliers to transact and artificially limiting supply in the annual RA market. If flowing on monthly non-firm transmission is important to CAISO, they should instead incentivize its use without limiting supplier’s ability to transact in the annual import RA market. That can be achieved by waiving UCAP adjustments for all schedules flowing on firm or monthly non-firm transmission. That way a supplier is not excluded from participating when they can’t purchase monthly non-firm due to timing constraints but is still incentivized to keep trying to procure firm or monthly non-firm transmission prior to flow.

The table below shows the BPA duration limits for when and for how long monthly non-firm can be purchased.

MYTH NO. 2 – THE BPA NETWORK TRANSMISSION IS UNRELIABLE FOR NON FIRM FLOWS

MSCG and SMUD have both provided data and charts to show that on coincident peak days across the west the BPA network was unconstrained and there was ample space to get to Big Eddy and John Day.

This had been mentioned several times but bears repeating, BPA releases unused firm transmission in the day ahead timeframe. Over 1500MW of grandfathered rights on the BPA network are released the day prior to flow and becomes available to purchase. This is why power can reliably flow on this transmission. CAISO has presented no evidence or data to the contrary. SMUD presented evidence that fewer than five curtailments have occurred on the entire BPA system in 2018, yet the response was that the situation “may get worse over time”.  If and when  (but not before) the evidence clearly shows that the situation has gotten worse that is the time to revisit this requirement, not now when generation capacity that could otherwise reliably serve California load will be prevented from participating in CAISO RA markets. At a time when CAISO is in competition with other BAs for excess surplus capacity, CAISO should not be artificially limiting the amount of generation supply that can participate in its markets.

CAISO risks excluding not only hundreds of MW of import RA capacity but potentially large quantities of  WSPP Schedule B & C energy products (currently counting towards import RA obligations) that are delivered  to CAISO using some form of transmission that is of lower priority than Monthly non-firm.  Before CAISO brings in any requirement for Monthly non-firm transmission it should present a fulsome analysis of how many MW of energy contracts will be excluded from participation.

MSCG will not reproduce the charts here, but pages 95 through 102 of CAISO’s presentation[1] on September 17^th make the case abundantly clear why firm transmission should be required only on the last leg prior to CAISO BA, and why a transmission requirement on the BPA network leg is unnecessary.

MYTH NO 3. – USFs CURTAILMENTS ARE IMPACTED BY FLOWING ON NON FIRM TRANSMISSION TO COB OR NOB

In its fifth revised straw proposal stakeholder comments, Powerex  stated (page 8) that  path 66 (COB) experiences unscheduled flows (USFs) and that NERC curtailment priority will curtail non-firm schedules first.  What Powerex failed to mention is that schedules flowing to COB are ON PATH and scheduled, therefore not affected by USF, which stands for UNSCHEDULED flow.

For example, on a P66 USF and a delivery schedule to COB, with import at MALIN, the schedule is considered “on-path” and therefore the entire schedule is considered firm 7-F since it’s imported on firm CAISO transmission. This means the network portion of the transmission could be non-firm and the whole tag will still be viewed as FIRM and thus the highest priority.

There should also be no debate that USFs are not an issue for schedules flowing to NOB because that is a direct current line and not impacted by USFs. Therefore, USFs are no reason to not allow non-firm transmission on the BPA network for flowing reliably to John Day or Big Eddy and eventually to COB and NOB.

MYTH NO 4. – IMPORT RA ON BPA NETWORK NONFIRM IS LESS RELIABLE THAN INTERNAL RA

The data that SMUD provided in its fifth revised straw proposal comments show there were less than 5 curtailments in 2017 & 2018 on the BPA network transmission. That is on ALL paths across the BPA network not just to Big Eddy or John Day. That is a very high standard considering the thousands of schedules that flow on BPA network every year and will compare favorably to any deliverability requirement or outage rate that internal generators are held to.

CAISO has provided no evidence or data to justify requiring firm or monthly non-firm transmission on the BPA network. Before such a requirement can be put in place, additional data and analysis must be provided to show why it is needed (as requested by many commenters in the CPUC process including CAISO DMM).

In the last round of comments alone, load serving entities representing over 80% of CAISO peak load have come out against the requirement of needing firm transmission on the BPA network (SCE, PG&E, SDG&E, CALCCA, SMUD). In fact, the few market participants in favor of a source to sink firm transmission requirement are either internal generators or external vertically integrated utilities that have a vested interest in reducing liquidity for and competition from other suppliers of Import RA.  CAISO cannot ignore this bias and blindly recommend the need for firm or monthly non-firm transmission without providing any data or analysis to support their proposal.

MYTH NO. 5 – HAVING NONFIRM ON THE BPA NETWORK, MAKES THE ENTIRE SCHEDULE NON FIRM

This is not true in Morgan Stanley’s experience.  Curtailments are done by transmission segment so when a schedule has firm rights on the Southern Intertie (last leg of prior to CAISO), and there is a curtailment on the Southern Intertie portion of the line (i.e. NOB or COB), then ALL firm schedules on the southern intertie leg are curtailed pro-rata irrespective of what transmission they are flowing on the BPA network leg.

As has been shown previously curtailments on the BPA network are extremely rare. Therefore having firm on the Southern intertie portion is adequate to make the schedule FIRM for when there are curtailments on the more congested last line of interest access COB or NOB.

MYTH NO. 6 – THERE IS AMPLE FIRM TRANSMISSION TO BIG EDDY OR JOHN DAY FOR PURCHASE

The below excerpt is reproduced from page 12 of Powerex’s fifth revised straw proposal comments where they pointed to recent OASIS activity as proof that firm BPA network transmission is readily available for purchase.

On the contrary, the above excerpt is evidence that requiring firm (or monthly non-firm) transmission on the BPA network will restrict competition, in the critical summer months when California needs import RA the most.  Several key points can be taken from the above excerpt:

1. All of the firm BPA network transmission MSCG was able to secure above came after the annual RA showings by loads were due – i.e. October of the year prior. Over 90% of RA contracts are executed prior to the annual showing timeframe and therefore, had there been a firm transmission requirement on BPA network enshrined in CAISO’s tariff, MSCG would have been unable to participate and sell any RA in the annual showing. This would have driven up RA prices and reduced competition at COB.
2. Despite trying vigorously MSCG was unable to secure ANY firm transmission to Big Eddy for the months of July, August or September 2020, the critical RA months for California. Therefore again, MSCG (and other suppliers) would not have been able to compete for RA contracts at NOB.  However, MSCG has been able to successfully and reliably deliver  on our RA commitments this summer, by using a combination of BPA network transmission priorities and firm on the Big Eddy to NOB portion (last line of interest).
3. Finally, the 228 MW of yearly firm transmission MSCG recently acquired through the secondary market that Powerex mentions above, is from the North Hurlburt wind farm that interconnects near Big Eddy.   MSCG is not going to sell import RA off a wind facility.  If we try to redirect this transmission on a firm or monthly non-firm basis to our flexible contractual resources on the Columbia River (Grant or Chelan) it will go into BPA’s transmission queue because it is now on a different flowgate.    MSCG is already in queue for long term transmission to access Big Eddy and John Day and already a part of BPA’s cluster study. Those studies can take many months and we have been told to not expect a result until late summer 2021.  Again, this uncertainty will result in unnecessary exclusion from participating in the Annual RA program.

CONCLUSION:

CAISO has the elements of a workable proposal and is near the finish line on this long and difficult task of updating the import RA rules while striking a needed balance between reliability and market participation / liquidity.  It should not undermine these efforts and lose the support of numerous market participants and majority of load serving entities by introducing an artificial eTag deadline or transmission requirement on the BPA network that is wholly unnecessary. In MSCG’s respectful opinion the CAISO’s final proposal should be:

• Source identification in advance
• Attestation the capacity is expected to be surplus to the BA’s needs
• Firm transmission on the last line of interest
• UCAP adjustments if a participant fails to deliver (with allowable excuse if firm transmission or monthly non-firm transmission is curtailed).
• eTag for import RA awards on the day prior to flow submitted prior to midnight (after BPA transmission release at 10pm the day prior to flow).

Importantly, there should not be an explicit tariff requirement to flow on only monthly non-firm transmission as this will prevent participation in import RA markets.

Thank you for the opportunity to participant and comment on this important process.

[1] http://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyEnhancements-Sep15-17WorkingGroup.pdf

[1] In fact, BPA’s available transfer capacity (ATC) procedures prevent it from selling this monthly non-firm transmission, when the firm has already been sold, until it is released in the day ahead timeframe.  https://www.bpa.gov/transmission/Doing%20Business/ATCMethodology/Documents/ATCID.pdf

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

NCPA notes that the “working group” sessions were truncated due to cancelation of session one. CAISO had to rush through the 142 slides in a time period that did not provide stakeholders adequate time to ask important questions or to work through existing and new issues. NCPA appreciates the insight provided into CAISO’s direction and looks forward to the next straw proposal in which NCPA’s specific concerns with outage planning can be addressed. NCPA’s particular concerns with the material presented are 1) CAISO’s controversial interpretation of planned to forced outage reporting; and 2) lack of PTO requirements to coordinate transmission outages with those generators that are impacted by such outages, especially since CAISO proposes to remove TIGO exemption.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

NCPA supports CAISO’s proposal to align its outage process with that of RC West and to adopt the “urgent” outage type, but disagrees that such outage types should be constrained to the arbitrary 7 day forced outage window. NCPA believes “Planned to Forced” outage reporting issues can largely be addressed if “urgent” outages are allowed to be submitted in the Planned Outage windows where possible. Urgent outages must cover a minimum of 3 cases: 1) critical work needed to avoid impending unit failure, 2) work dependent on specialized contractors with limited availability to reschedule, 3) work required to meet hard regulatory deadlines.

NCPA respectfully requests that CAISO continue offering Off-Peak Opportunity Outages in the Planned Outage Timeframe contrary to the current proposal to discontinue that functionality outside of the Forced Outage window. Off-peak opportunity outages have proved to be a valuable opportunity to schedule necessary near term maintenance. Discontinuing this option in the Planned Outage window deprives generators of some of these valuable opportunities and deprives CAISO of notice when these outages must be taken if they are known during the Planned Outage window.

