Comments on Issue paper

1. Provide a summary of your organization’s comments on the Clarifications to Reliability Must-Run (RMR) Designation Process issue paper:

California Community Choice Association (CalCCA) appreciates the opportunity to comment on the Clarifications to Reliability Must-Run (RMR) Designation Process Issue Paper (Issue Paper). Given the tight supply conditions facing California in the coming years, and the resulting system and local RMR designations that have occurred in recent months, it is prudent for the California Independent System Operator (CAISO) to commence this initiative to evaluate how RMR costs and credits are allocated when a resource meets both a local and system reliability need.

The CAISO should allocate RMR costs in a manner that reflects benefits received. As such, the CAISO must revisit the process for allocating costs when a resource is needed for both local and system reliability. The costs for local RMR are allocated to all load-serving entities (LSEs) serving load in the transmission access charge (TAC) area in which the local area is located. The costs for system RMR are allocated to all LSEs in all TAC areas since the resource serves needs across the entire system. When an RMR meets both a system and local need, it is not appropriate to allocate costs only to LSEs in the local area because all customers will benefit from the reliability to the system afforded by the RMR. Therefore, the CAISO should modify the process for designating RMRs by assessing if the resource meets both local and system reliability needs and allocate costs to all customers that benefit from the RMR designation.

2. Provide your organization's comments on the primary reliability need topic, as described in section 2.1:

The Issue Paper outlines five issues to consider when choosing a primary reliability need for which to make an RMR designation when two reliability needs exist, including:

1. Historical considerations of local reliability needs as primary;
2. Infrastructure investment incentives;
3. LSEs benefitting from the RMR;
4. The local resource adequacy (RA) premium; and 
5. The need to convert existing RMR contracts.

As the CAISO notes, since start-up the CAISO only designated resources for local reliability needs and it currently considers it the primary reliability need any time it is binding. However, given the current state of California supply conditions, the CAISO issued RMR designations for the Midway Sunset and Kingsburg plants for system reliability needs.[1] Additionally, the CAISO designated a local RMR for the Agnews plant, recognizing it was possible the resource could also have been needed from a system perspective.[2] Because local resources inherently meet system needs, when there is a system reliability need for an RMR in addition to a local need, costs and credits should be allocated on a system-wide basis commensurate to those who receive the benefits. While this differs from the CAISO’s historical practice of designating resources for local reliability needs only, statewide supply conditions have begun to necessitate RMRs for both system and local needs. As such, the CAISO should modify its allocation methodology so that when an RMR is meeting both reliability needs, costs, and credits are allocated to all customers receiving the benefit of the resource.

The CAISO states the responsible utility has an incentive to invest in infrastructure to address local issues that drive local designations, and this incentive is lost if the system need is considered primary. While this may have been true with a small number of LSEs, the number of LSEs in each TAC area has increased substantially in recent years. This diminishes the incentives for the utility to invest in infrastructure to address local reliability needs and prevent the need for CAISO to rely on RMR because the costs of RMRs are spread among a larger quantity of LSEs. CalCCA agrees investments should be made when needed to alleviate local reliability concerns without relying on RMRs, either through transmission or generation alternatives. However, these projects will likely need to be identified in the Transmission Planning Process given the incentives for a utility to invest in infrastructure upgrades to avoid RMRs are not as strong as they once were. Given infrastructure investment incentives from RMRs alone are likely not strong enough to result in infrastructure upgrades to relieve the local reliability need, they should not drive cost allocation. Instead, cost allocation should be driven by all reliability benefits provided by the RMR.

The CAISO suggests that if a system-wide need is considered the primary need, then all current local RMR contracts will have to be designated and converted to system-wide RMR contracts (including cost and RA credit allocations) for as long as the system reliability need exists. This concern should not prevent the CAISO from making modifications to RMR allocations in a manner that reflects all benefits received. Upon Federal Energy Regulatory Commission (FERC) approval of modifications to RMR allocations, the CAISO should begin using this allocation process for all new RMRs designated for a system and local benefit. Existing RMRs should be converted during the process for extending RMRs that results in CAISO Board approval each October. The CAISO has indicated this initiative cannot conclude by October of this year. Therefore, the process for converting existing RMRs would be done in October 2022.

[1]     http://www.caiso.com/Documents/Apr9-2021-InformationalReport-ProposedNewRegulatoryMustRun-RMR-Kingsburg-ER19-1641.pdf.

[2]     http://www.caiso.com/Documents/PresentationPotentialReliabilityMustRunDesignationAgnewsPowerPlantMay182021.pdf at 7.

3. Provide your organization’s comments on the proposed initiative schedule and EIM Governing Body role, as described in section 4:

CalCCA supports this initiative’s Energy Imbalance Market (EIM) Governing Body classification.

4. Additional comments on the Clarifications to RMR Designation Process issue paper:

No additional comments at this time.

1. Provide a summary of your organization’s comments on the Clarifications to Reliability Must-Run (RMR) Designation Process issue paper:

1. Be consistent. If Local is the primary, makes sure you are consistent in your analyses and designations.
2. CAISO should consider a hybrid cost allocation for resources that have duel designations (system and local)
3. Transitions need careful consideration. CAISO should incorporate langue that clarifies that any change to designation type (e.g., sub-area local to local, local to system, or local and system to just system) or reliability need being addressed will require the review and approval of the CAISO Board to the appropriate cost allocation.

2. Provide your organization's comments on the primary reliability need topic, as described in section 2.1:

PG&E does not have an opinion on which (System or Local) should be primary.

Be consistent. Regardless of which takes primacy, CAISO needs to be consistent in its analyses and designations. If CAISO is inconsistent in their designations, and therefore cost allocation, it creates a risk that one set of customers bare a disproportional amount of RMR costs or RMR costs not commensurate with the benefits to customers.  Consistency reduces this risk.

3. Provide your organization’s comments on the proposed initiative schedule and EIM Governing Body role, as described in section 4:

RMRs are about the reliability of CAISO BAA and CAISO’s Board should have sole authority for this initiative.  PG&E agrees that there is no role for the EIM Governing Body.

4. Additional comments on the Clarifications to RMR Designation Process issue paper:

CAISO should consider a hybrid cost allocation for resources that have duel designations. CAISO should consider a hybrid cost allocation because an RMR unit that is needed for both System and Local will benefit the local customers and the CAISO system as a whole. PG&E encourages the CAISO to explore hybrid cost allocation methods that provide parties with proper incentives.

Transitions need careful consideration. CAISO should add language clarifying that changes to the designation type (e.g., sub-area local to local, local to system, or local and system to just system), or reliability need being addressed, will go back to the CAISO board for review and approval and will result in the appropriate cost allocation. This provides transparency and preserves incentives to resolve RMRs.

1. Provide a summary of your organization’s comments on the Clarifications to Reliability Must-Run (RMR) Designation Process issue paper:

At this time, the Six Cities’ comments on the topics identified in the August 10, 2021 Issue Paper are limited to the proposition, at page 3 of the Issue Paper, that existing RMR contracts will have to be redesignated if system-wide need is primary.  The Six Cities oppose the suggestion that existing RMR contracts be redesignated in the middle of an RMR contract year.

2. Provide your organization's comments on the primary reliability need topic, as described in section 2.1:

The Six Cities do not oppose the concept of identifying a primary reliability need for RMR designations going forward and look forward to evaluating proposed criteria for making such designations.  However, the Six Cities disagree with the statement at page 3 of the Issue Paper that a determination that a system-wide need is primary should trigger redesignation of all existing RMR contracts at that point.  Because the designation adopted for a particular RMR resource will provide the basis on which stakeholders will review and evaluate the appropriateness of the RMR commitment, the initial designation should remain in place for the initial contract year.  If the CAISO proposes to renew an RMR designation for a particular resource based on a different primary need in the subsequent year, it would be appropriate to revise the classification going forward for the renewal term.

3. Provide your organization’s comments on the proposed initiative schedule and EIM Governing Body role, as described in section 4:

The Six Cities agree with the CAISO’s determination in Section 4 of the Issue Paper that the topics to be addressed in this initiative are outside the scope of the EIM Governing Body’s role.

4. Additional comments on the Clarifications to RMR Designation Process issue paper:

The Six Cities have no additional comments on the Issue Paper at this time.

1. Provide a summary of your organization’s comments on the Clarifications to Reliability Must-Run (RMR) Designation Process issue paper:

2. Provide your organization's comments on the primary reliability need topic, as described in section 2.1:

3. Provide your organization’s comments on the proposed initiative schedule and EIM Governing Body role, as described in section 4:

4. Additional comments on the Clarifications to RMR Designation Process issue paper:

1. Provide a summary of your organization’s comments on the Clarifications to Reliability Must-Run (RMR) Designation Process issue paper:

Vistra sympathizes with the CAISO’s efforts to ensure it has taken all necessary steps to shore up reliability. We narrowly scope our feedback to the CAISO’s issue paper and straw proposal in response to issue #5:

“If a system wide need is considered the primary need than all current local Reliability Must Run contracts will have to be designated and converted to system wide Reliability Must Run contracts (including cost and Resource Adequacy credit allocations) for as long as the system reliability need exists.”

Vistra requests the CAISO revise its proposal to only apply the proposed clarifications to non-legacy Reliability Must Run (“RMR”) Units. In the remainder of our comments Vistra provides additional support for this request.

2. Provide your organization's comments on the primary reliability need topic, as described in section 2.1:

The CAISO identified an issue that it proposes should be addressed when identifying the primary reliability need of a RMR Unit – existing RMR Units’ classification. In issue #5 identified under section 2.1, the CAISO proposes that all current RMR contracts will have to be converted to a system-wide RMR Contract until the system need is resolved.

Vistra requests the CAISO narrow the scope of this issue to only apply to non-legacy RMR Units. The CAISO should not apply the proposed rule to allow existing Legacy RMR Contracts to be converted to a system RMR Contract. Appendix H of the CAISO Tariff governs the treatment of Legacy RMR contracts, where Legacy RMR contracts are those entered by RMR units prior to September 1, 2018.

These Tariff provisions apply to the Oakland Power Plant which achieved commercial operations in 1978[1] and was first designated as an RMR Unit in 1998. The Oakland Power Plant is a 110 MW liquid fossil-fired power plant located in Oakland, California owned and operated by Vistra. The capacity of Units 1 and 3 of the Oakland Power Plant is fully committed as a Reliability Must-Run (RMR) Unit under a Legacy RMR Contract with the CAISO. The Oakland Power Plant has been in operations for almost 44 years and maintained online under the Legacy RMR Contract for more than two decades.

Vistra plans to retire the remaining fossil units at Oakland Power Plant before 2024 and install battery energy storage units and is working with CAISO and PG&E to that end. There are several events that must occur before that can be accomplished, such as that these units must be released from RMR designation, which should be released once the local reliability need is addressed. PG&E appears to be on track to complete the transmission related components of the Oakland Clean Energy Initiative[2] with current projected in service date for the transmission related elements by March 2023[3] that will address the local reliability need in combination with Vistra’s repowering of the currently retired Oakland Power Plant Unit 2. Given the clear path to resolving the local need requiring these Legacy RMR Units in the near future, the Legacy RMR designation should not be converted to a system RMR contract.

There is a likelihood that the CAISO system need may persist through 2026. If this Legacy RMR Unit is converted to a system RMR and is required by CAISO to maintain its online status through 2026, it would bring it to almost five decades of operations and three decades as a Legacy RMR Unit. In our view, it is not in the best interest of the CAISO to convert the Legacy RMR designation to system RMR and maintain its online status through the balance of the system reliability need as this facility reaches the end of its useful life. Instead, Vistra proposes that the CAISO exempt Legacy RMR Units from the proposed rules in this initiative and apply any changes only to non-legacy RMR Units.

[1] California ISO 2017-2018 Transmission Planning Process Unified Planning Assumptions and Study Plan, March 31, 2017 at page A-29.

[2] Request for Clarification or, in the Alternative, Request for Rehearing of Pacific Gas and Electric Company for the July 15, 2021 order under EL20-63 page 3 includes PG&E description of the transmission enhancement status stating “The Moraga Claremont 115 kV Lines #1 and #2 have been re-rated and relevant substations will be upgraded, which will further bolster future reliability in the area”. Link available at https://elibrary.ferc.gov/eLibrary/filedownload?fileid=72EFDE2B-C8A3-C816-A620-7B50F6900000.

[3] Stakeholder Transmission Asset Review (STAR) documents released by PG&E on June 1, 2021 for Project Names OCEI - Oakland X 115kV Bus Upgrade and OCEI - Moraga 115kV Bus Upgrade. Link available at https://pgera.azurewebsites.net/Regulation/ValidateDocAccess?docID=656693.

3. Provide your organization’s comments on the proposed initiative schedule and EIM Governing Body role, as described in section 4:

None at this time.

4. Additional comments on the Clarifications to RMR Designation Process issue paper:

Vistra requests the CAISO provide additional details in its next iteration on how the CAISO proposes to identify whether a reliability criteria violation that impacts the entire CAISO BAA is likely to occur if a given unit were to retire/mothball.

Our understanding of the CAISO current rules based on the record in ER19-1641 is that the CAISO may perform technical study to identify whether a unit retirement would result in the CAISO having insufficient capacity to meet the requirements of NERC Reliability Standards such as BAL-001-2, BAL-002-3, BAL-002-WECC-2a, BAL-003-1.1, or TPL-001-4 etc. If a risk of violation of one of these standards is identified in a technical study that the CAISO may retain a retiring unit as RMR. Further, we understand that the CAISO must conduct a reliability study to establish that the specific resource that requested retiring or mothballing or release from an existing RMR designation is needed to meet applicable Reliability Criteria before it can be eligible to receive an RMR designation.

While there was a discussion about the primary system reliability need in the Issue Paper and during the call, it was not clear whether the system need being discussed by the CAISO was bridging the Resource Adequacy deficiency facing the system or identifying a system need that can only be met by the resource seeking retirement, mothballing, or release from RMR. While we are not opposed to the CAISO trying to better clarify when it is designating resources for system Reliability Criteria versus to meet local capacity area requirements in this effort, we are cautious that with the new use of the system RMR that it is more important to document the procedures to identify resources that should be under system RMR consistent with existing authority.

It is important to ensure there is clarity that the designations would not be to cure the system Resource Adequacy shortfall but instead to ensure the CAISO BAA can meet applicable Reliability Criteria that a study has identified cannot be met without retaining the resource that is requesting retirement, mothballing, or release from RMR. Consequently, we request the CAISO provide in the next iteration a proposal for performing system technical studies and designating system resources in more detail. Please provide additional details on:

• The system RMR studies analyzing whether an applicable system Reliability Criteria would be violated if the resource requesting retirement, mothballing, or release from RMR was allowed to go off-line.
• A list of the applicable Reliability Criteria that affect the BAA.
• How the technical studies ensure that the resource being studied is the only resource that can meet the identified system need to meet applicable Reliability Criteria at the BAA-level.

We would expect the CAISO proposed details to add to existing Tariff and manuals as needed will mirror the procedures and details provided by the CAISO and approved by FERC in the ER19-1641 docket. In ER19-1641 docket, CAISO revised its Tariff through tariff revisions to enhance its Reliability Must Run (RMR) framework and further differentiate its RMR program from its backstop procurement authority under the Capacity Procurement Mechanism (CPM) provisions of its tariff. In this proceeding, the CAISO laid out guidelines for what authority the CAISO must designate RMR Units based on Reliability Criteria but not to cure Resource Adequacy insufficiencies. In its transmittal letter, the CAISO stated:

“[T]he CAISO will not use RMR to backstop RA procurement deficiencies.[1] If there is an RA showing deficiency, the CAISO will only backstop it with CPM. A resource that might be able to fill the RA deficiency cannot request, and will not receive, an RMR designation to fill the RA deficiency. Rather, the CAISO will fill the RA deficiency with another resource from the CPM competitive solicitation process. If no other resource is available, the CAISO still will not offer an RMR contract to the generating unit because it remains available for CAISO dispatch. Under the CAISO’s proposal, the CAISO will use RMR for resources that have submitted a retirement/mothball notice and attestation and that the CAISO has found are needed to meet Reliability Criteria. In other words, a generating unit desiring an RMR designation must submit a formal notice of retirement/mothball and attestation (discussed in the next section) to even be eligible to receive an RMR designation. This requirement does not exist today. Also, the CAISO must conduct a reliability study to establish that the resource is needed to meet applicable Reliability Criteria before it can be eligible to receive an RMR designation. An RA showing deficiency does not, by itself, mean that a resource is needed to meet Reliability Criteria; it only means that LSEs have not procured sufficient capacity to meet their RA obligations. The CAISO’s reliability study must show that a reliability need exists and that only the resource to be designated can meet it, i.e., the resources procured in the RA process or that otherwise have not retired, do not meet all of the CAISO’s reliability needs and the CAISO needs the retiring/mothballing resource to meet applicable Reliability Criteria. Thus, resources will not arbitrarily be able to choose between accepting an annual CPM designation or receiving an RMR Contract.”[2]

Further, the CAISO also provided helpful details on its process to differentiate a RMR need that is not to cure Resource Adequacy shortfalls and what type of needs would trigger a RMR beyond a local RMR. The details provided in the CAISO response to deficiency letter[3] provided helpful additional details on what types of studies could identify a need for a RMR beyond the local capacity area need that could be leveraged to provide additional details in this initiative. Under the CAISO Tariff Appendix A, “Reliability Criteria” is defined as “[p]re-established criteria that are to be followed to maintain desired performance of the CAISO Controlled Grid under Contingency or steady state conditions” -- specifically, pre-established North American Electric Reliability Council, Western Electricity Coordinating Council, or CAISO-established reliability standards. While not a definition provided in the Issue Paper, we think the definition of Reliability Criteria in Appendix A is equally applicable in the current initiative, as it is the type of need that would allow the CAISO to designate resources a system RMR under its current authority.

We respectfully request the additional details are necessary to mitigate uncertainty on whether the new system RMR and any conversion of local RMR to system RMR under this proposal are done only if it meets the requirements approved by FERC summarized above.

[1] Tariff Section 41.3 “41.3 Reliability Studies and Determination of RMR Status” to add in the Tariff that the CAISO, “Although the CAISO may base an RMR designation on the Local Capacity Technical Study, the CAISO does not use its RMR authority to address Resource Adequacy deficiencies”.

[2] California ISO RMR CPM Enhancements Amendment, Transmittal Letter under ER19-1641, April 23, 2019, Page 39, https://elibrary.ferc.gov/eLibrary/filedownload?fileid=01FF88C4-66E2-5005-8110-C31FAFC91712.

[3] California ISO Response to Deficiency Letter under ER19-1641, July 26, 2019, https://elibrary.ferc.gov/eLibrary/filedownload?fileid=0202628C-66E2-5005-8110-C31FAFC91712.

1. Provide a summary of your organization’s comments on the Clarifications to Reliability Must-Run (RMR) Designation Process issue paper:

WPTF appreciates the opportunity to comment on the CAISO’s Clarifications to reliability must-run designation process issue paper as discussed with stakeholders on August 17, 2021. WPTF is surprised to see the limited scope of the initiative, especially given what the CAISO Board of Governors asked the CAISO to address related to its Reliability Must Run policy and process. On two recent occasions, the CAISO Board of Governors engaged in discussions regarding RMR designations. During these discussions, the Board raised questions and urged the CAISO to try and improve the RMR process such that the CAISO does not have to continually rely on the RMR designations; they should only be used as a last resort. WPTF is extremely concerned that this initiative is not addressing the Board’s ask and falls significant short of doing so. For example, most recently, the Board of Governors asked the CAISO to develop a process to allow gas units to convert to storage without being held hostage to RMR. This policy does not include any discussion to that regard nor consider any other holistic changes. Thus, WPTF respectfully requests that the CAISO rescope this initiative in a way to ensure it fully encompasses the asks of the CAISO Board.

2. Provide your organization's comments on the primary reliability need topic, as described in section 2.1:

3. Provide your organization’s comments on the proposed initiative schedule and EIM Governing Body role, as described in section 4:

4. Additional comments on the Clarifications to RMR Designation Process issue paper: