Regulatory Packet Part 2 — MCE Board of Directors, February 20, 2025

DECEMBER FILINGS
Contact
Shawn-Dai Linderman ([email protected])

1. Please provide your organization’s questions or comments on the Modifications to TPD Allocations by these sections:
a. Allocation Groups b. Multi-fuel projects receiving an allocation with PPAs c. Opportunities to seek TPD i. In addition, the ISO seeks stakeholder input on whether a project should be able to seek an allocation during the interconnection facilities study by demonstrating they have a PPA. d. Eligibility of Energy Only projects, including technology additions i. The ISO seeks stakeholder input on whether pre-cluster 15 EO projects should be able seek TPD through the Commercial Operation group after the 2025 TPD allocation cycle. e. Modifications to the TPD scoring criteria
The California Community Choice Association (CalCCA) appreciates the opportunity to provide comments on the California Independent System Operator’s (CAISO) Track 3 Revised Straw Proposal. The transmission plan deliverability (TPD) allocation process is a critical part of project development because resources must obtain TPD to provide resource adequacy (RA). The CAISO proposes to redefine the TPD allocation groups as: (1) the power purchase agreement (PPA) group; (2) the commercial operation group; and (3) the conditional allocation group. The CAISO’s proposal would provide projects with three consecutive opportunities to seek a TPD allocation or retain a conditional TPD allocation, noting opportunities to seek and retain allocations of TPD are typically done on an annual basis but could be more than one year apart.[1] CalCCA is still developing a position on this proposal and seeks clarification on the timing of the three opportunities to seek a TPD allocation for projects with and without conditional deliverability allocations after the first opportunity. The proposal states:
the first opportunity will be in the TPD allocation request window following the interconnection customer’s receipt of its interconnection facilities study report. After the third opportunity to seek an allocation, projects that have not received an allocation will be withdrawn. Projects that do receive an allocation through the Conditional group, but are unable to retain their allocation in the next request window by demonstrating an eligible PPA will be withdrawn.[2] Applying the proposal to the Cluster 15 study timeline[3] appears to result in the following timeline:

Facilities Study Report: November 2026
Beginning of first opportunity / TPD Affidavits: March 2027 For projects with conditional deliverability after first opportunity:

Deadline to show a PPA or withdraw: March 2028[4]
For projects without conditional deliverability after first opportunity:

Beginning of second opportunity / TPD Affidavits: March 2028 For projects with conditional deliverability after second opportunity:

Deadline to show a PPA or withdraw: March 2029
For projects without conditional deliverability after second opportunity:

Beginning of third opportunity / TPD Affidavits: March 2029 Therefore, projects appear to have roughly one and half years after receiving the facilities study report to demonstrate a PPA or be withdrawn if a project receives a conditional deliverability allocation. If a project does not receive a conditional deliverability allocation, it will also have until March 2028 to either sign a PPA to get into the PPA group or seek conditional deliverability for its second opportunity. In the next iteration of the proposal, the CAISO should confirm or correct this understanding with a timeline or flow chart for the three opportunities using the Cluster 15 schedule, including the steps for projects that do and do not receive conditional allocations. This clarification will help stakeholders develop positions on the proposal.

CalCCA appreciates the CAISO’s responsiveness to stakeholder feedback in revising the PPA status points allocation criteria in Table 2 of the Straw Proposal. Categorizing projects based upon whether its PPA is with an California Community Choice Association SUBMITTED 12/02/2024, 03:26 PM 12/10/24, 11:42 AM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/ED3960DD-EADC-4B0C-8700-38A65A33DEBB#org-0d1c4d97-7272-4061-82fe-c76523… 1/3 •
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off taker that has a RA obligation will result in a meaningful differentiation of projects that meet versus exceed the minimum requirement, because it bases its ranking on RA obligations which drive the need for TPD. It will also provide for uniform treatment of all PPAs with load-serving entities. [1] See Straw Proposal at 19.
[2] Ibid.
[3] https://www.caiso.com/documents/resource-interconnection-standards-interconnection-study-timeline.xlsx. [4] For this example, assume one year between successive opportunities to seek and retain an allocation of TPD for simplicity, although they may be more than one year apart in practice.