NCPA appreciates CAISO’s commitment to re-evaluate Forced Outage nature of work categories and its recognition that including transmission-induced outages in UCAP is inconsistent with cost causation principles, does not provide the appropriate incentives to address and mitigate transmission outages, and unjustly penalizes generators for outages outside their control. NCPA still requests that CAISO consider ways to coordinate planned transmission outages with generators that would be affected by them. If NCPA knew in advance when PG&E planned to take lines serving its generators out of service, it could plan generator maintenance during those times, reducing redundant outages. As it is, it is not uncommon for NCPA to schedule maintenance on a unit and return it to service, only to have the unit taken offline shortly thereafter for a PG&E transmission outage. The lack of coordination increases the amount of time affected units are out of service. For example, NCPA submits generator outages to CAISO by October 15^th of the preceding year. NCPA would like to coordinate such with PTOs and CAISO but currently there is no such mechanism to do so and what we find is that while units will be offline for most of a given month in the spring or fall for annual maintenance, the PTO issues notice of random outages in the summer that have been in the works for month that they could have taken during the unit outage. Also, PTOs never consult with NCPA prior to issuing transmission outage notifications. They issue the notice and do not accept requests for any sort of modification such as moving it out a day in order to be adjacent to a weekend or holiday.

As for the UCAP Seasonal Availability Factor methodology, NCPA would like to better understand the impact of reclassifying October as a summer month. The 5^th Revised Straw Proposal provided availability factor examples for three individual resources while the Working Group slides used the entire fleet. NCPA requests that CAISO perform apples to apples examples of UCAP and WSAAF using the natural gas fleet example with and without October as a summer month.

NCPA would like to better understand CAISO’s proposal to report Forced Outages of Non-Dynamic Resource Specific System Resource RA Imports since that functionality currently does not exist. Evidence of RA Import curtailments is typically captured in e-tags. How does CAISO propose to change the current requirements? 

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

NCPA continues to support CAISO’s proposed source specification (a specified portfolio of resources within single BAA or BAA’s pool of resources). Any attestation should come from the importing LSE in order to avoid role and responsibility disputes between the importing LSE and source BAA. If the source BAA is not involved in the contract, it cannot provide an opinion on contract terms.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

NCPA disagrees that the planned outage reserve margin option was “generally opposed by the stakeholder community”. Although there were issues with some elements, NCPA is not convinced that a methodology based on this concept could not have been negotiated. Further, CAISO stated that option two was the status quo but what was presented was in fact not the status quo because it included a new element whereby substitution was required at the time of outage submittal instead of the current 8 days prior to outage deadline. Notwithstanding this, NCPA believes that this proposal could be acceptable provided that disputes involving Planned to Forced Outage reporting are addressed. As stated earlier, allowing “Urgent” Planned Outages could largely address the issues with Planned to Forced Outages that have bedeviled the CAISO and participating generators. An SC would submit an Urgent Planned Outage with the hopes that there will be enough headroom to for CAISO to approve the outage without UCAP impacts and if not, then then the outage could continue as Forced, shouldering the UCAP impacts if the outage falls within assessment hours. In order to assist with arranging Planned Urgent Outages, Planned Opportunity Outages, and Forced Opportunity Outages through increased transparency, NCPA would like CAISO to continue considering publication of a headroom calendar as was described in the 4^th Revised Straw Proposal.  

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

General Comments:

Load-Following Metered Subsystem Requirements

NCPA currently operates as a Load-Following Metered Subsystem (LF-MSS) in the CAISO market.  The requirements associated with operating as an LF-MSS are set forth the MSSA Agreement and the Tariff.  As an LF-MSS, NCPA is contractually required to balance its demand and supply in real-time during each 5-minute interval.  If an LF-MSS fails to provide sufficient supply to meet its demand requirements in real-time, the LF-MSS is subject to significant deviation penalties.  To perform its duties as a LF-MSS, NCPA is required to maintain sufficient capacity in real-time that it can move up or down to balance its portfolio.  Because NCPA is responsible for maintaining its own supply balance and load following, it reduces the CAISO’s collective need for real time access to capacity.  This unique operating practice has been historically recognized by CAISO in the context of Resource Adequacy, and how must offer and bidding requirements may (or may not) apply to a LF-MSS. 

In the CAISO’s second Revised Straw Proposal, the CAISO confirmed that “CAISO is not proposing changes to how load-following metered subsystems are treated under the existing tariff” in the context of must offer obligations. In the CAISO Tariff, the Resource Adequacy Resources, including RA supplied from imports, claimed by a LF-MSS to meet its Resource Adequacy requirements are exempt from the must offer obligations (and associated bidding requirements).  A LF-MSS requires available capacity to follow its load up and down; therefore, since the inception of the RA program, CAISO has exempted RA resources claimed by a LF-MSS from the must-offer obligation.  This exemption is necessary and should continue for all LF-MSS resources shown as RA in the LF-MSS portfolio going forward. 

Due to the unique operating requirements of a LF-MSS, NCPA believes that any RA import attestation requirements applicable to a LF-MSS should be limited, and should only require attestation that the import RA claimed is encumbered only by the LF-MSS, therefore confirming that such RA capacity is not being double counted for the purposes of CAISO’s verification.  NCPA believes this treatment is appropriate because a LF-MSS is already contractually required to balance its supply and demand in real-time pursuant to the MSS Agreement and Tariff, and is subject to penalties if it fails to do so.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

PG&E’s comments are summarized as follows:

• RA import requirements:
  • PG&E welcomes the clarifications provided on the contracts applicable for RA imports and supports the WSPP schedule B and C to be eligible.  PG&E believes additional analysis of these contracts are needed to ensure that the terms of the contracts provide sufficient delivery certainty when there is scarcity in other regions of the West and that the RA counting for these RA imports accurately reflects the potential for non-delivery.
  • PG&E is still concerned with the firm transmission requirements. PG&E would appreciate the CAISO clarifying whether it is proposing any transmission commitments at the LSE RA showing, as it had in previous versions. Due to potential market power concerns associated with transmission holders being able to block competitive alternatives, PG&E can not support transmission commitments with the LSE RA showing unless the CAISO can demonstrate that the release and acquisition of firm transmission rights will occur well in advance of the LSEs RA showing deadline.
• Planned outage process enhancements:  
  • The CAISO proposed maintaining the existing planned outage replacement requirements due to challenges related to monthly RA program timing and stakeholder community opposition to options provided.
  • PG&E opposes the “minor enhancements” introduced to be included in the existing planned outage replacement requirements process.  The “minor enhancements” are in fact material changes and require evaluation and appropriate stakeholder comments.
  • PG&E recommends the CAISO maintain the existing planned outage replacement requirements with no changes and the CAISO identify a future initiative dedicated to the planned outage process for a complete evaluation and stakeholder contribution.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

In this section of the presentation, the CAISO covered the outages definitions, the UCAP methodology and the June 2020 RA Showings converted to UCAP, PG&E offers comments on the three topics.

Outage definitions:

PG&E welcomes the clarifications provided on the Reliability Coordinator outage definitions and the existing timelines.

PG&E believes more clarity is needed on the transmission outages definitions and on the process to ensure a resource won’t see its UCAP value reduced if curtailed because of transmission constraints. More generally, resources should not be penalized for outages outside of the control of the generator (PSPS events, gas pipeline outage, etc.).

PG&E supports the CAISO to continue to examine the outage exemption proposal (as stated in slide 25 and 26) to be provided in the next proposal.

UCAP methodology:

PG&E welcomes the redefinition of Peak Months as May-October and Off-Peak Months as November-April, aligned with CPUC’s definition of summer months.

June RA showings converted to UCAP:

PG&E thanks the CAISO for the analysis presented on June 2020 RA showings converted to UCAP. PG&E agrees with the concern raised by many stakeholders that one single point of data might not be appropriate to apply to other months that were not studied.

As discussed at the stakeholder meetings, PG&E understands the CAISO is still working on more detailed analysis to be included in the next proposal.  PG&E looks forward to reviewing that analysis.

As already raised in previous comments, PG&E believes more robust analysis should be done on: 1) Planning Reserve Margin (PRM) adjustments under the UCAP paradigm; 2) a demonstration of the average percentage of UCAP capacity versus NQC capacity at system level; 3) what are the appropriate incentives replacing RAAIM by UCAP; 4) determining the appropriate basis of selection for the UCAP assessment hours  (See page 2-3 of PG&E’s comments on the Fifth Revised Straw Proposal).

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

The CAISO presented at the working group meetings clarification on the “dedicated source” requirement for RA import. This includes a single resource; a specified portfolio of resources within a single BAA; BAA’s pool of resources; or resources Backed by WSPP Schedule B or C or equivalent agreement. PG&E welcomes this clarification. As PG&E explained in its comments to the 5th Revised Straw Proposal (See page 9-10 of PG&E’s comments on the Fifth Revised Straw Proposal), “while not being resource specific contract, the Western Systems Power Pool (WSPP) Schedule C (or contractually equivalent) firm energy contract (i.e. firm energy delivery with a stipulated damages provision enforced against the Seller upon failure to deliver, with limited exemptions allowing for force majeure claims or a requirement to meet public utility or statutory obligations) is robust and provides reliability value”.   However, given the recent August heatwave, PG&E believes CAISO should perform additional analysis on how such contracted RA performed during these events. 

Additionally, PG&E believes that CAISO should do a comprehensive evaluation on the counting and UCAP measures for all RA import resources and contracts.   The recent heatwave has raised significant questions on the extent to which California can rely on import RA to meet reliability needs and what additional rules and incentives are needed.  For example,  CAISO’s proposed UCAP calculation for RA imports could result in a high UCAP value based on the availability calculation even if in the extreme conditions when CAISO needs the energy, the exporting BA would likely recall the power or the counter party to an WSPP contract would not make the energy available.   

PG&E also believes CAISO and the DMM should look at whether the UCAP process can be exploited.  For example, if a seller has an unreliable resource one year, could the seller switch resources shown to the CAISO as import RA in future years thus avoiding the penalty (and incentive) to be available to CAISO.  While CAISO’s proposal that UCAP would be assessed on an SC level using their shown RA and forced outages could help, PG&E requests CAISO evaluate whether sellers could use more than one SC ID to avoid the UCAP consequences of resources not being available.

