Comments on stakeholder workshop

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

The Bonneville Power Administration (Bonneville)[1] appreciates the opportunity to submit comments on CAISO’s Day-Ahead Market Enhancements (DAME) Workshop held on January 24, 2022. Bonneville continues to strongly support the development of the imbalance reserve product and co-optimization of this new product with other products in the IFM. Bonneville noted the importance of the development of a day-ahead flexible capacity product in our EIM Policy Record of Decision[2] to join the EIM in September 2019. Bonneville also supports the development of the reliability capacity products. CAISO has clearly explained the benefits of these new day-ahead capacity products and reasons why they are preferable to out-of-market actions currently employed by CAISO system operators to maintain the reliability of the grid. CAISO operators have relied upon significant amounts of out-of-market actions that create market inefficiencies, fail to properly incentivize flexible capacity, and distort market prices and signals. Bonneville also views the development of the imbalance reserve (IR) product as foundational for EDAM.

[1] Bonneville is a federal power marketing administration within the U.S. Department of Energy that markets electric power from 31 federal hydroelectric projects and some non-federal projects in the Pacific Northwest with a nameplate capacity of 22,500 MW. Bonneville currently supplies around 30 percent of the power consumed in the Northwest. Bonneville also operates 15,000 miles of high voltage transmission that interconnects most of the other transmission systems in the Northwest with Canada and California. Bonneville is obligated by statute to serve Northwest municipalities, public utility districts, cooperatives and then other regional entities prior to selling power out of the region.

[2] See Administrator’s Preface Page P-2 and Page 7 of BPA Administrator's Final Record of Decision - Energy Imbalance Market Policy

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

We strongly agree with the CAISO on the need for the day-ahead market enhancements. The RUC process was intended to cover differences between bid-in demand in the IFM and the CAISO’s expected load forecast and net virtual supply.  Yet given the absence of the IR product, the CAISO uses upward adjustments to the load forecast used by the day-ahead market’s RUC process to account for net load uncertainty and real-time ramping needs. However, as CAISO’s analysis showed, the correlation between RUC adjustments and imbalance reserve needs is weak. Further, the RUC adjustments do not account for the bi-directionality of the IR needs and the fact that IR needs are generally for all hours, not just peak hours.

The IR product provides an opportunity for additional clean, flexible resources to meet CAISO’s uncertainty and ramping needs. RUC commits hourly capacity that may not provide the flexibility that is needed in real-time. And the RUC process limits participation of certain resources, namely system resources (such as Bonneville’s hydro system resources) that are not allowed to participate in the RUC process without a resource adequacy (RA) contract. Notwithstanding the RUC requirements, Bonneville has limited excess firm hydro supply to sell as RA given the various uncertainties of hydro operations and obligations in the RA procurement timeframe. But in the day-ahead timeframe, Bonneville may provide additional firm hydro supply given that variables such as stream flows, load forecasts, seasonal operating constraints and targets, etc., are more defined.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

Bonneville agrees with the benefits of implementing imbalance reserves presented by the CAISO.

• The IR product is modeled nodally and priced respecting transmission constraints, which ensures deliverability. Some stakeholders have commented that there is not a need for the IR product and that the CAISO could just continue to rely on the real-time must offer obligation of the flexible RA product. However, the flexible RA product is procured at a system level and may not be deliverable when needed.
• The IR product is procured based on the quantile regression methodology, which better reflects real-time conditions.
• Co-optimization of the IR product with other products in the IFM optimizes the fleet’s ramping capability between day-ahead hourly schedules and 15-minute ramping capability. This ensures the adequacy and optimal allocation of system ramping capability.
• The market can optimize the various costs of different types of resources offering IR to be available in real-time.
• Market prices would more effectively incentivize participation of flexible capacity and result in more appropriate compensation to flexible resources.
• Enables and encourages additional clean hydro resources to provide flexibility.

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

Bonneville generally agrees with the overview of the interrelationships between RA, DAME, EDAM and the EIM. While the CAISO and EDAM Entities do not adhere to a common RA standard, the EDAM RSE should provide a common standard that ensures each EDAM BA and the CAISO BA has sufficient resources to meet its obligations on a DA basis and is not leaning on the EDAM.

Bonneville maintains that CAISO’s continued use of a separate IFM and RUC process where reliability capacity is procured in a subsequent market run to the IFM that procures energy, ancillary services, and imbalance reserves is sub-optimal. A more efficient and effective solution for the CAISO BA and for EDAM would be to co-optimize all products into a single market run through the integration of the IFM and RUC.

Bonneville is also supportive of the option for a “light” version of the EIM RSE for EDAM Entities that have already passed the EDAM RSE.

Specifically regarding the IR product, hydro resources that are not able to provide RA capacity may have additional firm surplus day-ahead capacity to provide as imbalance reserves to the CAISO. Bonneville also views the IR product and its connection to the EDAM RSE as foundational to EDAM. As CAISO noted, IR establishes a consistent treatment of uncertainty in each BAA’s EDAM RSE requirements and ensures IR resources are made available to the real-time market through the must-offer obligation. It also enables trading of capacity to meet the uncertainty component of the EDAM RSE.  

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

Bonneville appreciates the additional analysis provided by the CAISO on DAME. We find that CAISO’s analysis strongly supports the need for the IR product and was helpful in fostering robust stakeholder dialogue. We also appreciate CAISO’s analysis of the quantile regression methodology and how it compared to actual imbalances that materialized. We encourage the CAISO to continue forward momentum on this effort given it's importance for the CAISO BAA and for EDAM.

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

California Community Choice Association (CalCCA) appreciates the opportunity to comment on the Day-Ahead Market Enhancements (DAME) workshop. CalCCA supports the California Independent System Operator’s (CAISO’s) objective of reducing out of market actions by more optimally scheduling resources to cover increased systematic uncertainty. However, CalCCA remains concerned the costs due to impacts on the Resource Adequacy (RA) program outweigh the benefits of implementing the proposal.