2. Please provide your organization’s questions or comments on Special Considerations for Long Lead Time, Location Constrained Resources, specifically:
a. Eligibility b. Extension to seek TPD c. Broader procedural changes to the interconnection process for long lead-time, location-constrained resources
CalCCA agrees with the CAISO that it will be necessary to allocate TPD to long-lead time (LLT) resources such as offshore wind, out-of-state wind, and geothermal that currently have longer project development cycles that may not be compatible with the updated TPD allocation process outlined in Section 2. The CAISO’s straw proposal for allowing eligible resources an extension to seek TPD allocations can efficiently and equitably meet this need with additional work to define the details around: (1) how much TPD can be reserved for this purpose; and (2) when TPD that is reserved for LLT resources would be released after a certain time if it goes unused.

The straw proposal recognizes the need to release reserved TPD after a certain time, stating:

The ISO will have to establish a deadline for specified projects to begin seeking TPD for each cluster, which should align with the timeframe for the resource coming online in portfolios. The ISO will also have to develop conditions or a trigger mechanism for releasing reserved TPD if generation or transmission does not materialize. Such conditions would need to be driven by the transmission planning process, such as changes to the policy scenarios or canceling transmission projects.[1]
As the CAISO further defines this process, it should avoid over-reserving for LLT, or maintaining reservations for projects that prove unviable, as TPD is “inherently finite.”[2] The process for allocating TPD to LLT resources should maintain the incentive for resources to seek a PPA as soon as practical so that LLT resources with reserved TPD do not retain it without a viable path to using it. The process for LLT resources with reserved TPD should maintain a clear deadline for projects without a PPA to be removed from the queue and the TPD released to make room for other projects to seek an allocation.
[1] Straw Proposal at 32-33.
[2] Straw Proposal at 25.

3. Please provide your organization’s questions or comments on Intra-cluster Prioritization of Use of Existing SCD/RNU Headroom:

CalCCA supports the CAISO’s proposal to allow generators to interconnect up to an amount that will not trigger the need for the LLT short circuit upgrade or other reliability network upgrades. This proposal will provide 12/10/24, 11:42 AM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/ED3960DD-EADC-4B0C-8700-38A65A33DEBB#org-0d1c4d97-7272-4061-82fe-c76523… 2/3 opportunities for projects to come online and obtain deliverability more quickly when there is headroom to do so, helping to alleviate the current crisis of interconnection capacity scarcity.

4. Please provide your organization’s questions or comments on Modifications to the Priority for Awarding Interim Deliverability:

CalCCA has no comments at this time.

5. Please provide any additional feedback:

CalCCA has no comments at this time.
12/10/24, 11:42 AM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/ED3960DD-EADC-4B0C-8700-38A65A33DEBB#org-0d1c4d97-7272-4061-82fe-c76523… 3/3 %()25(7+(38%/,&87,/,7,(6&200,66,21
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VII. CALCCA RESPONSES TO THE RULING QUESTIONS