In its comments to the FERC Order 831, PG&E highlighted the need to have RA import rules ensure reasonable price for customers. For the CPUC jurisdictional RA imports, the proposed rules (CPUC Decision D.20-06-028) require the LSEs contracts with non-resource specific resources to self-schedule or submit economic bids between $-150 to $0. At a minimum PG&E recommends the CAISO should have bidding requirements to ensure the CAISO gets the power at or below $1000/MWh cap.

California resource adequacy should have energy that is dedicated to California during peak load and scarcity conditions. Ensuring this resource adequacy energy is dedicated to California during critically scarce hours should be a major objective after the events of this summer. California’s RA does not meaningfully provide reliability if it cannot ensure that the energy from that capacity is dedicated to California.

It is not just and reasonable that California ratepayers should have to pay for the resource adequacy and then have CAISO to compete for the energy at scarcity price levels.  The solution to ensuring that California receives energy for the capacity it paid for cannot be that California needs higher bid caps and greater ability to compete for this energy. CAISO should consider whether import RA capacity needs to have deliverable energy at a maximum of $1,000/MWh unless there is a demonstration that a specific resource has gas fuel costs and heat rates that would reflect higher costs regardless of the prices in neighboring areas. above $1000 from that capacity in order to get the energy to meet our reliability needs.

The CAISO also presented its preferred option requiring firm transmission service point-to-point (PTP) source to sink and an alternative requiring firm service on last leg and monthly non-firm service on all other intervening lines of interest.

The analysis of available transmission presented courtesy of Morgan Stanley shows the upstream transmission is “highly constrained”. PG&E is still concern with the processes for the release and acquisition of firm transmission rights. PG&E would appreciate the CAISO clarifying whether it is proposing any transmission commitments at the LSE RA showing, as it had in previous versions. PG&E does not support transmission commitments with the LSE RA showing unless the CAISO can demonstrate that the release and acquisition of firm transmission rights will occur well in advance of the LSEs RA showing deadline such that transmission market power can not be exercised.

The question of how external BAAs make firm transmission available is also crucial in the current development of the Extended Day-Ahead Market (EDAM) initiative. 

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

The CAISO proposes to abandon the Fifth Revised Straw Proposal option because of the lack of consensus among stakeholders. At the working group meetings, the CAISO indicated a desire to maintain the existing planned replacement requirements process with minor enhancements.  However, the CAISO’s minor enhancements are not minor and could have significant market impacts.

PG&E opposes the implementation of any changes that haven't been evaluated (including market and process transition impacts) and afforded an appropriate stakeholder process.

CAISO identified main objectives for the planned outage process enhancements including to “minimize or eliminate the need to require substitute capacity to greatest extent possible” and “include development of a CAISO system for procuring replacement capacity”.

As stated in previous comments, PG&E supports a planned outage process that provides outage certainty and accurately reflects the system needs. PG&E believes the RA planned outage treatment should support a clear reliability need, while respecting regulatory, operational, and contractual imperatives. Rationalizing the planned outage process should reduce compliance risk, operational issues, and appropriately assign the costs and benefits of outages directed and supporting an operationally reliable fleet. 

PG&E believes the CAISO proposal including minor enhancements is not aligned with either the CAISO’s main objectives or PG&E’s.

PG&E recommends the CAISO identify a future initiative to address the planned outage process.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

PG&E welcomes the examples provided by the CAISO at the working group meetings.  

PG&E is still concerned that the proposal to convert an NQC requirement into a UCAP equivalent value will apply an unnecessary outage rate for resources that count towards a local requirement that already accounts for generator outages (see page 1-2, PG&E's comments on the Second Revised Straw Proposal). From a reliability standpoint, PG&E would like to better understand if the different translation from NQC to UCAP will not result in excess margin. PG&E reiterates its request that the CAISO demonstrate how this calculation will impact the different local areas and show if the UCAP calculation improves the reliability in some local areas. 

PG&E supported earlier a common metric to apply to system and local RA counting. Following the CPE (Central Procurement Entity) decision, PG&E now questions how the relationship between local and system will reconcile (since one MW UCAP for system RA won’t count the same for local RA). 

6. Additional comments on the September 15 and 17, 2020 working groups:

PG&E offers the following additional comments: 

• Review of the RA program considering the recent heat waves events: PG&E requests the CAISO to provide more transparency on how markets and RA worked during the recent heat waves events and to revise the RA program accordingly. How did WSPP contracts perform versus all other imports? 

• UCAP calculation for storage and DR: the CAISO hasn’t addressed the concerns raised by stakeholders on UCAP for storage and for DR. PG&E is looking forward to CAISO’s response on these items in the next version. 

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

Please see Powerex's comments on the RA Ehancements Septemeber 15 and 17 Working Group at www.powerex.com/sites/default/files/2020-10/2020-10-01%20Powerex_comments_on_RA_enhancements.pdf

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Please see Powerex's comments on the RA Ehancements Septemeber 15 and 17 Working Group at www.powerex.com/sites/default/files/2020-10/2020-10-01%20Powerex_comments_on_RA_enhancements.pdf

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

Please see Powerex's comments on the RA Ehancements Septemeber 15 and 17 Working Group at www.powerex.com/sites/default/files/2020-10/2020-10-01%20Powerex_comments_on_RA_enhancements.pdf

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

Please see Powerex's comments on the RA Ehancements Septemeber 15 and 17 Working Group at www.powerex.com/sites/default/files/2020-10/2020-10-01%20Powerex_comments_on_RA_enhancements.pdf

6. Additional comments on the September 15 and 17, 2020 working groups:

Please see Powerex's comments on the RA Ehancements Septemeber 15 and 17 Working Group at www.powerex.com/sites/default/files/2020-10/2020-10-01%20Powerex_comments_on_RA_enhancements.pdf

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

SDG&E appreciates CAISO holding a two-day workshop on the RA Enhancements initiative. Overall, SDG&E continues to not support the CAISO’s proposal for the UCAP framework.  Particularly, SDG&E believes the CAISO has not shown the benefits or necessity of transitioning to the UCAP framework.  While SDG&E understands that UCAP is used by nearly all other RTOs/ISOs, the UCAP framework is part of a bigger resource adequacy framework within those RTOs/ISOs.  Specifically, a centralized capacity market is a key component of those other frameworks.  The CAISO cannot or should not simply adopt the UCAP product without those other crucial components that other RTOs/ISOs have in their RA framework.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

SDG&E is concerned that the changes to the definition of planned and forced outages to be consistent with the CAISO’s reliability coordinator’s (RC) outage definitions may artificially lower a resource’s availability metrics because the RC outage definitions increase the submittal time of a forced outage from T+7 days to nearly T+20 days for the purposes of calculating a resource’s UCAP.  The average availability data by technology type provided by the CAISO is only based on today’s definition of forced outage and is not representative of the proposed definitions.  SDG&E believes the RC outage definitions are unclear and should be revised to include more timelines.  The CAISO has not provided any reason, aside from aligning to the RC outage definitions, as to why expanding the time horizon is appropriate for purposes of the UCAP evaluation.  The definition change is arbitrary and seems unnecessary since the RC role has no impact on a resource’s UCAP value.

As discussed during the workshop, the CAISO’s revised formula for calculating the Hourly Unavailability Factor (HUF) must be consistent when it’s used to calculate a resource’s UCAP.  Since the 5^th revised straw proposal, the CAISO has changed its HUF proposal from dividing the outage derates by the resource’s NQC value to the resource’s PMAX value.  However, the availability is then multiplied by the resource’s NQC value to calculate the resource’s UCAP.  When the resource’s PMAX is greater than the NQC, this will result in a lower UCAP than anticipated.  This new formula will effectively double penalizes a resource.  SDG&E provided an example of this in its comments to the CAISO’s Straw Proposal Part 2 back in March 2019. (http://www.caiso.com/InitiativeDocuments/SDGEComments-ResourceAdequacyEnhancements-StrawProposalPart2.pdf)  SDG&E believes the CAISO’s methodology must be consistent on both ends so that resources are not double penalized for their outages.

During the workshop, the CAISO stated that its preliminary results of the June sufficiency assessment yielded an unexpected frequency of Stage 1-3 emergencies.  However, it’s unclear whether such occurrences are high or low.  Current planning standards are based on 1-in-10 loss of load expectation (LOLE) and does not incorporate the occurrences of the Stages.  The CAISO has not provided any analysis of whether planning standards should include such objectives and what level of LOLE would result if those metrics were to be included.  It is unclear whether UCAP is the major cause of these Stages.  SDG&E hopes the CAISO can provide the analysis and hold additional workshops to discuss the results of the forthcoming sufficiency assessment.  This would provide stakeholders an opportunity to better understand what problems there are in the existing RA framework and how to best solve them.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

The availability of “firm” transmission outside the CAISO Balancing Authority should not be a pre-condition for RA import capacity. Such a pre-condition will significantly impede the ability of suppliers to provide RA import capacity to CAISO LSEs since a significant amount of transmission capability outside the CAISO Balancing Authority is not released until close to when day-ahead price/quantity offers are due to the CAISO. Additionally, where import RA is sourced from a pool of resources, the required contract paths may not be known far in advance of when offers are due to the CAISO; it would be inefficient and costly to lock-down multiple firm transmission paths far in advance of the CAISO’s day-ahead market.

SDG&E does not support the CAISO’s proposal to require import RA resources to demonstrate they have acquired “firm” transmission service outside the CAISO Balancing Authority. However, if the CAISO should consider whether such firm transmission requirements should only applicable to scheduling coordinators that have failed to deliver the energy in real time after the scheduling coordinator has been found to violate the CAISO’s requirements.  The CAISO should not assume all market participants are trying to not deliver the needed energy when called upon based on a small percentage of non-delivery.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

SDG&E is again disappointed with the CAISO’s reluctance to develop a substitution capacity market for outages.  SDG&E believes the efficiency and cost savings for suppliers from participating in a centralized market for outages outweighs the CAISO’s development costs. 