CalCCA offers the following comments on the workshop presentations:

• CalCCA generally supports reducing the need to rely on out-of-market actions but remains concerned the costs of the DAME proposal will outweigh the benefits;
• The CAISO’s proposal should ensure resources providing imbalance reserves are available to serve CAISO load and the CAISO should further detail how the DAME proposal relates to high priority (PT) export rules in the next iteration of the proposal; and,
• CalCCA recommends the CAISO maintain the real-time must offer obligation for RA resources and require RA resources bid zero dollars and not receive the marginal price for imbalance reserves until the impacts of removing the zero-dollar bidding requirement can be evaluated within the Extended Day-Ahead Market (EDAM) initiative.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

The CAISO currently accounts for net load uncertainty and real-time ramping needs through adjustments to the load forecast in the residual unit commitment (RUC) process. Out-of-market manual operator adjustments are used to cover net load uncertainty, replacement of dispatched reserves, or “one-off” contingencies like wildfire or gas system risk. The imbalance reserve product is intended to address net-load uncertainty, while manual adjustments will still be needed for “one-off” contingencies.[1]

CalCCA generally supports reducing the need to rely on out-of-market actions but remains concerned the costs of the DAME proposal will outweigh the benefits. When comparing approaches for accounting for uncertainty, cost must be considered. The costs of the current DAME proposal are heavily dependent on the bidding rules for RA resources because RA contracts already pay for the capacity that would largely be procured through imbalance reserves. These costs could be minimized by maintaining the zero-dollar bidding requirement for RA resources as discussed in #3 and #4 below. 

[1]             CAISO Day-Ahead Market Enhancements Workshop Presentation, Jan. 24, 2022 (CAISO Presentation) at 9.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

The CAISO presentation indicates imbalance reserves will better ensure export schedules are feasible by reducing RUC adjustments.[1] The CAISO’s proposal should also ensure resources providing imbalance reserves are available to serve CAISO load. In the next iteration of the proposal, the CAISO should further detail how the DAME proposal relates to PT export rules. Resources with imbalance reserve awards should not be used to support PT exports in the same way RA resources cannot be used to support high-priority exports. Additionally, the CAISO should further clarify a question asked by California Public Utilities Commission Energy Division staff in the working group regarding what would happen when a non-EDAM participating balancing authority import is used to support an export, and the import is not available in real-time. Under this scenario, what would happen to flows of both high and low priority exports and how would this scenario impact entities’ resource sufficiency evaluations?

The CAISO presentation also indicates biddable imbalance reserve products would allow the market to optimize costs, improve unit commitment decisions, and more appropriately compensate flexible resources.[2] The CAISO’s presentation does not describe, however, the downsides of allowing a biddable product under a bi-lateral RA market. Load-serving entities (LSEs) in California have entered into long-term RA contracts that procure capacity obligated to be available to the CAISO market to provide energy. LSEs will likely find it difficult to renegotiate RA contracts to account for resources being paid for capacity through the imbalance reserve product given current RA market conditions. This would effectively result in customers paying for the same capacity twice; once in RA contracts and once in the CAISO market.

Because RA resources are already paid to be available to provide energy through real-time, the CAISO should not release that capacity already paid for after the day-ahead market. If RA resources are relieved of their must offer obligation after the day-ahead, the CAISO market would not receive the full benefit of having all resources and their attributes that have already been paid for available to meet grid needs. Given the costs of making resources available through real-time are already covered in RA contracts, the CAISO should not limit its access to resources already procured to maintain grid reliability, and instead, should maintain the real-time must offer obligation for RA resources within this initiative.

[1]             CAISO Presentation at 16.

[2]             CAISO Presentation at 17.

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

The transition period proposed in the last iteration of the proposal would preserve the zero-dollar bidding requirement until the first year of EDAM onboarding. CalCCA recognizes that under EDAM, a zero-dollar bidding requirement for RA resources could create the negative outcome of committing California resources for imbalance reserves first for all EDAM participating BAAs’ imbalance reserve requirements because California resources are the only ones subject to the zero-dollar requirement. Given the proposal’s impacts on the California RA program, CalCCA recommends the CAISO maintain the real-time must offer obligation for RA resources and require RA resources bid zero dollars and not receive the marginal price for imbalance reserves and reliability capacity. The impacts of removing the zero-dollar bidding requirement can then be evaluated within the EDAM initiative. This consideration should include potential alternatives to modifying the zero-dollar bid requirement given the double payment concerns and tight RA market conditions that exist today.

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

CalCCA has no additional comments at this time.

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

PG&E appreciates the CAISO’s efforts to facilitate stakeholders’ understanding of the day-ahead market enhancements and extensive analyses to respond to stakeholders’ requests.

PG&E requests the CAISO continues clarifying the need for DAME, specifically the Imbalance Reserve Products (IRP) and associated rules, within California. PG&E believes that the existing RA program has the ability to cover the uncertainty objectives of this initiative. If DAME is essential to E-DAM’s implementation, the CAISO should discuss the benefits and risks of IRP in the settings of an extended market. At a minimum, PG&E believes that IRP should be contingent upon E-DAM’s implementation.  

Finally, PG&E believes coordinated planning efforts and technical development is necessary to achieve robust, transparent, productive solutions to interrelated issues of day-ahead market enhancements, the extended day-ahead market, California resource adequacy, and EIM. PG&E would like to request in future DAME proposals clarification of assumptions for related stakeholder processes, e.g., E-DAM, RA enhancements, and Transmission Service and Market Scheduling Priorities. In particular, PG&E urges the CAISO to consider adopting more coherent approaches to interrelated technical issues in DAME and E-DAM. PG&E is concerned with the feasibility of the current implementation timelines and requests the CAISO consider two alternatives we propose.