1. The FGS Report includes a wide range of stakeholder input and recommendations from three public workshops. Please review the report (Attachment 1) to ensure it accurately reflects stakeholder input from the workshops. If there are discrepancies, please identify the sections, provide specific details and suggested corrections, and identify any inaccuracies, inconsistencies, or omissions from the workshop discussion in the sections of the FGS Report. Comments should be limited to workshop discussions and proposed recommendations.
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2. The FGS Report outlines ten key operational needs, categorized as broad themes, which are essential for realizing a High DER future. These needs were identified based on insights and discussion from Workshop 1 - Identifying Operational Needs. (Refer to Attachment 1, pages 24-29, "Outcome: Operational Needs for a High DER Future" section.) Based on the stakeholder survey during workshop facilitation, the FGS Report findings show that the following three operational needs are considered high priority with sufficient urgency to justify implementation within 1-2 years:21 i. DER Visibility to the Distribution System Operator,
ii. DER dispatchability/control, and
iii. Open access to the distribution system
a) Do you agree that the above operational needs are the highest priority and need to be implemented within 1-2 years? If so, why? &DO&&$GLVDJUHHVZLWKWKLVSULRULWL]DWLRQIRUUHDVRQVGHVFULEHGLQVHFWLRQV,,,,,DQG,9 DERYH
b) If you disagree with any of the above-identified high priority needs, which three operational needs should be prioritized and why? Please include a timeline for implementation and explain your reasoning for supporting the priorities.
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3. Diverging approaches to enabling a High DER Future — Following Workshop 1, the workshop series highlighted a diverging approach to long-term visions for a High DER Future between the IOUs’ top-down “grid orchestration” approach22 where DSOs are central in coordinating DERs and the bottom-up, open-access vision23 recommended by other stakeholders. (Refer to Attachment 1, page 36, "Key Takeaways from Workshop 2".) a) Which approach do you support, the top-down “grid orchestration” See)*65HSRUWDW)LJXUH8UJHQF\RI,PSOHPHQWLQJ2SHUDWLRQDO1HHGV )*65HSRUWDW
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approach24 or the bottom-up, open-access vision25 for a High DER future? Please explain your reasoning for supporting the chosen approach and what steps should be taken in this proceeding to implement this vision. How do these steps align with the DSO’s roles and responsibilities?
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b) How do the operational needs identified in question 2 above align with your recommendation for question 3 (a) above?
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4. In Workshop 2, Assessing Gaps, the stakeholders focused on identifying gaps and barriers to achieving the operational needs from Workshop 1. During Workshop 2, the IOUs also presented roadmaps for DERs and/or Grid Orchestration and Automated Distribution Management Systems (ADMS) and DER Management Systems (DERMS) capabilities26 in relation to the operational needs identified from Workshop-1. (See pages 58-82 of Attachment 1, "APPENDIX A: OPERATIONAL NEEDS GAP
ASSESSMENT" for a detailed assessment of the gaps.) The following questions focus on operational needs and use cases articulated specifically for DER/Grid Orchestration by leveraging ADMS/DERMS capabilities. a) Which operational needs and use cases can be operationalized by addressing gaps and barriers to DER/Grid Orchestration and ADMS/DERMS capabilities? How do these steps align with the DSO’s roles and responsibilities?
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b) What specific steps should be addressed in this proceeding to advance DER operationalization? How do these steps align with the DSO’s roles and responsibilities?
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c) The IOUs recommended a working group/task force(s) to collaborate on a framework that enables advanced DER/Grid Orchestration.27 Do you agree with this recommendation, and if so, what are the key factors to consider in forming and setting goals for work products for this group? If you disagree, what alternative approaches should be )*65HSRUWDW
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considered?
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d) In Workshops 1 and 2, the IOUs outlined a “grid orchestration” vision for a high-DER future. The terminology and Grid
Modernization Plans (See Attachment 1, Appendix B) indicate a significant role for DSOs in orchestrating DERs. However, despite pilot work underway (See Attachment 1, Appendix C), there are still gaps in the timelines for developing and implementing operational capabilities. What improvements should be made to the ongoing pilot program? How can the ongoing and proposed pilots guide further actions to address the gaps? In your response, identify the gaps and the proposed enhancements.
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e) Is there a benefit in reviewing the five nearest-term pilot programs or functions the utilities can roll out and determining the technical requirements for those options? Explain your reasoning. &DO&&$KDVQRUHVSRQVHDWWKLVWLPH

5. The FGS Report compiled stakeholder recommendations as five topic summaries based on input and discussion during Workshop 3 - Developing Recommendations to Address Gaps. The FGS Report also includes Gridworks’ recommendations for the next steps. (Refer to the “Stakeholder Recommendations ...” and “Gridworks Recommended Next Steps ...” sections in Workshop 3, pages 39 – 51 of Attachment 1.)
a) Please rank the five topics in order of priority and explain your reasoning ("1" being the highest priority). Please include subtopics 3a and 3b as you rank the five topics.

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c) Regarding topic 3b in the FGS Report, DER Visibility to the CAISO, how do we ensure interoperability and visibility between the DSO and the CAISO for DER visibility to the CAISO?
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Contact
Lauren Carr ([email protected])

1. Please provide your organization’s feedback on the changes being considered to the inputs and assumptions.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the November 19, 2024, modeling workshop. The California Independent System Operator (CAISO) proposes to make improvements to its inputs and assumptions for modeling hydro and forced outages. First, improving the methodology for modeling hydro by randomly drawing from 25 years of historical hydro years is worthwhile, as the CAISO demonstrated through sensitivity simulations that hydro assumptions have significant impacts on loss-of-load expectation (LOLE) events. Second, the CAISO indicates it will continue to update its forced outage rates and scrub its historical Outage Management System data. CalCCA supports the CAISO undertaking this effort, as it will be necessary to model forced outage rates accurately and use them for an eventual UCAP counting methodology. The CAISO’s forced outage rates are lower than the California Public Utilities Commission’s (CPUC’s) and GADS’s. For example, the CAISO forced outage rate for combustion turbines in 4.5 percent compared to 6.2 percent and 12 percent for the CPUC and GADS, respectively. These differences could have significant impacts on the modeling results, particularly for resources that are likely needed during reliability events.

CalCCA appreciates the CAISO’s analysis of the correlation between load, solar, and wind in the 500 samples used in the reliability simulations. Comparison between the range of correlation coefficients reported by the CAISO and the correlation coefficients from the CPUC’s 23 weather years[1] shows some discrepancies, as demonstrated in Figure 1. The most important difference is that the CPUC weather data shows multiple weather years with load-solar correlation coefficients that are below the range of 500 sampled years in the CAISO dataset. A lower correlation coefficient suggests a lower contribution of solar to reliability. The CAISO and the CPUC should evaluate this difference and determine if it is due to differences in the solar profiles or differences in the load profiles. The CAISO and the CPUC should also decide if their datasets should be adjusted to generate a wider range of load and solar correlations across samples.

Another difference is the solar-wind correlation coefficients: the small range in the CAISO dataset is more negatively correlated than in the CPUC dataset and varies much more narrowly than the solar-wind correlation in historical observations.[2] CAISO, in coordination with the CPUC, should evaluate whether adjustments to the sampling process are warranted based on these differences. These differences suggest that the CAISO’s data sets, the CPUC’s data sets, or both could require an update to ensure accuracy. The CAISO and the CPUC should coordinate to investigate these differences and align on data sources based upon their findings.

California Community Choice Association SUBMITTED 12/10/2024, 12:13 PM 12/18/24, 4:38 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/784918F3-3862-4E40-9F1F-450D1B96E4AF#org-342e641e-7850-472d-b6e9-031a3833… 1/3 Figure 1. Discrepancies between Load, Solar, and Wind correlation coefficients between the CPUC’s 23 weather years (dots), historical metered solar and wind (diamonds), and the range of correlation coefficients across all CAISO modeled samples (shaded area). [1] Downloaded from https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-power-procurement/long-term-procurement-planning/2024-26-irp-cycle-events-and-materials/system-reliability-modeling-datasets-2024. Load data is the CAISO Baseline load. Solar and Wind are aggregate of CAISO generators for the planning year of 2026.
[2] Historical metered data is from the CAISO production and curtailment data (https://www.caiso.com/library/production-curtailments-data). Curtailment data was used to estimate the pre-curtailment wind and solar correlations. We do not compare the metered wind and solar data to the metered CAISO load because the metered load embeds the behind-the-meter solar generation, producing different correlation coefficients than would be calculated with the consumption profiles.

2. Please provide your organization’s input on preliminary mid-term and long-term results.

CalCCA appreciates the efforts of the CAISO and Astrapé to model mid-term and long-term reliability. The results demonstrate surplus capacity in 2026 through 2034. After removing surplus capacity to surface 1-in-10 LOLE, reliability events are concentrated in hours HE 18/19 and then again in HE 22. These separate reliability events appear to indicate a capacity need in the early evening hours when there is insufficient capacity to available to serve load and an energy need in the later evening hours when storage resources reach their energy limitations. One implication of these results is that loss-of-load events associated with depleted storage in HE 22 may be mitigated by actions that delay the discharge of storage, such as additional generation or reduction in demand in the hours immediately preceding HE 22.

The results suggest that “critical hours” should not be assumed as exclusively loss-of-load hours or exclusively gross peak hours, as described by E3. There are multiple ways critical hours can be accounted for within an RA program to ensure there is enough capacity and energy to meet reliability targets. The CPUC’s slice-of-day program, for example, uses hourly capacity requirements and a storage charging sufficiency requirement. As the CAISO assesses near-term, mid-term, and long-term reliability needs in coordination with LRAs, it will become increasingly important to consider “critical hours” beyond peak hours to ensure reliability under a highly renewable and energy storage system.
12/18/24, 4:38 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/784918F3-3862-4E40-9F1F-450D1B96E4AF#org-342e641e-7850-472d-b6e9-031a3833… 2/3 CAISO Modeled Load-Solar Range

0.6 ..... 0.4 C
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2000 2005 2010 2015 2020
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3. Please provide your organization’s feedback on the capacity accreditation methods and PRM approaches presented today.

CalCCA appreciates the presentations from NP Energy, Astrapé Consulting, E3, and the CPUC Energy Division.

The presentations provided a variety of different approaches for valuing RA capacity. As stated in CalCCA’s December 5, 2024, comments to the Issue Paper, the CAISO should provide opportunities for all LRAs to adopt the same resource counting methodologies and accompanying PRMs and availability incentives. The CAISO, in coordination with LRAs, should seek to count resources in a manner that puts all technology types on a level playing field by accurately reflecting their capabilities in their NQC values in both the year-ahead and month-ahead timeframe. They should also demonstrate that proposed changes to NQCs are accompanied by revisions to the PRM.

4. Please provide any feedback not already captured.

CalCCA has no additional feedback at this time.
12/18/24, 4:38 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/784918F3-3862-4E40-9F1F-450D1B96E4AF#org-342e641e-7850-472d-b6e9-031a3833… 3/3 Contact
Shawn-Dai Linderman ([email protected])

1. Please provide a summary of your organization’s general comments on the Discussion Paper and November 14 meeting.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) Congestion Revenue Rights (CRR) Discussion Paper.

CalCCA supports the CAISO taking on an initiative to ensure the CRR market design achieves the foundation purposes set by Federal Energy Regulatory Commission and CAISO precedent.[1] The comments herein recommend, in summary, that the CAISO:

Consider battery energy storage system (BESS) load as eligible loads and eligible sinks in the allocation process;
Evaluate how to change its CRR product definitions, either by redefining the hours of peak and off-peak or adding additional products; and
Explore CRR auction efficiency to determine if a change to the auction is needed to ensure CRRs can be effectively used as hedges by entities engaging in forward energy contracting and minimize systemic losses paid for by transmission ratepayers.
[1] Discussion Paper at 3 and 5.

2. Please provide your organization’s comments on the tentative working group schedule found on slides 8 and 36 of the presentation from the November 14 meeting.

CalCCA supports the tentative working group schedule. The working group will progress through foundations, analysis, policy scope, problem statements, and an issue paper by the second quarter of 2025. This provides the right amount of time to discuss the issues before turning to the policy development phase.

3. Are there any topics that your organization would find it especially helpful to devote time to at future working group meetings? These could be topics covered in the discussion paper, topics that came up in the November 14 meeting, or topics not covered at all so far. Any specific level setting topics on the history or current CAISO processes and procedures related to CRRs?
The CAISO should have one working group meeting on level-setting, including the current CAISO processes and the use of CRRs in hedging, and at least one working group meeting on analysis depending on the volume of requests for analysis put forth by stakeholders. The CAISO should also hold working group meetings that allow parties to present their own proposals, including more in-depth presentations on the proposals put forth in the stakeholder catalog and other proposals parties develop during the working group process.

4. Are there any topics that your organization would find it especially helpful to devote time to at future working group meetings? These could be topics covered in the discussion paper, topics that came up in the November 14 meeting, or topics not covered at all so far. Any California Community Choice Association SUBMITTED 12/12/2024, 02:36 PM 12/18/24, 4:40 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/83FF416F-27CE-445A-9560-A0BA23805201#org-8bcdc326-8128-403e-9fac-c5db19ba8… 1/3 •
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level setting topics on the use of CRRs in hedging that you would like to present (or would like to see presented by others)?
See response in section 3 above.

5. Please provide your organization’s comments on the draft problem statements listed in the Discussion Paper and discussed at the November 14 meeting. Does your organization have any proposed changes or additional proposed problem statements? New Problem Statement
The CAISO should add the following problem statement: BESS storage load is not considered an eligible load or eligible sink under tariff section 36.8.2.

While pumped storage load is considered an eligible load and eligible sink under the tariff, BESS load is not.

Load-serving entities (LSE) with pumped storage in their portfolios are allocated a potentially significant amount of CRRs to hedge congestion to their storage loads. Meanwhile, LSEs with BESS loads do not receive the same treatment. This appears inequitable and disadvantages LSEs with BESS in their portfolios. Within this initiative, the CAISO should consider treating grid charged BESS loads the same as pumped storage loads for the purposes of the CRR allocation, as no distinguishing characteristics between pumped storage and BESS have been identified to justify different treatment.

Product Definition
The CAISO should explore its CRR product definitions within this initiative. As stated in the problem statement, the current on-peak and off-peak definitions may adversely impact the ability to hedge congestion risks. The CAISO defines peak and off-peak CRRs in its Business Practice Manual as follows:

On normal weekdays, Monday through Saturday, off-peak hours are the hours ending 1 through 6 and hours ending 23 and 24; on-peak hours are the hours ending 7 through 22.

Public holidays and Sundays are treated as off-peak. That is, all 24 hours on these days are off-peak.

As renewables on the system have increased, the CAISO’s load shape and generation patterns have changed, affecting energy flows and congestion patterns on the system. This initiative should evaluate how to change the definitions, either by redefining the hours of peak and off-peak or adding additional products (e.g., a new super-peak product or additional products).

CalCCA agrees with the California Department of Water Resources (CDWR) that the current definitions do not align well with how the grid has evolved. While CDWR recommends splitting the on-peak time-of-use into super peak (HE 17 HE21) and on-peak (HE07 HE16, and HE22), the CAISO must perform an analysis before defining new products and/or hours. This initiative should map energy flows by hour to determine if there is a logical way to refine the product definitions and their time periods.

With more solar generation on the grid, there is a need to examine whether additional periods should be defined. Since LSEs seek to hedge the risk of congestion on solar output which will only occur in daylight hours, the current definitions of on-peak and off-peak do not address the expected operational hours. The CDWR proposal does not address solar hours either. The Intercontinental Exchange (ICE) transacts standard solar contracts, one that is Monday-Saturday excluding holidays and another that is seven days a week. Both define the hours of settlement as HE 09 – HE 16. If the CAISO is going to examine changing the hours of the CRR product, it should include in scope other changes to better accommodate needed hedging given the changing output profile of generation.

Auction Efficiency
The CAISO should also explore CRR auction efficiency within this initiative. As stated in the problem statement, the CRR auction only yields about 65 cents per dollar of congestion revenue. The data provided by the CAISO and DMM is helpful and appreciated. However, more about the issue must be understood prior to any changes.

For example, the CAISO currently has a “set aside” of CRRs from imports after each of the allocation processes (annual and monthly). In some cases, LSEs are able to get CRRs in the auction that they were not able to 12/18/24, 4:40 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/83FF416F-27CE-445A-9560-A0BA23805201#org-8bcdc326-8128-403e-9fac-c5db19ba8… 2/3 •
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obtain in the allocation. It is not clear whether this is due to the “set aside” or due to some other cause. Before LSEs can evaluate the efficacy of changes to the CRR auction and allocation process, it is important to understand why LSEs are unable to obtain some CRRs in the allocation that they later obtain in the auction.

6. Please provide your organization’s comments on any additional analysis or data you believe would help develop the problem statements and why.

The CAISO should: (1) analyze energy flows by hour to identify a logical way to redefine or add products to account for changes in system peak and off-peak hours; (2) work with individual LSEs to identify the reason(s) they were not able to obtain CRRs in the allocation process but later did obtain them in the allocation, as described in section 5; and (3) provide further information on the amount and cause of CRR revenue insufficiency.

First, regarding the flows to inform time of use for CRRs, the CAISO should evaluate whether congestion on source-sink pairs routinely change direction at a consistent time. For example, it is possible that flows change when solar resources begin generating at sunrise and stop generating at sunset. If this is causing a significant change in flows on the grid, then changing CRR periods is increasingly important. In addition, the CAISO should examine congestion on battery storage as most of its output occurs during the net load peak. The CAISO could then evaluate whether a super-peak product, like the one recommended by CDWR, would cover such a need or if a different product is needed.

Second, regarding LSEs unable to obtain CRRs in the allocation but later obtaining them the auction, it would be helpful to identify why that outcome occurs. For example, is the CRR set-aside impacting the ability to get CRRs in the allocation? As an alternative to examining each case in which an LSE requested a CRR in the allocation but did not get it, the CAISO could model whether those CRRs would have been granted to the LSE in allocation had the DMM proposal for the changes to the auction and its resulting impacts on the allocation process been in place.

Third, regarding revenue insufficiency, it would be helpful to know how much of the insufficiency is due strictly to the current auction process. The CAISO could evaluate those CRRs that would have been allocated to LSEs under the DMM proposal (as discussed in the prior paragraph) and determine if there is any revenue insufficiency and if so, how much.

These data points would be helpful to LSEs in determining how the proposals advanced in this initiative so far improve load’s ability to hedge congestion risk under the proposed changes.

7. Please provide any additional comments.

CalCCA has no additional comments at this time. 43
12/18/24, 4:40 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/83FF416F-27CE-445A-9560-A0BA23805201#org-8bcdc326-8128-403e-9fac-c5db19ba8… 3/3 Contact
Shawn-Dai Linderman ([email protected])

1. BAA Grouping Approach: Please provide your organization's feedback on the proposed BAA grouping methodology for market power mitigation:
a) Do you support grouping BAAs to assess competitiveness? Why or why not? b) What changes, if any, would you recommend for the testing approach? c) What changes, if any, would you recommend for determining the competitive LMP?
The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO’s) Balancing Authority Area (BAA) Level Market Power Mitigation (MPM) working group discussions. CalCCA supports the grouping approach for assessing BAAs for competitiveness as presented by the CAISO at its November 6, 2024, working group meeting. This approach will improve the CAISO’s BAA-level MPM methodology by including available supply from other BAAs in its test for competitiveness. CalCCA agrees this will better reflect actual market conditions and competitive dynamics.

The CAISO should continue to use the dynamic competitive path assessment (DCPA), which uses a three pivotal supplier test to test for competitiveness under the grouping approach. While some stakeholders expressed concern with the grouping approach because a BAA could pass individually but fail as a group, this outcome is not a flaw with the grouping approach. For example, assume an MPM test of a group with two BAAs:

In this example, the following conclusions can be drawn:

On its own, BAA 1 does not have any pivotal suppliers and should be competitive; On its own, BAA 2 has pivotal suppliers (Load cannot be met without G11, G12, and G13) If BAA1 and BAA2 were combined, G11, G12, and G13 are still pivotal as the 3500 MW load will need all three to operate even if all other resources are operating.

Therefore, even though BAA 1 could pass if it were tested on its own, in reality, there is direct transfer capability between BAA 1 and BAA 2. This means supply from BAA 1 is available to serve BAA 2 load and vice versa.

California Community Choice Association SUBMITTED 12/13/2024, 01:01 PM 12/18/24, 4:42 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/4606AE2B-2D5D-4C57-A73F-E5FDC099F3E4#org-5ce9721e-7e05-495e-8b39-ba192e… 1/3 •
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BM1
Load: 1000 MW
Gl:150
G2 :150
G3 :150
G4: 150
G5 :150
G6: 150
G7: 150
G8 : 200
G9:200
Gl0:200
i;otal Gen: 1650 MW
BM2
Load: 2500 MW
611: 850
612:850
613: 850
G14: 100
i;otal Gen: 2650 MW
Combined!
Lo,ad: 3500 MW
Gl:150
G2:150
G3:150
G4:150
G5:150
G6:150
G7:150
G8: 200
G9: 200
Gl0:200
611:850
612:850
613:850
G14:100
i;otal Gen: 430q
Therefore, because the combined BAA 1 and BAA 2 load cannot be met without G11, G12, and G13, the group fails the three pivotal supplier test and supply in BAA 1 and BAA 2 should be subject to mitigation.

The CAISO should include the CAISO BAA in the grouping approach. In doing so, the CAISO BAA would be treated like any other BAA rather than assumed to be competitive. If there is the potential for the CAISO BAA to be structurally uncompetitive in some hours, the CAISO should have a mechanism to mitigate against the exercise of market power. The ability to mitigate market power when there is the potential for suppliers to exercise it will ensure ratepayers are protected against excessively high costs. At the same time, there is little risk of resources not recovering their costs with the CAISO BAA included in the grouping approach, as MPM only mitigates uncompetitive hours, not every hour, and it only mitigates bids that are above the resources’ default energy bids (DEBs) or the competitive locational marginal price (LMP). For these reasons, the CAISO BAA should be tested for competitiveness under the grouping approach.

2. Pivotal Supplier Treatment: Please share your feedback on the concepts for identifying and mitigating pivotal suppliers:
a) Should mitigation only apply to pivotal suppliers, or should it extend to all suppliers in uncompetitive BAAs? b) What are your thoughts on dynamically evaluating pivotal groups to identify pivotal suppliers? The CAISO should not only apply mitigation to pivotal suppliers. It should instead extend mitigation to all suppliers in uncompetitive BAAs, as it currently does under its system MPM in the Western Energy Imbalance Market and its local MPM for the CAISO BAA. CalCCA agrees with the reasons presented by the CAISO to mitigate all suppliers in uncompetitive BAAs.[1] The presence of pivotal suppliers indicates structural issues with market competitiveness within a BAA, and non-pivotal status does not mean a supplier cannot exercise market power. The CAISO should not risk adding computational time or introducing opportunities for gaming or collaboration by modifying its methodology to mitigate only pivotal suppliers.

The CAISO states that arguments against mitigating non-pivotal suppliers may include the following: (1) non-pivotal suppliers, by definition, cannot unilaterally influence market outcomes because small suppliers are price takers and coordination becomes increasingly difficult with three or more suppliers; and (2) mitigation of non-pivotal suppliers could be seen as overly restrictive market intervention by suppressing price signals and discouraging efficient market entry/investment. However, the CAISO MPM is already designed to address these concerns by only mitigating uncompetitive hours, not every hour, and only mitigating bids that are above the resources’ default energy bids (DEBs) or the competitive LMP. Therefore, if a small supplier is a price taker or its bid price equals its marginal cost, MPM should have no effect on the price the supplier receives as it would receive its DEB, which should equal its marginal cost plus a buffer, or the competitive LMP if the competitive LMP is higher than the resource’s DEB. For these reasons, the CAISO should not apply MPM to only pivotal suppliers.
[1] November 21, 2024, presentation at 20.
[2] Id., at 21.

3. Impact Test Implementation: Please comment on the proposed "impact test" in the BAA-level mitigation framework:
a) Do you support including an impact test? Why or why not? b) What are your thoughts on impact thresholds and how they may vary based on: • Frequently constrained areas • System emergency conditions • Peak versus off-peak periods • Absolute ($/MWh) or relative (%) thresholds The CAISO should not include an impact test that tests whether a generator's bidding behavior both deviates from expected competitive levels and “materially affects market prices.” CalCCA does not support only mitigating offers with LMP impacts above a defined threshold, as stakeholders have not demonstrated the need for such a change that could result in increased ratepayer costs. Again, MPM mitigates only uncompetitive hours and only bids that are above the resources’ DEB or the competitive LMP. DEBs ensure that the mitigated resources still [2]
12/18/24, 4:42 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/4606AE2B-2D5D-4C57-A73F-E5FDC099F3E4#org-5ce9721e-7e05-495e-8b39-ba192e… 2/3 recover their costs. Lack of an impact test would, at worst, result in mitigated bids that would cover all costs of providing the energy in the market. If the market clearing price is higher than the resources’ DEB, including those that were mitigated and those that were not, resources would still receive market clearing price and any applicable rents where that market clearing is above their marginal cost.

While the CAISO states that this proposal could help avoid “over-mitigation,” the concept of over-mitigation does not make sense with the way the CAISO applies MPM. Assuming over-mitigation means mitigating resources’ bids when the market is competitive, then over-mitigation would have no impact on market outcomes. In a competitive market, the marginal resource would be expected to bid its DEB (which includes costs and a margin above costs for profit)[1], and that DEB would set the market clearing price that all other resources would receive. In an uncompetitive market, resources with the ability to exercise market power would be mitigated to their DEBs or the competitive LMP.
[1] Economic theory for a competitive market would dictate that the resource bid its short-run marginal cost which would not include a margin above those costs for a level of profit that may be included in the DEB.

Therefore, it is more likely that CAISO’s MPM process results in a price level that if anything is slightly above the competitive outcome. See section 39.7.1 of the CAISO Tariff.

4. Implementation Timeline:
a) What are your thoughts on targeting a straw proposal by May 2025? b) What changes, if any, would you suggest for the working group sequence?
CalCCA supports the CAISO’s timeline of May 2025 for a straw proposal. The CAISO should prioritize the implementation of BAA-level MPM improvements, including testing the CAISO BAA for BAA-level MPM, ahead of the other two scoping items. Implementation of BAA-level MPM improvements should occur, at the very latest, at the same time as the implementation of scarcity pricing revisions so that generators with the potential to exercise market power cannot do so in a manner that triggers scarcity pricing without the ability for the CAISO to properly prevent such actions.

5. Other Comments: Please provide any additional feedback not addressed in the sections above.

In this example, the following conclusions can be drawn:

Therefore, it is more likely that CAISO’s MPM process results in a price level that if anything is slightly above the competitive outcome. See section 39.7.1 of the CAISO Tariff.

5. Other Comments: Please provide any additional feedback not addressed in the sections above.

CalCCA has no other comment at this time.
12/18/24, 4:42 PM California ISO - All comments
https://stakeholdercenter.caiso.com/Comments/AllComments/4606AE2B-2D5D-4C57-A73F-E5FDC099F3E4#org-5ce9721e-7e05-495e-8b39-ba192e… 3/3 %()25(7+(38%/,&87,/,7,(6&200,66,21
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MCE Board of DirectorsFebruary 20, 2025

MCE Board of Directors
February 20, 2025