SDG&E does not support the CAISO re-proposing an option that was part of the 3^rd revised straw proposal because the CAISO elected to not pursue this option in its 4^th revised straw proposal after many stakeholders’ objections.  The CAISO’s proposal to require substitution for all outages will only make current matters worse by reducing the amount of surplus capacity that is available to market because additional outages will require substitution regardless of need.  This will likely result in suppliers utilizing their surplus or holding on to their surplus just so that they can have substitute capacity available for their own future planned outages.  This will only magnify the planned-to-forced outage reporting issues that CAISO has already experienced.

SDG&E believes the CAISO should consider creating a separate stakeholder initiative focused on planned outage substitution enhancements to resolve the underlying issues that exist in the current framework.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

As stated in prior comments, SDG&E does not support the UCAP for Local RA requirements proposal because it is inconsistent with how the CAISO studies the Local RA needs.  The conversion from NQC to UCAP for Local RA requirements may create situations in which LSEs may be sufficient in UCAP but deficient of NQC and the CAISO would backstop procure based on the NQC need if LSEs do not cure the deficiency.  The CAISO must demonstrate how UCAP for Local is just as reliable as the current NQC Local RA requirement.  It may be helpful for the CAISO to study a Local area with using only UCAP values to understand what the resulting Local requirement would be and whether that is different than the proposed UCAP Local conversion.

6. Additional comments on the September 15 and 17, 2020 working groups:

SDG&E recommends that the CAISO focus its efforts primarily on the necessary updates to the planning reserve margin first.  The Commission has elected to study whether the current 15 percent planning reserve margin is appropriate.  SDG&E believes the CAISO’s assessment study can help inform the Commission’s study process so that LSEs are appropriately procuring the needed capacity to meet reliability, not only in the short term, but also in the long term.  Having the CAISO establish its own UCAP requirements will only create disconnects between long and short-term procurement. 

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

SVP has no comments at this time - other than as described in Item #3 below.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

SVP has no comments at this time.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

SVP is concerned that requiring firm transmission for imports creates significant seams issues and opportunities for individual market participants to hoard transmission access and extract undue rents for transmission.  For imports that would use BPA’s Southern Intertie segment the problem exists for both source to sink and the last line of interest proposals.

There are seams issues between CAISO’s market based access to transmission and BPA’s OATT based transmission, with CAISO’s system not distinguishing between firm and non-firm services, while BPA’s OATT subscribes traditional higher priority to firm services over non-firm services.  Under the current market structure generators can compete for access to CAISO’s markets using non-firm and firm transmission.  The ability to use non-firm service to transmit Northwest energy into CAISO is an important check on transmission market power, maximizing competition and use of the Southern Intertie transfer capability.  Southern Intertie firm service on the BPA system is fully subscribed.   If firm transmission rights holders on BPA’s system do not use their rights, BPA releases the rights for sale as non-firm transmission by 10:00 a.m. on the day-ahead.   Beginning with the origins of open access transmission FERC has relied on the transmission provider’s release of unused firm transmission as non-firm as a means to prevent anti-competitive hoarding of transmission rights.[1]

Requiring the retention of firm transmission will require load serving entities within CAISO to seek transmission rights from a limited number of entities holding transfer rights.  Although CAISO proposes a transmission procurement deadline of 3:00 pm on the day-ahead, a few hours after firm rights can be released as non-firm, the entities holding firm will know they do not need to compete with the non-firm service, degrading the check on market power or hoarding.  Notably, when BPA considered a proposal to eliminate non-firm service on the Southern Intertie stakeholders indicated the proposal would withhold unused transmission, restrain trade and hamper Northwest resources’ access to the CAISO market.[2]  BPA noted the proposal “could significantly reduce Southern Intertie utilization. If customers have CAISO awards but are unable to find HNF transmission, Southern Intertie utilization would decrease.  This risk could be mitigated by the development of a more liquid secondary market for transmission.”[3]  CAISO’s proposal to require firm transmission would have the same functional effect – eliminating the ability to use non-firm transmission, restraining transactions between the Northwest and CAISO markets, with no organized market for secondary sales of firm transmission.  Without the ability to use non-firm transmission northwest generators and California load serving entities will be openly exposed to the market power of the few entities holding transmission rights on BPA’s Southern Intertie segment.

Several stakeholders raised concerns about these anticompetitive attributes of CAISO’s proposal in their August 2020 comments.  For example, SMUD noted the CPUC rejected a proposal to require firm transmission for RA imports due to the limited number of entities holding firm transmission rights.  Morgan Stanley similarly noted that a firm transmission requirement would encourage hoarding of transmission.  DMM raised concerns that a firm transmission requirement would advantage existing long term rights holders, and requires better exploration of the ability to access transmission in neighboring BAAs.

SVP is concerned that CAISO’s September 15^th presentation dismisses the competition concerns because FERC’s open access addresses transmission market power, complaints about abuses can be brought to FERC, and other markets have similar requirements.[4]  SVP is not aware if the other markets referenced in CAISO’s Straw Proposal[5] interface with neighboring OATT based systems via fully subscribed interties, or are otherwise similarly situated.  However, FERC’s open access mitigation of transmission market power depends, in part, on the release of unused transmission as non-firm to combat hoarding.  CAISO’s proposal would eliminate the need for firm transmission rights holders to compete with non-firm service, severely limiting competitive access and disrupting the OATT protections against hoarding.  SVP takes little comfort in the ability to address anti-competitive behavior through a complaint at FERC after misconduct occurs and consumers are harmed.  It would be far better to design the RA program in a manner that does not create opportunities for transmission market power abuses or proactively mitigates that exposure.  SVP is in favor of properly functioning RA rules that ensure reliable grid operations, but it is not apparent that the benefits of requiring firm transmission for import resources outweigh the potential harm resulting from exposing load serving entities to transmission market power.  Until transmission seams issues are addressed in a manner that mitigates OATT transmission market power SVP urges CAISO to not make firm transmission an obligation to support RA imports.

[1] Order 888, Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, 61 FR 21540-01

[2] BPA Regional White Paper Presentation and Analysis of Southern Intertie Hourly Non-Firm Alternatives at 48-49 (February 16, 2016).  https://www.bpa.gov/Finance/RateCases/BP-18/Meetings/White%20Paper_IS%20HNF_V3_FINAL.pdf

[3] Id. at 47.

[4] CAISO September 15, 2020 presentation at slide 84.  http://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyEnhancements-Sep15-17WorkingGroup.pdf

[5] Fifth Revised Straw Proposal at 66-67. 

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

SVP has no comments at this time.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

SVP has no comments at this time.

6. Additional comments on the September 15 and 17, 2020 working groups:

SVP has no comments at this time.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

The Six Cities continue to support certain elements of the CAISO’s proposals in this initiative and continue to express concerns regarding other elements of the CAISO’s proposals in this initiative.  With respect to the CAISO’s Unforced Capacity Evaluations topic as discussed during the working group meetings, the Six Cities remain significantly concerned regarding the CAISO’s proposed outage classifications, including use of the Reliability Coordinator (“RC”) timing requirements for categories of outages, and the CAISO’s proposal to reduce the Unforced Capacity (“UCAP”) values of resources for Urgent Outages.

As discussed below, the Six Cities continue to support the overall objectives underlying the CAISO’s proposals on imported Resource Adequacy (“RA”) resources.  The Six Cities urge the CAISO to continue refining its proposals around source specification.  With respect to transmission deliverability to the CAISO Balancing Authority Area (“BAA”) border, the Six Cities acknowledge the CAISO’s desire for firm transmission to assure that resources will be available to the CAISO when needed, but echo concerns expressed by other stakeholders about potential impacts from this requirement and the need for further evaluation. 

Finally, as outlined below, the Six Cities oppose the CAISO’s proposals related to planned outages and substitutions as both unworkable and costly.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Although the Six Cities do not oppose use of the RC’s substantive definitions to categorize outages, the Six Cities strongly oppose application of the RC study windows for purposes of outage classification.  Specifically, the Six Cities oppose limiting the definition of Planned outages to those requested prior to the expiration of the RC’s short range study window.  As noted by SDG&E during the working group discussion, this effectively would change the current T-7 cut-off for requesting a Planned outage to T-20.  The currently effective T-7 cut-off for requesting Planned outages already is unnecessarily restrictive.  Expanding that cut-off to T-20 has not been justified.  The classification of outages should be based on the facts giving rise to the need for the outage, not an automated label applied solely on the basis of when the outage is requested.  If there is sufficient RA capacity available to the system to accommodate a request for an outage to perform maintenance submitted no less than three days prior to the proposed date to begin the outage, or if the resource owner offers to provide Substitute Capacity during the outage, the CAISO should approve the request.  Further, any such outage approved by the CAISO should not be defined as a Forced outage and should not adversely affect the UCAP value for the resource.  Conversely, if RA capacity expected to be available to the system at the time for which an outage is requested is not sufficient to accommodate the Outage and the resource owner does not offer to provide Substitute Capacity, then the CAISO should deny the outage request.  If the resource owner nevertheless proceeds with the outage, then it should be classified as a Forced outage and reflected as such in the calculation of UCAP for the resource.

It is critical for stakeholders to understand fully the CAISO’s proposed classification of outage types and the applicable timing.  Therefore, the CAISO’s next proposal should include a detailed discussion, with examples, of the outage types and the timing that would apply to each type, as well as the corresponding UCAP impact, with a particular focus on examples of and timing for Urgent outages. 

The Six Cities continue to oppose reduction of UCAP for Urgent outages as if equivalent to Forced outages.  As described in Procedure No. RC0630 at page 15, for an Urgent Outage:

Facility/equipment remains in service until personnel, equipment and/or system conditions allow the outage to occur.

Urgent outages allow Facilities to be removed from service at an optimal time for overall system reliability.  (Italics in original.)

Because an Urgent Outage by definition is coordinated to maintain overall system reliability, it is not reasonable to reduce UCAP for Urgent outages as if they are the same as Forced outages.  Reducing UCAP for outages that are coordinated with the CAISO and timed to support system reliability is fundamentally unfair and may discourage such cooperative timing.  In the working group meeting, the CAISO stated for the first time that Urgent outages have priority over Planned outages (see Slides 18 and 23) and argued that reduction of UCAP for Urgent outages is justified on that basis. 