PG&E looks forward to continuing to work with the CAISO to improve future proposals in this initiative.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

PG&E requests the CAISO continue clarifying the need for DAME[1], specifically the Imbalance Reserve Products (IRP) and associated rules, within California.

If DAME is essential to E-DAM’s implementation, the CAISO should discuss the benefits and risks of IRP in the settings of an extended market. At a minimum, PG&E believes that IRP should be contingent upon E-DAM’s implementation.  

The primary objective of the day-ahead market is to ensure system reliability and stable pricing for the CAISO BA, whereas E-DAM is driven by efficient market transactions and optimal resource distribution across a broader western footprint. DAME aims at addressing the loopholes in the E-DAM and levelizing the resource portfolios of different BAs by bridging the distinct objectives of E-DAM and DAM. PG&E understands that this is naturally challenging and appreciates the CAISO’s continuous efforts of improving the proposal and working with stakeholders.

PG&E is not convinced by the data and studies shown in the Jan 24^th Working Group or the previous proposals that DAME, specifically the IRP product, is needed for California alone. To demonstrate that the enhancements are necessary, PG&E requests that the CAISO provide the following:

• Evidence of IRP’s economic benefits for California ratepayers. PG&E finds it difficult to conclude from the data that replacing RUC adjustment with IRP could save market operating cost. Instead, the data (detailed in comments to Item 5) suggest that the RUC adjustment (by the CAISO operators) is in fact making efficient use of RA capacity to ensure that California is meeting its upper confidence level load forecasts at minimal unnecessary cost.  PG&E believes the current depth of bids in the real-time markets, as provided by RA RT MOO, is necessary to produce an efficient solution (i.e., optimal scheduling and fair pricing) by creating competitiveness thus preventing structural market power.

On the contrary, PG&E is seriously concerned about the financial risks that IRP will impose on California. As stated in PG&E’s past comments, IRP could exacerbate scarcity under tight supply conditions and inflate energy prices. In addition, the proposed IRP procurement method with deployment scenarios could increase Marginal Congestion Cost (MCC) by creating phantom congestion. According to DAME’s second revised proposal, RA resources are required to bid for IRP in the IFM at $0/MW. PG&E worries that when implemented in E-DAM, this proposal would allow other BAs’ to lean on California’s flexible capacity (procured and paid for exclusively by California LSEs and their customers) at zero cost.  

• Evidence of IRP’s additional reliability benefits within California. PG&E believes the existing RA program and the associated RT MOO could sufficiently address the need for covering the uncertainties and ramping needs in CAISO’s real-time markets. In the Flexible Capacity Needs and Availability Assessment Methodology (FCNAAM) initiative,[2] LSEs’ procurement targets are set at a minimum of 90% of the expected flexibility needs for each year-ahead and month-ahead showing, based on 1-minute load forecasting for the target years. FCNAAM also clearly states that all resources operating in CAISO under a Flexible RA contract will be required to submit economic bids for their full RA capacity (not awarded AS) in the Real-Time market.

PG&E requests the CAISO clarify the motivation and need for removing RA RT MOO. PG&E is seriously concerned that this proposal will undermine California’s system reliability. Based on past settlement data, PG&E believes that the RT MOO is necessary to cover a wide range of uncertainties and consistently meet the CAISO BAA RSE capacity and flexibility requirements in the EIM, and in the future, E-DAM.  

Finally, PG&E understands that the DAME may be necessary for E-DAM’s implementation. E-DAM will operate an extended geographical area and require measures, including additional reserves, to offset risks associated with the increasing uncertainties. However, BAs other than the CAISO may not have specific reliability reserves in place that are comparable to California’s RA construct. In the E-DAM context, IRP can serve as a standardized product to meet overall system flexibility requirements, while ensuring equal market treatment among different BAs.

For the reasons stated above, PG&E urges the CAISO to discuss the benefits and risks of the proposed enhancements in the settings of E-DAM and address the aforementioned problems for California. At a minimum, PG&E believes the IRP and associated market rules should be made contingent upon E-DAM’s implementation.   

[1] PG&E’s comments on DAME are specifically referring to IRP and its associated market design enhancements.

[2] Started on December 15th, 2021, for target year 2023, and advisory years 2024 and 2025

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

See comments on Item 2 (need for DAME) and Item 5 (the day-ahead market enhancements analysis).

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

PG&E fully agrees with the CAISO that the proposed day-ahead market enhancements are interrelated with California’s RA construct existing and under development as well as the future extended day-ahead market. PG&E requests the CAISO to discuss those areas with more detail in future DAME proposals and stakeholder events to provide market participants a full-scope understanding of the proposed enhancements’ impact. In particular, PG&E requests clarification on the assumptions of related ongoing stakeholder processes, including E-DAM, RA enhancements, and Transmission Service and Market Scheduling Priorities, as this is critical to developing feasible DAME solutions in the long term. For example,

• How will RUC be structured in E-DAM? Will the CAISO run RUC for other BAs or just for California? If RUC will be run for all the BAs in E-DAM, will it be run as separate markets or a single extended market?
• How will RA resources (or similar capacity in other BAs) bid in E-DAM for energy and for IRP? Do they have a MOO in day-ahead and in real-time? What are the prices they are required to bid at? The answers should be justified with BA’s existing contractual cost and compliant with their state or local regulatory authority requirements.
• How will CAISO ensure transmission availability in real-time for awarded interchanges in day-ahead? What are the scheduling priorities of energy, operational reserves and IRP, if transmission becomes unavailable in real time due to derate or outage? And what is the settlement process if those products are not deliverable?

PG&E believes DAME and related policy initiatives (I.e., EDAM, RA Enhancements, Transmission Services and Market Scheduling Priorities) should be managed with coordinated efforts to ensure a better alignment of their implementation timeline and the consistency of intertwined technical issues.   

Most importantly, PG&E urges that the CAISO to adopt more coherent approaches to developing the technical solutions interrelated in E-DAM and DAME, for reasons that are twofold,

• Risks and benefits. PG&E believes that DAME’s benefits and risks cannot be evaluated in isolation from the E-DAM context.
  • As mentioned in Comment 2, PG&E is seriously concerned that the proposed enhancements, when implemented in E-DAM, could expose California customers to significant financial and reliability risks. Before the next proposal, PG&E believes that it is important for the CAISO to address stakeholders’ questions in the Jan 24^th working group, including
    1. How can the CAISO secure RA capacity, which is paid for by California customers? If RA resources are bid at $0, they will be exhausted for IRP procurement in IFM, which has two highly undesirable consequences: (1) allowing for free leaning on California’s resources, and (2) leaving zero capacity available for California’s RUC.
    2. How can the CAISO ensure sufficient capacity for California in real-time, if RA’s RT MOO is removed? Moreover, will export IRP be counted to cover real-time loads? If so, what if California fails RSE in the real-time market or transmission capacity of exports becomes unavailable due to outage or derate?   

PG&E understands that DAME could be an essential preparatory step for E-DAM. For example, IRP can serve as a standardized product to meet overall system flexibility requirements while ensuring equal market treatment among different BAs. To evaluate those potential benefits, it is necessary for the CAISO to clearly define how IRP will be implemented in E-DAM. Within DAME’s implementation timeline, does the CAISO the expect to be able to confirm how E-DAM would be formed initially (e.g., who will be the first participants of E-DAM)? PG&E believes such context could allow for a more effective design of DAME to address its needs.   

• Feasible implementation timeline. PG&E is concerned with the potential infeasibility and cost associated with the current implementation timeline of DAME and E-DAM. According to the CAISO’s Policy Initiative Roadmap 2022, DAME and E-DAM will be developed in parallel, seeking implementation in Fall 2023. PG&E worries that the additional efforts of frequent revisions will be inevitable to address DAME’s challenges (and introduce further design enhancements) once implemented in E-DAM. This could prolong both stakeholder processes and result in significant market costs, which eventually will be passed on to customers.

PG&E proposes two alternative implementation pathways for the CAISO to consider:

1. The CAISO should allow for an observation period in the current DA market to assess the IRP market impact, before finalizing E-DAM’s design and implementation.
2. The CAISO should integrate into both initiatives’ development of interrelated technical issues for DAME and E-DAM including consistent planning and technical matters shared across both initiatives.  

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

PG&E highly appreciates the CAISO’s conducting analysis and providing data. However, PG&E finds it difficult to make connections between the data provided and the needs for DAME, or IRP’s benefits, as claimed by the CAISO, and requests in the attached document. 

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

Please see Powerex’s comments available at: CAISO January 24, 2022 DAME Workshop Comments

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

Please see Powerex’s comments available at: CAISO January 24, 2022 DAME Workshop Comments

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

Please see Powerex’s comments available at: CAISO January 24, 2022 DAME Workshop Comments

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

Please see Powerex’s comments available at: CAISO January 24, 2022 DAME Workshop Comments

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

Please see Powerex’s comments available at: CAISO January 24, 2022 DAME Workshop Comments

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

The Public Generating Pool (PGP ) appreciates the opportunity to comment on the Day-Ahead Market Enhancements (DAME) workshop held on January 24, 2022.  PGP members are very interested in these enhancements that will not only improve market efficiency and decrease the need for CAISO to utilize out-of-market actions, but will also provide a mechanism for flexible resources to be compensated for providing capacity to the market.

The goal of this workshop was for CAISO to address requests from California stakeholders to provide further evidence that the new products proposed in this initiative are necessary.  CAISO provided a description of the need as well as supporting analysis that shows the size of imbalances between day-ahead and real-time from 2017-2021.  PGP believes that both the description of the need and the supporting analysis clearly demonstrates why the products proposed in this initiative are necessary to reduce out-of-market actions.

In addition, at the workshop call, it was clear that CA stakeholders are concerned about the interaction of RA capacity that was already procured and capacity that would be awarded from these new products.  PGP believes that double paying for capacity is an undesirable market outcome and suggests that CAISO spend more time explaining how the interaction of procured RA capacity and these new products will function, whether or not there is a risk that this interaction could result in double payment of capacity, and, if there is a risk of double payment, what steps could be taken to mitigate this risk.

Finally, PGP agrees that this initiative is foundational to the development of an Extended Day-Ahead Market (EDAM).
 

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

The Public Power Council[1] appreciates the opportunity to provide comments on the January 24 Day-Ahead Market Enhancements stakeholder workshop.  PPC remains very supportive of CAISO’s efforts to enhance the day-ahead market.  PPC strongly supports both the creation of new imbalance reserve products and modifications to the Residual Unit Commitment (RUC) to allow procurement of downward capacity.  PPC believes the Day-Ahead Market Enhancements will create benefits for both load and suppliers through increased market efficiency and by providing a market-based mechanism and price for flexible resources to provide flexible capacity.

CAISO staff has clearly articulated the need for, and the benefits provided by, the Day-Ahead Market Enhancements for years now.  The challenges CAISO faces managing the increased number of variable resources with the existing day-ahead market design and products have been well documented throughout this stakeholder process and other CAISO reports.  Analysis performed by CAISO over the last several years has demonstrated a clear need for the modifications.  Operators have been routinely relying on out-of-market actions such as load conformance and exceptional dispatch to set up the CAISO BAA with sufficient flexible capacity to reliably meet real-time operating conditions. The regular reliance on out-of-market actions is inefficient and undermines the economic signals provided by market prices.  PPC expects the Day-Ahead Market Enhancements will help address these systematic problems.  PPC also believes creating an imbalance reserve product will help provide important information on the cost of flexible capacity and will encourage more participation from flexible resources.

While PPC maintains the original market formulation that would have combined IFM and RUC into a single co-optimized market run was superior foundation for EDAM than the current proposal, PPC still believes creation of the Imbalance Reserve product is critical to the success of EDAM.  This product will ensure that CAISO is procuring the flexibility and capacity needed to account for uncertainty without utilizing out of market actions.  Additionally, the Imbalance Reserves requirement can be used as common metric of uncertainty needs for each BAA in EDAM.  This metric will be critical input for a well-functioning day-ahead resource sufficiency test. It also will allow CAISO to optimize procurement of reserves for uncertainty across a wider footprint and enables counterparties to bilaterally trade capacity to meet resource sufficiency needs. 

[1] PPC members are statutory preference customers of the Bonneville Power Administration (BPA) and represent over 90 percent of BPA’s Tier 1 sales.  Overall, Northwest public power is the largest purchaser of BPA’s power products and services and is among the largest purchasers of BPA’s transmission products and services, funding nearly 70 percent of the agency’s total power and transmission costs.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

The Sacramento Municipal Utility District (SMUD) provides these comments on the CAISO’s Day-Ahead Market Enhancements (DAME) initiative following the January 24, 2022, stakeholder workshop. SMUD is an active participant in the CAISO’s day-ahead and real-time markets over the interties.  In addition, SMUD currently participates in the Energy Imbalance Market (EIM) through the Balancing Authority of Northern California and is participating in the Extended Day-Ahead Market (EDAM) initiative. Accordingly, SMUD has a direct interest in this initiative from both a market and reliability perspective.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

SMUD supports the overall DAME concept, as improvements are needed to both market efficiency and reliability to address the ever-increasing variability of supply.  These changes are therefore important independent of whether EDAM goes forward. Accurate procurement of Imbalance Reserves to balance the system will likely reduce reliance on the Residual Unit Commitment (RUC) process and out-of-market actions, which are limited tools and can cause inefficient market results.  In addition, the CAISO’s analysis clearly shows that enhancements will provide reliability benefits that are critical for the CAISO’s dynamic grid as renewables, including solar and wind, continue to grow.

At the workshop on January 24, entities commented that Imbalance Reserves should not be used to support Non-Resource Adequacy (RA) Exports over internal CAISO load.  While SMUD agrees, we would like to explain why non-RA capacity should NOT be considered a part of the Imbalance Reserves market under any circumstance.  Imbalance Reserves would be procured to ensure the CAISO can serve its native load customers.  Non-RA capacity is supply that is not under contract with internal CAISO load serving entities (LSE) to meet their obligations – more specifically, RA.  In other words, it is in excess of contracted RA used to serve CAISO load, and therefore has no contractual obligation to an internal CAISO LSE. SMUD, like other utilities external to the CAISO, have their own RA obligations they abide by.  Like internal CAISO LSEs, they have prudently planned by building or entering into, in most cases, multi-year, and multi-million dollar, agreements with resources both inside and outside of the CAISO BAA. For resources in the CAISO, SMUD secures capacity and the accompanying export priority to serve as its own RA (referred to as non-RA in the CAISO), and these non-RA resources are therefore critical to serving SMUD’s and other neighboring utilities (should they too contract for non-RA supply in the CAISO) native load. Accordingly, because non-RA resource capacity is not dedicated to the CAISO, it should be completely separate from the Imbalance Reserve market and its obligations.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

SMUD sees DAME as a necessary step in the development of EDAM. EDAM’s resource sufficiency evaluation (RSE) will ensure that EDAM BAAs are not leaning on the CAISO, and could include similar imbalance reserve obligations for EDAM participants.  While DAME will need to stand on its own if EDAM ultimately does not proceed, it also needs to provide a workable structure for EDAM participants if EDAM launches after DAME implementation.

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

SDG&E appreciates the opportunity to comment on CAISO’s latest presentation on the Day-Ahead Market Enhancements (DAME) initiative. SDG&E further appreciates CAISO heeding stakeholders’ concerns and taking the time to provide the analysis that we felt was lacking.

Flexible Resource Adequacy

Based on the data presented at this meeting, it seems one of the primary issues CAISO is trying to address is a ramping infeasibility problem.[1] If this is the case, then what is missing from Flexible Resource Adequacy (RA)? SDG&E’s understanding is that this is the intended purpose of the Flex RA requirement, and those units procured for Flex RA have a Must Offer Obligation (MOO) to bid into the Day-Ahead Market (DAM).  Are there alternative adjustments that can be limited to the Flex RA requirement to address CAISO’s concerns? Implementing Imbalance Reserves (IR), Reliability Capacity Up (RCU), and Reliability Capacity Down (RCD) would be a big change to the structure of the DAM. It would further require changes to the MOO bidding rules currently in all RA contracts. If substantially the same result could be achieved with modest reforms to existing products, this seems the more sensible course of action.

Real-Time Must Offer Obligation

CAISO went a long way to alleviating SDG&E’s concerns over the proposal to remove the Real-Time (RT) MOO. However, CAISO only showed a few sample days in 2020 where the grid was under high stress. But notably none of these included the August 14^th and 15^th blackouts, nor the September 6^th – 8^th heat wave. SDG&E would be interested in seeing this data and confirming if it would show IR handling the DA/RT imbalance as well. If the data would show poor handling of the imbalance, what assurance is there that CAISO would have known at the DA timeframe to take additional action over and above what IR had committed?

Firming Up Wheels

The CPUC raised a concern over how this would work under the Extended Day-Ahead Market (EDAM). Specifically, there could be a problem where an EDAM entity attempts to wheel power from a non-EDAM entity, through a neighboring EDAM entity, and into its own service territory. If the wheel clears IR, it would be a firm schedule. But if it is supported by an import that does not show up in RT, the export leg of the wheel will still be honored. Is IR “firming up” an export for free? If so, and this happens on a day where the grid is short, this presents a potential reliability concern.

[1] DAME Meeting January 24, 2022 Presentation 1 by James Friedrich, Slides 8, 11, 16, 17, 18 all mention ramping needs. Furthermore, the presenter noted in response to a question that the problem may be that the definition for Flex RA is outdated and needs revision.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

SDG&E now better understands why CAISO believes it needs DAME. However, for the reasons stated above, SDG&E still questions whether DAME is truly necessary. Our understanding is that most of the concern could be addressed with more focused changes to existing products, i.e., Flex RA.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

CAISO went a long way towards making its case for DAME. SDG&E appreciates CAISO listening to stakeholders and providing the analysis that stakeholders requested. The data presented was largely effective at communicating the issue and addressed many of SDG&E’s concerns.

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

The Six Cities appreciate the CAISO’s re-engagement on the Day-Ahead Market Enhancements (“DAME”) initiative and the analysis that the CAISO team has completed in response to stakeholder requests for data substantiating the need for the CAISO’s proposals, including implementation of the imbalance reserve and reliability capacity products.  The Six Cities continue to evaluate the CAISO’s analysis, and they may provide supplemental comments on the information the CAISO has presented.  At this time, the Six Cities have not changed their previously-stated positions on the DAME proposals, but are committed to considering further the information the CAISO has published and to working with the CAISO and stakeholders to evaluate the next iteration of the CAISO’s proposal for this initiative.

Additionally, the Six Cities urge the CAISO to consider and respond to certain concerns articulated during the January 24^th workshop, as outlined below, and to ensure that the DAME and Resource Adequacy Enhancements (“RAE”) initiatives are appropriately coordinated and that there is adequate time for stakeholders to consider the proposals in both initiatives. 

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

As noted, the Six Cities continue to evaluate the information the CAISO has provided to substantiate the need for the products it has previously proposed.  The Six Cities understand that the data presented by the CAISO demonstrates that the imbalance reserve product may supplant the need for some portion of the uncertainty adjustments that are occurring in the Residual Unit Commitment (“RUC”) process, but may not address the need for RUC adjustments in their entirety.  At this time, the Six Cities are unpersuaded that implementation of the new DAME products to remove the need for approximately 40-60% of RUC adjustments is preferable to making incremental and more limited revisions to improve the RUC process and/or enhance flexible capacity requirements.  A continued stakeholder conversation about the need for these products is necessary. 

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

The Six Cities concur with the observations by Southern California Edison Company (“SCE”) during the workshop that the CAISO’s proposals are not sufficient to ensure that capacity being purchased by CAISO load serving entities (“LSEs”) will remain available for use by and for the benefit of CAISO load during tight or constrained system conditions.  In the event that the CAISO proposes to proceed with implementation of the imbalance reserve product, then it is critical to provide assurances to CAISO LSEs that the incremental capacity costs they are incurring for imbalance reserve procurement (on top of the resource adequacy capacity for which they are already paying) remains primarily available to meet the needs of CAISO load, particularly in light of the CAISO’s statement during the workshop that the imbalance reserve product will be required only for the CAISO balancing authority area (“BAA”) and will not be a requirement for EIM BAAs.  To the extent that the CAISO believes these concerns are unfounded, then the Six Cities urge the CAISO to include a discussion of its reasoning in the next version of its Straw Proposal. 

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

The Six Cities agree with the observations by PG&E’s representative during the workshop regarding the interrelationship between the DAME and EDAM initiatives and with the comment that the risks and benefits of the DAME proposals cannot be discussed in isolation from EDAM.  The Six Cities are concerned that the DAME proposals (and the timing for consideration of these proposals) are being driven by the CAISO’s objective of ensuring that the EDAM process advances.  However, the Six Cities reiterate that any changes to the day-ahead market should be adopted or rejected based on whether these changes benefit that market and the CAISO’s BAA load on a standalone basis, rather than whether such changes will “lay the foundation” for EDAM or increase the likelihood of attracting participants in the EDAM.  Given the CAISO’s focus on EDAM topics, the Six Cities are concerned that the DAME initiative is not receiving adequate time or attention, and that stakeholders will be compelled to address the complex issues presented by DAME on a compressed schedule in order to meet timing needs driven by EDAM.

The Six Cities also observe that the CAISO has not addressed their significant concerns regarding the lack of synchronization between the DAME and Resource Adequacy Enhancements (“RAE”) initiatives.  The Six Cities highlighted this concern in their October 27, 2021 comments on the Phase 2 RAE Straw Proposal.  (See response to Question #2.)  The RAE and DAME initiatives contain overlapping elements, and the CAISO should ensure that the schedules for these initiatives are aligned. 

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

The presentations from the January 24th workshop and the related Day-Ahead Market Enhancements Analysis Report do not support a conclusion that implementation of the Imbalance Reserves Product is likely to produce benefits that outweigh the costs of the product.  Indeed, the analyses make no attempt to compare the costs of procuring imbalance reserves under the proposed DAME framework versus the costs of providing necessary capacity to address uncertainty through RUC adjustments, even on an order of magnitude basis.  The comparisons discussed in Section 6 of the Analysis Report at page 20 suggest that imbalance reserve requirements may be lower than RUC adjustments on some overall basis, but that reveals nothing about the costs for the imbalance reserves.  As noted at page 24 of the Analysis Report, “the overall RUC capacity was met largely by RA capacity,” for which LSEs pay separately under RA contracts and which has $0 incremental capacity cost in RUC under the current framework.  Moreover, the Analysis Report indicates at page 20 that on high load days, Imbalance Reserve Requirements would be similar to requirements set through RUC adjustments.  On those types of days, the costs for imbalance reserves could be substantially higher than RUC costs under the current framework, particularly if, as the Analysis Report suggests at page 24, the capacity relied upon to meet the higher obligation was RA capacity, already paid for once under RA contracts and then paid a second time when procured for imbalance reserves.

As discussed elsewhere, the Six Cities continue to evaluate the CAISO’s analysis, which will inform their positions on the CAISO’s proposals in this initiative.  Given the compressed timeframe to provide comments on the January 24^th workshop and the Analysis Report, the Six Cities may provide supplemental comments at a later date.

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to submit the following comments on the DAME initiative workshop. SRP encourages continued discussions of DAME, including on the relationship between DAME and the Extended Day Ahead Market (EDAM) initiative.

SRP understands that the CAISO DAME proposal remains unchanged from the second revised straw proposal last discussed with stakeholders in July 2021. SRP encourages the CAISO to review and directly address the comments and concerns submitted by EIM entities in August 2021. Specifically, SRP requests that the CAISO address the following concerns regarding the DAME second revised straw proposal:

• The second revised straw proposal identifies an additional Market Power Mitigation (MPM) run for Residual Unit Commitment (RUC).  SRP is concerned about adding another component to the market solution process of running the integrated forward market (IFM) and RUC sequentially, especially if the computation time is infeasible given the current timeline of running and publishing the day-ahead market results.  SRP requests the CAISO provide written clarification on the need for a separate MPM pass in each instance of market offers and include it as a topic of discussion at an upcoming stakeholder meeting. 
• SRP requests clarification on how divergence between real-time and day-ahead markets will be calculated and how this is beneficial to market participants.
• CAISO should provide full transparency on any load forecast differences between IFM and RUC prior to IFM run.
• Any limitations or adjustments that may occur between forecasts for the IFM and RUC need to be transparent and made public prior to the run of IFM.
• Variable Energy Resource (VER) forecasting may not provide sufficient accuracy in the day-ahead market to account for Imbalance Reserves Up (IRU) and Reliability Capacity Up (RCU) awards.  SRP requests that the CAISO clearly document any changes being made to the VER forecast to increase its accuracy.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

SRP recognizes the interdependency between DAME and EDAM and that the CAISO may need to incorporate enhancements into the existing day-ahead market to support EDAM. To further ensure the DAME and EDAM initiatives are aligned, SRP recommends the CAISO facilitate regular meetings to discuss and identify the relationships between these two initiatives.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

While SRP appreciates the CAISO hosting the workshop to discuss the incorporation of the imbalance reserve product into the DAME, SRP remains concerned that the new product would increase complexity. SRP recommends that the CAISO develop a transparent calculation for how entities would comply with imbalance reserve requirements well in advance of the IFM submittal deadlines to ensure that participants can easily determine their requirements in advance.  SRP supports a simplified method that captures capacity available for day ahead optimization purposes but recognizes that this reserve may not be applicable to the real-time market due to resource commitment or intertemporal constraints. SRP requests clarification on any potential impact the incorporation of the imbalance reserve product will have on the EIM Resource Sufficiency Evaluation (RSE) or the ability to resolve infeasibilities in the day-ahead or real-time markets. SRP requests that these questions be answered in the next iteration of the proposal and discussed at an upcoming stakeholder meeting.

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

SRP supports continued discussion of the interrelationship between California Resource Adequacy, DAME, EDAM, and EIM. SRP is interested in participating specifically in discussions focused on any impacts the DAME will have on EDAM and EIM. Further, SRP encourages the CAISO to clarify whether and what new market products are intended to be voluntary or a requirement for EIM participants or EDAM participants in the future.  SRP encourages the CAISO to create simple and transparent formulas for calculating reserve requirements and to clarify how these reserves would be co-optimized with energy for participants of day-ahead market, EDAM, or EIM. SRP supports co-optimization with energy to the extent that it leads to more efficient markets.

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

SRP recognizes that the implementation of imbalance reserves may reduce operator intervention into market operations in real-time for the CAISO to address materialized imbalance and uncertainty.  SRP believes this is an appropriate objective to pursue for markets with multiple settlement horizons (day ahead into the real-time) to ensure there is no incentive to perform inconsistent with market and reliability objectives. However, it is unclear how the incorporation of the imbalance reserve product will impact EIM participants. SRP requests clarification on any impact the incorporation of the imbalance reserve product will have on EIM participants.

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

Voltus appreciated the DAME workshop and found that CAISO succinctly and persuasively communicated its justification for developing imbalance reserve products. The presentation and report made a compelling case regarding the need for an imbalance reserve product to minimize the need for RUC adjustments.

Voltus appreciates the opportunity to comment on the Day-Ahead Market Enhancements workshop. Voltus is an aggregator of distributed energy resources that operates in all nine North American wholesale markets. Since Voltus’s business is focused on wholesale market participation, it develops market-leading technology for wholesale market products and has a depth of wholesale market expertise.

Voltus has developed the technical capabilities to enroll load in CAISO operating reserves, and, to the best of its knowledge, is currently the only aggregator providing demand response resources in operating reserves.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

Voltus supports CAISO’s inquiry into developing imbalance reserve products and does not disagree with any details discussed so far. Voltus proposes two enhancements.

First, the imbalance reserves products should be designed to maximize the potential for load resources and other dispatchable DERs to participate. The Analysis report states, “the distributions consistently have the higher probabilities (wider portion of the distribution) around 0MW, which indicates that a high number of imbalances are relative smaller.”^[1] Load could therefore be an important market tool to resolve the high number of relatively small imbalances. To this end, Voltus strongly encourages allowing zonal aggregation.

Second, the DAME stakeholder initiative should be broadened to explore collapsing spinning and non-spinning reserves into one contingency reserves product. CAISO currently requires that spinning reserves resources be frequency responsive. This requirement is unique among the FERC-jurisdictional ISOs. This severely limits the number of new, clean, dispatchable resources that can provide spinning reserves. Since CAISO is exploring adding two new imbalance reserve products, it would be logical to discuss, for the sake of market simplicity, collapsing spin and non-spin into one contingency reserve product that does not have a frequency response requirement.

[1] Alderete and Zhao, Day-Ahead Market Enhancements Analysis, at 6, CAISO (Jan. 24, 2022), http://www.caiso.com/InitiativeDocuments/Day-AheadMarketEnhancementsAnalysisReport-Jan24-2022.pdf.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

Voltus supports market-based pricing and operations that minimize the need for operator involvement. CAISO demonstrated that the magnitude of RUC adjustments has increased over the last five years,^[1] and that neither energy optimization nor the previously developed Flexible RA product are meeting the system’s needs. Voltus therefore supports the development of imbalance reserves products, subject to its recommendations that (1) the rules enable broad participation of load and other dispatchable DERs, including by allowing for zonal aggregations; and (2) spinning reserves and non-spinning reserves be consolidated. The imbalance reserve products will improve the Day Ahead Market, before that design is applied to the Extended Day Ahead Market (EDAM).

[1] Id. at 11.

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

The EDAM initiative is expected to ultimately include ancillary services.[1] The DAME stakeholder initiative is therefore critical to developing market designs that maximize reliance on market forces rather than the RUC process. Doing so will promote Day Ahead Market structures that can be extended to the EDAM.

[1] See CAISO, Extended Day Ahead Market Initiative—Foundational Workshop, at 14 (Nov. 12, 2021) http://www.caiso.com/InitiativeDocuments/Presentation-ExtendedDay-AheadMarketInitiativeFoundationalWorkshop-Nov12-2021.pdf.

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

Voltus found the Day-Ahead Market Enhancement Analysis report to be thorough and detailed, and would only request that CAISO model the price formation impacts, as PJM did when modeling its reserve market reforms.^[1]

[1] See PJM, Price Formation, at 19 (Dec. 14, 2018), https://www.pjm.com/-/media/committees-groups/task-forces/epfstf/20181214/20181214-item-04-price-formation-paper.ashx.

1. Please provide a summary of your organization’s comments on the Day-Ahead Market Enhancements (DAME) workshop:

WPTF supports the CAISO’s DAME proposal and appreciates both the supporting analysis and high-level description of the proposal prior to moving forward with a technical proposal. The benefits of the proposal ultimately hinge on the CAISO forecast of CAISO demand, operator bias, and the ultimate RUC forecast. While WPTF believes it will be more efficient to move operator bias into a day-ahead market product, in many ways it is an empirical question that can only be answered with data and assumptions made concerning bidding behavior. To that end, we ask that prior to the next draft (expected in April) the CAISO make a commitment to publish on its website the following forecasts:

1. CAISO forecast of CAISO demand
2. The “rough” high confidence forecast that guides operator bias as described in the presentation
3. The actual requirement used in RUC

Without these forecasts, despite the CAISO’s excellent analysis, there will continue to be lingering questions on the benefits of this proposal. The CAISO clearly has this data as it was used to develop the summary statistics and WPTF believes transparency is required in advance of this proposal moving forward.

2. Please provide your organization’s comments on the need for day-ahead market enhancements:

 The CAISO demonstrated that there is a significant amount of operator bias occurring in RUC in order to procure sufficient capacity needed for ramping capability and uncertainty. WPTF believes the imbalance product is needed to increase commitment efficiency and improve price formation in the day-ahead market. As noted during the January 24, 2022 presentation, the CAISO will continue to allow operators to adjust RUC to account for operational uncertainty, which will not be covered by the imbalance product. We believe that it will be important to monitor and make transparent operator bias after the implementation of the imbalance product. If operators do not reduce their bias due to distrust or lack of information about the imbalance product, the full benefits of the imbalance product will not be achieved.

3. Please provide your organization’s comments on the potential benefits of implementing imbalance reserves:

The CAISO describes the benefits as:

• Improving the optimal use of ramping and making better commitment decisions
• Lowering RUC adjustments leading to fewer infeasible (i.e. cut) exports
• Scheduling resources that are better suited to meet real-time uncertainty and ramping needs

WPTF believes the CAISO has supported the majority of these findings, but notably have presented these in terms of MWs rather than cost impacts. It is WPTF’s understanding that RUC costs have increased significantly over time, and it would be helpful to fold this information into the CAISO’s more theoretical benefit descriptions.

Generally, however, WPTF is supportive of the analysis and information published to date. We also want to acknowledge that the CAISO is moving in the direction of providing more analysis and support for their proposals. This is a welcome change, and we hope this trend carries throughout other initiatives as well.

4. Please provide your organization’s comments on the CAISO’s vision of the interrelationship between California Resource Adequacy, Day-Ahead Market Enhancements, Extended Day-Ahead Market, and EIM:

Operational uncertainty is covered by the RA program in two ways. First, via the planning reserve margin which accounts for forced outages and load forecast error. This is why RA resources in RUC are taken at $0/MW. Second, ramping uncertainty to a large extent is covered by flexible RA. Flexible RA product has a day-ahead and real-time economic must-offer obligation. This ensures that both predicted and unpredicted ramping needs can be met by RA resources. WPTF is still unclear on the connection therefore between the imbalance product and flexible RA as both require economic energy offers in the real-time market based on a procured capacity quantity. While WPTF can see the need for the imbalance product because it prevents the CAISO from allowing flexible RA from supporting a high priority export, we do not immediately see a reason to continue the flexible RA program given the existence of this additional energy market product, absent EDAM. We therefore ask the CAISO to articulate the additional reliability or market benefit of flexible RA that will exist after the imbalance reserve products are implemented. 

In the event EDAM is implemented, we do see a use for the flexible RA product. WPTF believes the sequential IFM and RUC structure will continue to work in EDAM as long as the CAISO stops biasing the RUC requirement and moves uncertainty into the IFM as a product. This is because the resource sufficiency tests should in theory ensure all parties bring sufficient capacity to cover their own load plus uncertainty. Within an EDAM framework RUC is too late for the CAISO to ensure they can meet their uncertainty requirement. Therefore, WPTF believes the flexible RA product must be modified to ensure there are sufficient resources offering to provide the day-ahead imbalance product – which must be designed to cover the CAISO’s portion of uncertainty.

5. 5. Please provide your organization’s comments on the day-ahead market enhancements analysis:

 Please see response to question 3.