If the CAISO intends to propose to reflect Urgent outages in the UCAP, the Six Cities recommend that the CAISO consider doing so at a reduced level relative to Forced outages.  For example, the UCAP impact for Urgent outages could be 25% or 50% of the UCAP impact for a Forced outage.  This concept would allow for some recognition of the coordinated timing for Urgent outages. 

The Six Cities request that in its next proposal, the CAISO include more detail and examples, and an explanation of the basis for, its proposed outage priorities.

The Six Cities appreciate the CAISO’s decision to reexamine its previous proposals regarding exemptions or exceptions from UCAP reduction.  As described in the Six Cities’ comments in this initiative submitted on August 10, 2020, the criteria for exceptions from UCAP reduction (which should be specified in advance in the tariff) should include any reductions in resource availability that (1) are directed by the CAISO, (2)  are consistent with an operational procedure agreed upon by the CAISO and the resource owner or operator for reliability reasons, or (3) result from an infrequent transmission outage.  Recognizing that resource outages due to frequently recurring transmission outages would indicate that the CAISO cannot realistically count on the resource being consistently available, it would be reasonable to disallow an exemption for outages caused by multiple transmission outages within a three year period.  In addition, it would not be appropriate to reduce a resource’s UCAP value based on availability limitations that result from limitations or deficiencies in the CAISO’s modeling processes.  For example, exhaustion of use limits resulting from inadequate opportunity cost allowances under the CAISO’s opportunity cost modeling methodology should not result in reduction of the affected resource’s UCAP value and should be addressed through better tuning of the opportunity cost calculation.

The Six Cities do not oppose the CAISO’s proposal to include October in the definition of Peak Months for evaluating seasonal availability.  (See Slides 32-33.)  However, the Six Cities seek to better understand the implications of the CAISO’s proposal.  While a six-month Peak period may be reasonable for the purpose of applying the UCAP seasonal availability factors, the Six Cities are concerned that if the CAISO proposal is, in addition, to prohibit all Planned outages during the six-month Peak period, this proposal would inappropriately limit the ability of resource owners to perform necessary planned maintenance.  To the extent that the CAISO proposes to prohibit all Planned outages during certain months, the Six Cities request that the CAISO consider imposing this restriction during a more limited set of months, such as, for example, July through September.   

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

As noted in prior comments in this initiative, the Six Cities support elements of the CAISO’s proposals that seek to ensure that RA imports are backed by physical capacity that is committed and deliverable to the CAISO.  The Six Cities continue to support these proposal elements, subject to the comments set forth below. 

To meet the CAISO’s proposed requirement that RA imports be from resources that are firm (or equivalent to firm) and dedicated to the CAISO BAA, the Six Cities note the CAISO’s confirmation that source specification may be demonstrated in a variety of ways, and that imports may be considered source-specific if associated with a single resource, a specified portfolio of resources within a single BAA, a BAA pool of resources, and/or backed by WSPP Schedule B or C or an “equivalent agreement” and supported by an attestation.  (See, e.g., Slide 76.)  The working group meeting included a discussion of how “legacy contracts” may (or may not) fit within these criteria, and the Six Cities urge the CAISO to continue to refine its proposals on this topic to ensure that highly reliable, legacy import resources that the CAISO and its load-serving entities have long relied upon for RA, such as the Hoover Power Plant, may remain available to and used by load-serving entities in the CAISO BAA for RA purposes. 

With respect to the CAISO’s proposals on delivery assurance, the Six Cities did not, in their most recent comments on the Fifth Revised Straw Proposal, express a view as to either of the proposed alternatives (consisting of a requirement for firm transmission on a “source to sink” basis or a requirement for firm transmission only on the final leg to the CAISO border), both of which may prove workable in addressing the CAISO’s goal of ensuring that RA imports are “dependable” and delivered on high priority transmission.  (See Slide 72.)  The Six Cities do agree with the views of other stakeholders, however, that it would be worthwhile to consider the extent to which such transmission is readily available to CAISO load-serving entities.  While the exercise of market power in the context of transmission availability is indeed the purview of FERC, the CAISO should nonetheless closely examine and seek to understand how this element of its proposal is likely to work in practice and may impact the composition of resources available to the CAISO for RA purposes.  If the CAISO’s proposed firm delivery requirement – whichever version the CAISO adopts – will provide an undue advantage to one or several entities outside of the CAISO, have the unintended effect of encouraging external entities to hoard transmission or avoid making it available for CAISO entities’ use (for whatever reason), or otherwise limit the CAISO BAA’s ability to access needed imports, then the CAISO and its load-serving entities should develop a clear understanding of these and other impacts before the CAISO’s firm delivery proposal is implemented.  Relatedly, it is important to have an understanding of the extent to which neighboring Transmission Service Providers, including those that are non-FERC jurisdictional, have reciprocal Open Access Transmission Tariffs that will assure CAISO load-serving entities that adequate transmission service will be available on reasonable and non-discriminatory terms. 

As the Six Cities have explained elsewhere, the CAISO should also consider how its policies related to the use of import RA resources as developed in this initiative interrelate with the Maximum Import Capability (“MIC”) import limitation.  It is critical that the CAISO’s import RA requirements and its MIC policies are synchronized so that load-serving entities have the ability to continue to rely on imported RA resources that otherwise satisfy the CAISO’s firmness and source specification requirements without MIC posing a barrier to reliance on these resources.  To this end, the Six Cities note the CAISO’s inclusion in its 2021 Policy Initiatives Catalog of an initiative for MIC Enhancements and support the CAISO’s advancement of this initiative.  (See 2021 Final Pol. Init. Catalog at 34.)

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

The Six Cities do not support the CAISO’s recommendations regarding the Planned Outage Enhancements topic.  Although the CAISO stated during the working group meeting that it does not plan to make significant changes to the current outage management process, at least two of the CAISO’s proposed revisions are quite significant.  As discussed in the comments on Topic 1 above, the CAISO’s proposal to require all requests for Planned outages to be submitted no later than the RC’s short-range study window effectively pushes the current T-7 cut-off for requesting a Planned outage to T-20, and refusal to consider requests for Planned outages after the short-range study window is unreasonably restrictive.

The CAISO’s proposal to require Substitute Capacity for all Planned outages is likewise a significant change.  Although requiring Substitute Capacity for all Planned outages would reduce uncertainty, it will be burdensome, costly, and potentially impracticable as RA capacity becomes increasingly limited.  To the extent that resource owners are unable to procure Substitute Capacity, they may be deterred from performing appropriate maintenance, with the potential for adverse impacts on reliability.  Furthermore, a requirement to provide Substitute Capacity for all Planned outages will encourage load-serving entities to hold contracted capacity in reserve, rather than including all contracted capacity in RA showings, thereby undermining the effectiveness of the proposed RA Deficiency Tool.

In previous rounds of comments in this initiative, the Six Cities have urged the CAISO to take additional time to provide more focused attention to improving the outage management process.  The existing outage management process has serious flaws that create uncertainty, unnecessary costs, and risks to reliability, and it will not be improved by the modifications proposed by the CAISO in the working group meetings.  The Six Cities reiterate their previous requests that the CAISO carve out the planned outage process enhancements topics and commence a separate initiative focused on outage management issues.  Although the CAISO’s observation that there are challenges to development of thoughtful and holistic solutions to outage management issues is indisputably correct, they are challenges that the CAISO must confront.  The separate outage management initiative should proceed on a parallel timeline with the remainder of the RA Enhancements initiative but need not hold up progress on the topics remaining in the broader initiative.  To frame the separate outage management initiative, the Six Cities urge the CAISO to establish one or more workshops to include stakeholder input to identify problems experienced under the existing outage management framework and to reach consensus on objectives for improvements to the outage management process.  A separate, targeted initiative devoted to outage management issues should allow a fresh look at potential approaches for supporting Planned outages while maintaining reliability.  

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

In concept, the Six Cities generally support the CAISO’s proposed application of UCAP in the context of Local RA requirements, subject to resolution of the concerns identified above related to determination of UCAP values and outage management.  The Six Cities continue to evaluate how the conversion from net qualifying capacity to UCAP values will be implemented. 

6. Additional comments on the September 15 and 17, 2020 working groups:

The CAISO, CPUC, and CEC have not yet released the root cause analysis of the reliability challenges experienced during the August and September heat emergencies.  It should be self-evident that modifications to the RA framework should seek to address issues identified in the root cause analysis as contributing to the emergency conditions.  The CAISO should be prepared to adapt the timeline for the RA Enhancements initiative and be open to further modifications with respect to both existing RA provisions and previous proposals for enhancements as necessary to address lessons learned from the heat emergencies.   

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

SCE appreciates the opportunity to provide comments herein on the CAISO Resource Adequacy Enhancements working group meeting and presentation material.[1]

[1] CAISO Working Group Meeting Presentation, September 15, 2020, available at: http://www.caiso.com/InitiativeDocuments/Presentation-ResourceAdequacyEnhancements-Sep15-17WorkingGroup.pdf.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

Outage Definition & POSO

As requested by stakeholders, the CAISO should provide clarity on urgent outages and how an urgent outage may or may not impact UCAP for the resource. In addition, SCE has the following questions related to urgent outages:

• How are urgent outages designated? Is the CAISO referring to the use of "emergency" being selected on the outage or will nature of work (NOW) remain and be used on urgent outages by including a new NOW?
• Based on the prioritization of the three types of outages: force, urgent, opportunity, as an opportunity type outage has the lowest priority, will all previously submitted opportunity type outages prior to the end of the short range study window submission deadline be approved? How will this affect off peak opportunity type/forced outages for resources which normally cannot generate due to lack of fuel (sun) for example?

SCE supports the CAISO further refining the definition of UCAP Exempt Outage (slide 26). SCE does not believe a transmission-induced outage should impact the resource’s UCAP because including the outage in the UCAP calculation does not incentivize better maintenance and availability for the resource.

SCE continues to find that there are merits in the prior planned outage reserve margin proposal, as described in the 5^th Revised Straw Proposal (RSP) (i.e., Option 1). For instance, this option provides simplicity compared to other options and addresses capacity withholding issues due to planned outage replacements. At this time, the CAISO proposes to maintain the existing planned outage replacement requirements and provide substitute capacity at the time of the RA showing. Under this “new” proposal, the CAISO and stakeholders should address whether the proposal will lead to the same (or worse) disincentives that parties may not make all RA capacity available to the CAISO. For example, suppose an LSE’s RA obligation is 10,000MW; if the LSE has an RA portfolio of 11,000MW (i.e., 1,000MW beyond the obligation), will the LSE be required to provide substitution for any of its planned outage capacity if all 11,000MW are shown to the CAISO?[1] Will the proposal create any incentive for the LSE to hold back some capacity from being made available to the CAISO (or the RA market) due to the substitution requirements imposed by the CAISO?

UCAP Calculation

SCE found the estimated UCAP value for the June 2020 RA portfolio (slide 47) very useful. The CAISO should provide similar estimates for the months of August and September because those months have higher requirements and the estimates for those months will provide more accurate information regarding potential impacts of the CAISO UCAP methodology.

With respect to UCAP calculation (slides 41-44), the CAISO proposes to base the calculation of Seasonal Average Availability Factors (SAAF) on Pmax while basing the UCAP calculation on NQC. The CAISO should clarify if the intent is to calculate a capacity value of a resource that will be based on its Pmax and the SAAF – to appropriately reflect forced outages – and whether the UCAP value of the resources will be the portion of it that is fully deliverable.[2] The CAISO should also confirm that the proposal will not derate from the NQC value, to derive the UCAP value, for a resource when the resource’s NQC is developed based on historical output (or bids reflecting historical availability) that already accounts for forced outages.  

Hydro UCAP

Given the unique characteristics for hydro resources, SCE has recommended two modifications to the CAISO hydro UCAP methodology proposed in the CAISO 5^th RSP, including: 1) allow increase on hydro UCAP value during the month-ahead (MA) process based on hydro resource availability known at the time, and 2) change the look-back period from 10 years to 3 years.[3] SCE reiterates the importance of these modifications, which are necessary to make the CAISO hydro UCAP proposal more aligned with what is intended by the initiative and provide better incentives for maintenance and availability for those resources. The CAISO should incorporate these modifications into the next iteration of its proposal.

Storage and Hybrid Resource UCAP

The CAISO continues to propose considering end-of-hour state-of-charge (EOH SOC) constraints in the UCAP calculation for storage resources (slide 49). With increasing amounts of storage resources anticipated to be online in next few years, there is a need to thoroughly evaluate this proposal (or any other proposal) and address how the UCAP of those resources should be calculated. For instance, what is the difference between self-scheduling the resource and EOH SOC when both self-scheduling and EOH SOC could result in the same availability (or unavailability) of the resource to the CAISO; why the EOH SOC will impact the UCAP while clearly the self-scheduling would/should not impact UCAP (aside from any obligation to meet flexible RA)? Will the CAISO proposal lead to significant derates of storage RA capacity, and if so, is the proposal still appropriate in terms of setting the right incentive for resource maintenance and availability to the CAISO? Will significant modifications to the CAISO proposal (such as modeling EOH SOC as a soft constraint and whether such approach is feasible to implement) be required, or should a different approach be developed to calculate storage UCAP? Given these unanswered questions, SCE believes additional work is necessary in order to develop an appropriate UCAP methodology for storage resources.

The CAISO proposes to calculate the UCAP for a hybrid resource based on forced, urgent outages, and dynamic limit impacts of the resource (slide 54). The CAISO should assess whether this proposal could double count a resource’s unavailability (for instance if unavailability is already considered in deriving the resource’s RA value per the methodology adopted by the CPUC and if that same availability is reflected in an outage card or dynamic limit).

[1] To obligate an LSE to provide substitution capacity for the portion of RA showing that is above and beyond the RA requirement does not seem to be justified. The CAISO should clarify this in the next iteration of its proposal.

[2] For example, for a resource with a 100MW Pmax and a 10% forced outage rate, the capacity reflecting the forced outage rate will be 90MW. If all 90MW can be deliverable, then the UCAP should be 90MW. If only 70MW can be deliverable, then the UCAP should be 70MW, and so forth.

[3] SCE Comments, July 30, 2020, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf, at 4-5.

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

Attestation Process

There is not sufficient clarity on how the attestation process would work. The working group meeting material and the CAISO 5^th RSP merely lay out the proposed requirement for parties to provide an attestation and supporting documents but do not address how such a process would work in practice. Under the CAISO proposal, resource-specific RA imports can be sourced from: 1) a single resource, 2) a specified portfolio of resources, or 3) a BAA’s pool of resources and the capacity must be excess capacity dedicated to the CAISO.[1] The CAISO also proposes that all RA import suppliers must provide an attestation to state the capacity has not been sold to any other entity.[2] For a resource sourced from a specified portfolio or BAA’s pool of resources, it is unclear who would be responsible for proving that the capacity is excess capacity to the hosting BA and what is the process, and how, to demonstrate the capacity is indeed excess capacity. Under the CAISO proposal, will the host BAA be required to perform a study or evaluation every time a resource in its area, or a pool of resources in its area, is being contracted with the CAISO entities? If this is intended by the CAISO under its proposal, then the proposal should address how to commit the host BA to performing such a study.

In light of these issues around the proposed attestation, in conjunction with the proposed firm transmission requirement, the CAISO should demonstrate why the CAISO proposal will be superior to the rules governing import RA recently adopted by the CPUC in Decision 20-06-028. In addition, the CAISO should consider, even if RA imports are resource-specific with firm transmission as proposed by the CAISO, how the proposal would prevent RA resources from being exported to other BAs during heat wave events.

Firm Transmission Requirements

The CAISO proposes to require firm transmission service point-to-point (PTP) from source to sink (Preferred Option) or to require firm service on last leg and monthly non-firm service on all other intervening lines of interest (Alternative Option). The CAISO proposes a day-ahead tagging timeline for firm transmission service and a T-45 tagging timeline for monthly non-firm service.[3] The proposed requirement represents a more stringent requirement than what currently exists.  There is also concern regarding potential concentration in the transmission market and it may be challenging for market participants to find and then purchase excess firm transmission. The CAISO’s view that such concern may be raised to FERC instead of the CAISO[4] does not resolve the issue if the concern about market power is real. In addition, the T-45 tagging timeline requirement can create issues as it is unclear whether such requirement is feasible in practice. Again, although SCE understands the CAISO’s motivation in proposing the resource specific and firm transmission requirements, it is not clear if the proposal would work in practice and why the proposal is superior to the current rules.

Process Alignment

To ensure a single set of RA import requirements, the CAISO must fully coordinate with the CPUC (and other LRAs). It is unclear in the proposal what process will be used for this coordination, including a process for the CAISO to replace the current import RA rules with its own proposal and identify and address any potential impacts. The CAISO would also need approval from the FERC. The CAISO proposal currently does not offer sufficient details regarding how the CAISO process will be aligned with other agencies and how any regulatory uncertainty will be addressed. Should the CAISO move forward with its proposal, those details need to be included in the proposal.

[1] Working Group Presentation, at 76.

[2] CAISO RAE 5^th RSP, at 64.

[3] Working Group Presentation, at 89-93.

[4] Working Group Presentation, at 84.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

Please see SCE comments in Section 2 above.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

UCAP Local RA

Given that the conversion between NQC and UCAP is performed at the TAC level, the CAISO should clarify whether the UCAP requirement for each local area will be included in its Local RA Technical Study Report as such information seems important and will provide necessary transparency for the RA market. During the working group meeting, the CAISO implied that the UCAP (and NQC) requirement for a local area (including TAC areas) will not exceed the available capacity in that area at the time of the study. The CAISO should include this clarification in the next iteration of its proposal.

6. Additional comments on the September 15 and 17, 2020 working groups:

There are several other important issues that were not covered during the working group meeting, including transitioning to the UCAP paradigm, the real-time must offer obligation proposal, and the planned to forced outage issue. For these and other issues, please refer to SCE prior comments.[1]   

[1] For SCE comments on Transitioning to UCAP Paradigm, see SCE June 24, 2020 Comments, at 2, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancementsWorkingGroup-Jun102020.pdf. For SCE comments on CAISO real-time must offer obligation proposal, see SCE July 30, 2020 Comments at 6-8, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf. For SCE comments on planned to forced outage and UCAP requirements, see SCE January 27, 2020 Comments, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancements-ThirdRevisedStrawProposal.pdf.

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

SouthWestern Power Group (SWPG) is pleased to provide these focused comments on the source specificity and firm delivery aspects of the CAISO’s proposal as presented on September 17 at the workshop.  We offer these under #3 below.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

SWPG’s partner Pattern Energy LLC (Pattern) is developing wind in New Mexico for delivery over the SunZia transmission project. Together we will be delivering wind-farm specific energy and RA over firm transmission by means of a dynamic transfer agreement. SWPG has no concerns about the intention of the CAISO to require that RA imports provide specific, dedicated resources delivered over firm transmission. However, SWPG is concerned that the way the CAISO has proposed to implement these requirements will significantly adversely affect commercial arrangements. In particular we are concerned about the CAISO requiring the WSPP Schedule C contract to be executed between Pattern and its LSE counterparties. In lieu of requiring WSPP contracts for these RA imports, we urge the CAISO develop alternate attestation mechanisms with which providers can attest that their resources are specific, dedicated, located within a single BAA, and are delivered via a dynamic schedule over firm transmission.

The SunZia-delivered wind energy is contracted using unique Power Purchase Agreements (PPAs) and is not contracted using WSPP contracts. Yet these arrangements are for specific wind farm output, output that is dedicated to meet the LSEs’ energy and RA requirements.  Further, since these contracts involve intermittent wind output, and these facilities are already recognized by CPUC rules to be intermittent in nature with an associated imputed RA value.

In addition, the resources’ output is provided via dynamic schedule arrangements pre-negotiated with the source, sink and intermediate BAAs. By design, these dynamic transfer agreements for the energy and RA already specify that the resource is dedicated to the CAISO and specify the firmness of the transmission to the CAISO border.

SWPG urges the CAISO to explicitly indicate in its RA Enhancement proposal that suppliers attesting to these qualities of their PPAs and dynamic schedule arrangements will be sufficient.  If the CAISO requires further assurance, the CAISO could propose that suppliers will, upon request of the CAISO, present copies of their PPAs and dynamic scheduling arrangements. (Under these instances the CAISO would need to provide proper confidential management of these business-sensitive documents the suppliers would present.) Such attestation mechanisms would shift the burden for confirming the RA import attributes to the supplier and alleviate the need for the CAISO to review a myriad of contracts while avoid the commercial burdens that would be created if the CAISO required all counter parties to execute standard WSPP contracts. 

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

Valley Electric Association (VEA) and Arizona Electric Power Cooperative (AEPCO) appreciate the opportunity to provide comments on the RA Import topic discussed at the CAISO’s September 17 RA working group meeting.  VEA is a load serving entity in the CAISO that relies on several long-term contracts to meet it is RA requirements, including a contract for the purchase of power from the Hoover project.  AEPCO is an all requirement power supplier to Anza Electric Cooperative, which is located in the CAISO’s balancing authority area (BAA).  Anza relies on its long-term Wholesale Power Contract with AEPCO to meet its RA requirements.  VEA and AEPCO provide further comments in Section 3 below.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

VEA and AEPCO appreciate CAISO staff’s willingness to consider the contracts that VEA and AEPCO rely on to provide RA.  In addition, CAISO staff has been receptive to developing an appropriate vehicle for RA providers, such as VEA and AEPCO, using other than a WSPP contract to attest to and/or demonstrate that: 1) the contracted RA resources are specified, dedicated, and located within a single BAA, 2) the contracted resources’ delivery mechanisms satisfy the CAISO’s requirement for firm transmission, and 3) for a dynamically scheduled resource such as VEA’s Hoover resource, the dynamic scheduling mechanism satisfies the CAISO’s requirement for firm transmission.

VEA and AEPCO look forward to working with the CAISO staff to finalize the attestation and related requirements in the CAISO Tariff and Business Practice Manual to implement changes to the RA Import rules.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

The UCAP paradigm, as proposed, fails to avoid punishing resources for circumstances outside of their control. Because it is punishing without fault, it clearly cannot be used to incentivize any action or inaction by the resources. As with all policy proposals, the CAISO should consider the effect of the policy and any unintended consequences that may result. The CAISO should continue to revise and review the UCAP paradigm to address, among others, the issues mentioned below. 

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

1. URGENT OUTAGES. Wellhead appreciates the clarification regarding urgent outages that the CAISO provided during the workshop. The CAISO discussed the following 3 scenarios and how each would affect the resources value:
   1. In scenario 1:
      1. a resource requests an urgent outage
      2. the CAISO does not grant it
      3. the resource waits to take the outage until it is granted a planned outage

This scenario did not result in an urgent outage because no outage occurred and therefore the resource’s UCAP was not affected

1. 2. In scenario 2:
      1. a resource requests an urgent outage
      2. the CAISO does grant it
      3. the resource takes the outage

In this scenario the resource did take an urgent outage because the CAISO granted the outage. Under the current proposal this resource’s UCAP will be affected in the same way as it would have if it had simply taken a forced outage.

1. 3. In scenario 3:
      1. a resource requests an urgent outage
      2. the CAISO does not grant it
      3. the resource takes the outage as a forced outage.

This scenario did not result in an urgent outage because the urgent outage was not granted. It resulted in a forced outage thereby affecting the resources UCAP.

Urgent outages (scenario 2) should not be considered in the UCAP calculation. The UCAP paradigm punishes resources which become unavailable by reducing a resources capacity value based on such unavailability. Resources which request an urgent outage, if granted, should not be penalized for being proactive in its attempt to avoid a forced outage. While Wellhead understands that the CAISO’s intent is to disincentivize resources from inappropriately using urgent outages to circumvent the planned outage process. The CAISO’s proposal (though unintentionally) will force resources to avoid urgent outages since the CAISO will treat this outage no different than a forced outage for UCAP. This unintended consequence will lead to a less reliable grid. Therefore, the CAISO should modify its proposal so that urgent outages will not be considered in the UCAP calculation.

If the CAISO continues to worry that urgent outages may be used inappropriately then perhaps a compromise can be reached whereby urgent outages are only partially considered for UCAP.

2. UCAP EXEMPT OUTAGES. The CAISO should expand the UCAP Exempt Outage beyond the current proposed language. The entire UCAP proposal is predicated upon the following principle: resource owners should be incentivized to maintain their resources to avoid the recurrence of forced outages. Punishing resources for circumstances outside of their control and which are unlikely to reoccur is contrary to this principle.

It is absurd to penalize a resource for something wholly outside of it its control, such as a transmission outage. There is no nexus between a transmission outage and a resources maintenance practice. Therefore, applying a UCAP that considers outages wholly out of a resources control is a punishment without wrongdoing or even a behavior which is to be incentivized. If there is no wrongdoing or behavior that needs to be changed, how can the CAISO justify the UCAP penalty. For this reason, the CAISO should expand the circumstances under which the exemption will apply. 

3. SEASONAL AVAILABILITY FACTOR. Wellhead supports using the seasonal availability factors as described in the proposal.
4. WEIGHTED SEASONAL AVAILABILITY FACTORS.  Wellhead supports UCAP evaluations being assessed, as proposed, during the 20% of tightest supply cushion hours. Wellhead supports the use of weighted seasonal availability factors for determining a resources UCAP. Wellhead strongly supports Option 2 as follows:

• Year 0 (i.e. before actual operational data is available): NQC
• Year 1: 60% year 0 performance, 40% NQC
• Year 2: 55% year 1 performance, 35% year 0 performance, 10% NQC
• Year 3: 45% year 2 performance, 35% year 1 performance, 20% year 0 performance

5. EOH SOC. Wellhead supports the EOH SOC tool.  

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

No comments at this time.

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

Wellhead continues to support adding a PRM to account for planned outages

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

No comments at this time.

6. Additional comments on the September 15 and 17, 2020 working groups:

1. Provide a summary of your organization's comments on the September 15 and 17, 2020 working group discussion:

The Western Power Trading Forum (WPTF) respectfully asks the CAISO to consider rescoping this initiative to respond to California’s capacity crisis. The recent blackouts have highlighted gaps in California’s dual RA programs and WPTF believes this proposal overall is a step backward not forward for reliability and market efficiency. While individual proposal elements may be warranted, the proposals main features; UCAP, local RA, monthly backstop study, and the planned outage process, will reduce transparency, increase transaction costs, and most concerningly, move away from coordination with the California Public Utilities Commission (CPUC).

It should be concerning to all stakeholders that the CAISO has not reevaluated its proposal in light of the August rolling blackouts. Rolling blackouts should have been a wake-up call and WPTF is surprised that the CAISO’s sole RA initiative is not considering how CAISO rules should change given California’s clear reliability crisis.

The RA Enhancements’ initiative scope and UCAP proposal were made public in October 2018 – two years ago. The CAISO’s original Issue Paper on page 3 lists the issues that were driving the need for the RA Enhancements proposal. WPTF encourages the CAISO and stakeholder to reread these and ask themselves whether these are actually the issues the CAISO should be addressing right now. WPTF believes things have changed in the last two years from a reliability and market perspective, and that the CAISO should devote more resources to ensuring a robust RA program that is transparent, efficient, and above all, coordinated with the CPUC’s IRP and RA programs. WPTF respectfully requests that CAISO leadership take a step back and evaluate whether the CAISO RA Enhancements proposal is the right fit for our current environment.

2. Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in slides 6-68:

 WPTF does not support UCAP for the following reasons:

1. UCAP will create two uncoordinated system RA programs; one administered by the CAISO and one by the CPUC, which will increase transaction costs, decrease transparency, and create uncertainty around which organization is responsible for maintaining system reliability.
2. The UCAP requirement only partially addresses the fundamental issue that the system RA requirement is too low to ensure reliability and therefore  cannot be a replacement for the CPUC’s system RA requirement.
3. The rationale for UCAP is dependent on a fundamental misunderstanding of RAAIM and how suppliers and load serving entities changed their behavior after its implementation.
4. The CAISO erroneously points to other ISOs as evidence that UCAP is beneficial when these benefits accrue from being a part of a larger package that includes annual RA requirements, centralized capacity markets, and penalty structures for non-performers.

1. The CPUC has not committed to removing their system RA requirement and associated counting rules, so the addition of UCAP will lead to two uncoordinated system RA programs in California.

UCAP is fundamentally a new system RA requirement that will be FERC jurisdictional. The CAISO proposes that load serving entities will have to meet a UCAP requirement with contracted resources using CAISO-determined counting rules. The CAISO will backstop if LSEs are in aggregate deficient of their UCAP system requirement. The UCAP requirement is uncoordinated with the existing CPUC system RA requirement. The CAISO’s UCAP proposal requires load serving entities to procure 110% of peak forecasted load with capacity valued using the CAISO’s UCAP qualifying capacity methodology. The CPUC requires 115% of peak forecasted load with capacity valued using the CPUC’s NQC methodology. These programs are unconnected and will lead to differing views of resource supply and demand in California.

WPTF does not, per se, object to the CAISO creating their own system RA requirement, but it should only do so in explicit coordination with the CPUC so that load serving entities and resources are not faced with the incredible burden of having to comply with two system RA programs that are setting differing levels of system reliability. Absent public CPUC support for the CAISO’s UCAP methodology and commitment to remove or coordinate their own system RA requirement, WPTF does not understand whether the CAISO intends to move forward. Two programs will lead to increased transaction costs, decreases in transparency, and even worse, countering views on the value of resources contribution to reliability. California just experienced rolling blackouts, due to in part miscounting of available capacity in long-term studies.

Additionally, the CPUC currently relies (and must rely) on the NQC list to value resources contribution to reliability. Going forward, what does the CAISO expect the CPUC should use in their capacity planning studies and their Integrated Resource Plan?  This is a similar issue facing the CAISO when it comes to LCR analysis and will impact the TPP.  Does it make sense to use UCAP when its influenced by one-time forced outages selected over a small sample size of hours that may not be predictive of future outages? Should the CPUC continue to use NQC, but then have resources shown (and paid) based on their UCAP value? The proposal does not address these and many other fundamental questions as to the value of resources and how to coordinate with the CPUC to ensure grid reliability.

2. The UCAP requirement only partially addresses the fundamental issue that the system RA requirement is too low to ensure reliability so cannot be a replacement for the CPUC’s system RA requirement.

It is still unclear to WPTF whether the CAISO is expecting the CPUC to simply drop their system RA requirement. Given that the CAISO is not formulating the UCAP requirement to fully replace the CPUC’s system requirement, WPTF expects that both requirements would remain in place. WPTF will not elaborate extensively on system RA requirements in this comment set; however, we offer this brief opinion.

A system RA requirement at a minimum should cover forecasted peak load plus (1) load forecast error, (2) forced outages, and (3) upward reserve requirements. It can be debated as to how much load forecast error, what level of forced outages, and what level of reserves, but they all to some extent need to be accounted for in the requirement.

The CAISO has argued that UCAP will allow resources to be better valued in the market because LSEs will be able to identify less efficient resources. First, the CAISO has not demonstrated for individual resources that historical forced outages are a good predictor of future availability. WPTF believes this correlation will be particularly bad for certain hydro resources, but again requests the CAISO provide clear data demonstrating this correlation. It seems like this methodology, unlike a more robust eFORd, may end up impacting specific resource types RA value in ways unrelated to their actual contribution to reliability.  

Second, WPTF does not understand why the CAISO feels that even if LSEs knew that one resource might have slightly less forced outages than another resource this will add to reliability or improve market efficiency. The CAISO needs literally every single resource on the grid. Every single resource will need to be contracted by load serving entities and bills will need to be paid every month regardless of whether a resource is “needed” from a RA showing perspective in an off-peak month or not. California is relying on imports because of the severe capacity shortage in the state. These tight conditions are expected for at least the next 5 years if not longer.  As long as resources are doing their best to maintain their resources (which they are, as discussed in C below), then WPTF fails to see how grid reliability is improved by UCAP.

Finally, WPTF is concerned that the CAISO’s UCAP requirement approach will not be able to replace the CPUC’s requirement without a Loss of Load Expectation (LOLE) analysis that demonstrates UCAP has a sufficient planning reserve margin to become the main system RA requirement. WPTF understands that LOLE analyses take a significant amount of work and that the CAISO has limited resource adequacy staff, but without a process in place to determine the adequate amount of planning reserves needed to maintain a 1 in 10 reliability metric, the CPUC and FERC will rightly be concerned that a system RA requirement based on historical outages cannot adequately ensure future reliability.  The proposed 10 percent margin has no basis in a reliability metric that WPTF is aware of; this reliability margin must be reconsidered and aligned with industry standard reliability planning metrics.

WPTF asks the CAISO to again take a step back and ask what will actually help keep the lights on in the next three years, five years, and onward. WPTF does not believe that assessing the relative forced outages between resources that have to stay on the grid really does anything for reliability, but that a robust CAISO-established system RA requirement could - if the CAISO is willing to devote the resources to the effort.  

3. The rationalization for UCAP is dependent on a fundamental misunderstanding of RAAIM and how suppliers and load serving entities changed their behavior after its implementation.

The CAISO has repeatedly stated that RAAIM is not working because resources are not providing substitute capacity while on outage. WPTF does not understand why the CAISO keeps making this claim. RAAIM is not intended as a tool to require substitution. RAAIM and its predecessor the Standard Capacity Product (SCP) were developed because the CPUC’s PRM was supposed to only account for approximately a 6% - 7% forced outage rate. The 6% - 7% was loosely based on the historical forced outages rates at the time. SCP was supposed to encourage resources to stay on top of plant maintenance so that forced outage rates would stay around that level. And if a resource was on forced outage a lot more than the monthly historical average, then it would transfer some of its RA payments to other more reliable resources via the SCP program. RAAIM replaced SCP for two reasons, first, RA resources were avoiding the SCP by simply not offering into the CAISO market despite a tariff must-offer requirement, and two, the CAISO implemented a flexible RA requirement which required economic offers rather than self-scheduling. RAAIM was developed to ensure all RA resources were bidding into the market when able and if were shown as flexible RA, were not self-scheduling. It was never meant as a tool to ensure forced outage substitution. The substitution was merely a feature asked for by market participants so if economic, they could provide additional RA rather than being penalized.

RAAIM by the own CAISO’s data has been shown to increase DA and RT RA availability, particularly for flexible RA. Page 238 of the Department of Market Monitoring 2017 annual report states,

“Results presented in Table 10.5 suggest that flexible resource adequacy had fairly high levels of availability in 2017. Availability increased compared to 2016, partially due to the implementation of a financially binding incentive mechanism [RAAIM] in April of 2017…. Average availability ranged from 79 percent to 94 percent in the day-ahead market, an increase in almost every month compared to 2016. In the real-time market, availability ranged from 79 percent to 88 percent, a significant increase from 67 percent to 80 percent availability in 2016.”

The DMM noted that there was a significant increase in availability after RAAIM was put into place. Since 2017 RA prices have increased to significantly more than the RAAIM price and available substitute capacity has decreased. It is therefore not at all surprising the CAISO is not seeing suppliers provide substitute capacity. But this is a function of the tightness in the market, not an indication that RAAIM is not working. All data seems to indicate that RAAIM is working as resources are in fact bidding into the energy market and doing needed maintenance.

Additionally, during the blackout events, the CAISO reported that forced outages have been incredibly low in 2020 overall. During the report to the Board of Governors, Steve Berberich noted that during the heat wave events in August 2020, forced outages “were the lowest in years.” Clearly, RAAIM in conjunction with other market incentives (like energy prices) is providing incentives for resource maintenance and availability or there would have been more forced outages.

This is not to say, WPTF supports keeping RAAIM. Compared to 2017, the CAISO is now able to do bid insertion for many more use-limited resources and low/negative energy prices in the middle of the day make it much more beneficial to economically offer into the market rather than self-schedule. But RAAIM and forced outages are not the reason California is having reliability issues and should not be the foci of this initiative.

4. The CAISO erroneously points to other ISOs as evidence that UCAP is beneficial but fails to understand UCAP only is established in context of annual requirement and capacity market.

UCAP in other ISOs is part of a larger package of annual or seasonal RA requirements, centralized, clearing-price capacity markets, access to capacity transactions including after the operating day, and finally penalty structures for non-performance. These other components are vital to the UCAP paradigms success because they allow market participants to easily trade in and out of their positions as their capacity values change from year to year, mitigate non-performance risk through substitution transactions, and assess penalties for non-performance when called on by the ISO/RTOs. California’s bilateral market is not structured to have flexible contracting and after-the-fact penalties. Expecting entities to contract multiple years ahead of time for a monthly product that is valued differently for NQC, EFC, and now UCAP is unreasonable.

It is very rare that WPTF protests a CAISO policy as unreasonable but expecting the growing number of LSEs and small storage and renewable resources to contract efficiently if UCAP is approved is unreasonable. The only participants that may be able to benefit from this complicated proposal with no ability to trade in and out of positions are large ones who have sufficient power in the bilateral market to force contractual terms that benefit them. WPTF has already seen that most contracts are being drafted where if UCAP is implemented this decreases the contract quantity being paid for by the LSE. In response suppliers are preemptively raising their $/kW-month price in case UCAP gets approved. Merely having this UCAP proposal is already raising capacity prices for no reason other than contract risk and transaction costs. The UCAP paradigm, if approved by FERC, will increase prices even more because there is no easy way for counterparties to know what their UCAP capacity value will be from year to year and no way easy way to value these changes in a bilateral market. WPTF believes that any paradigm that makes price discovery even harder within a bilateral market is bad for ratepayers and should not move forward. 

3. Provide your organization’s feedback on the RA Imports topic as described in slides 71-120:

WPTF prefaces its comments to note that imports show up in excess of shown RA every day and showed up well beyond what was shown as RA during the August shortage events. Imports are an incredibly important part of maintaining reliability in California and it is unfortunate that the CAISO has taken a tone of distrust toward them. The casual discussions over the past two years of “speculative supply” and CAISO routinely implying that somehow imports are more likely to game the system and tariff must-offer obligations are not well-founded in data and from what WPTF can tell. So, while WPTF agrees that changes to import RA rules need to be made, we would like to be clear it is not because we believe the data demonstrates that gaming or speculative supply is an issue. Instead we believe that capacity tightening across the entire West means that all balancing areas need to be more transparent and have clear rules regarding imports.

Similar to WPTF’s UCAP philosophy, WPTF believes that the CAISO needs consistent import rules with the CPUC as much as practical and reasonable. This is not to say that the CAISO should adopt its own -must-flow rules, but that CPUC Decision 20-06-028 should be allowed to play out to determine the impacts before imposing inconsistent restrictions on imports. 

4. Provide your organization’s feedback on the Planned Outage Process Enhancements topic as described in slides 121-125:

WPTF believes the CAISO is hitting the nail on the head on slide 125 where it states that the CAISO’s planned outage options are constrained by the monthly nature of the RA program. Perhaps the CAISO should try again and push for an annual program at the CPUC. WPTF is still unconvinced by any of the planned outage options and supports the CAISO reviewing stakeholder comments for alternatives. It seems that at a minimum if an outage comes in well in advance, it should be able to show substitute capacity for those weeks and not be at risk of being canceled or moved.

5. Provide your organization’s feedback on the UCAP for local topic as described in slides 126-139:

 If WPTF understands the CAISO’s local UCAP topic; it is proposing to:

1. Do the local study just like it does today
2. Translate the local need from NQC requirement to a UCAP requirement
3. Have LSEs show resources using a UCAP value
4. Translate the LSEs shown resources UCAP value into an NQC value
5. Check that the NQC value of resources meets the local study requirement, and if it doesn’t, which definitely could happen because different resources have different relative UCAP to NQC values, then the CAISO will ask for more capacity.
6. The CAISO will again translate the deficient NQC amount into a UCAP value
7. LSEs will provide the deficient UCAP capacity
8. The CAISO will translate the UCAP capacity into NQC capacity and recheck whether this is sufficient, if not repeat E-G above, if so, local requirements are fulfilled.

This seems to add unnecessary complication without any reliability gain. WPTF asks the CAISO to consider having resources simply show their NQC, which is what their must-offer obligation is based on, rather than a UCAP value.  

6. Additional comments on the September 15 and 17, 2020 working groups: