CAISO kicked off a series of stakeholder meetings last week on its revised straw proposal to add a day-ahead market to the real-time Western Energy Imbalance Market (WEIM), a major expansion push for the ISO in the West.

Potential participants in the extended day-ahead market (EDAM) were able to ask questions of CAISO planners and offer their thoughts on the plan’s specifics, including a proposed resource sufficiency test and resource participation, during the Aug. 29 meeting.

Carrie Bentley, an energy consultant representing the Western Power Trading Forum, asked why CAISO’s proposal would require that all resources in a participating balancing authority area (BAA) take part in EDAM when that’s currently not the case in the WEIM.

“I was hoping you could provide more color on why the CAISO was removing the option for resources to be nonparticipating?” Bentley said. “It was my understanding that in WEIM, the amount of nonparticipating resources [as a percentage of capacity] is pretty high. So perhaps if you could tell me … why you’re removing that option? And then whether you’re going to then remove it from WEIM as well? It just seems to remove a lot of optionality.”

CAISO Executive Principal George Angelidis said the “reason why we eliminated the option for the nonparticipating resource concept that we’re using in the Western Energy Imbalance Market is that we don’t see the value for it, in the sense that it doesn’t give you anything different than a normal resource that participates in the market with a self-schedule and not submitting bids. The submission of bids is voluntary in EDAM, with the exception, of course, of resource adequacy, [so] we just didn’t see any difference between participating and nonparticipating resources.”

Bentley said she understood but still saw possible benefits to having the option of nonparticipating resources.

Resource Sufficiency

On the topic of resource sufficiency, Powerex Director of Power Jeff Spires said CAISO’s proposal to use “e-tags” to track the fulfillment of firm energy contracts in EDAM was essential but that a second proposal to allow participants to backfill capacity at the last minute undermined the process.

The EDAM revised straw proposal introduced the “tagging mechanism,” or e-tag, a means of electronically monitoring and recording energy transactions for firm energy contracts. The proposal requires “all non-source-specific forward supply contracts [to] be tagged within three hours following publication of the day-ahead market results.”

“This will increase confidence that this non-source-specific forward supply will be delivered in real time because submitting a tag requires resource and transmission identification.” (See CAISO Updates EDAM Straw Proposal.)

Spires said, “We all know by this point … that resource sufficiency is one of the fundamental elements of the EDAM and that really is one of the first steps that we need to get right before the remaining market design elements can fit together and work. You know, it all kind of starts with an assumption that there’s enough supply across the footprint and that everyone’s bringing their fair share.”

“That requires ensuring that the [resource sufficiency] test is representative of both the supply and the obligations of each BA and in the context of imports,” he said. “In our view, that means that imports that are being used to meet the resource efficiency evaluation need to be real; they need to be deliverable to the BA that’s counting on them. And a day-ahead e-tag is a critical element to be able to demonstrate that the import is supported by a resource and that there’s transmission to deliver it.”

CAISO, however, is also proposing that “non-tagged schedules will be required to submit e-tags, or otherwise cure shortfall, by the start of the STUC [short-term unit commitment] horizon for the hour in which the failure occurred,” a slide in the ISO’s presentation said.

The revised straw proposal says that when an EDAM participant is short on supply in the day-ahead time frame, “it can backfill the deficiency with supply” in the short-term horizon “ending in the hour” of the shortage.

That part is a challenge, Spires said, “because it essentially renders that day-ahead e-tag requirements as optional. And what it really leads to is enabling an entity to point to an import that isn’t supported by identifiable supply or transmission and essentially says that ‘that’s OK,’ as long as that participant is able to successfully find supply or transmission or both in real time. And that’s very problematic in our view. It erodes confidence in the test itself because it effectively says that an entity can pass [the EDAM’s resource sufficiency test] even though they are going into real time short of resources and or transmission.”

In reply, CAISO Market Design Sector Manager Danny Johnson said, “I think we do understand your position and Powerex’s position on this. I think what we’re trying to explore here is, ‘Is there a model that deviates from [the day-ahead e-tag] that also provides confidence to all of the interested BAA partners in this?’ And that’s what we’re exploring in this proposal. And I do think there are some teeth to this. We will be reporting out if this doesn’t occur regularly. If an EDAM BAA does eventually fail to tag by [the start of the hour in the STUC horizon for which the failure occurred], they would get kicked out of [a pooled resource sufficiency evaluation], and I think we even have provisions that the export transfers into that EDAM BAA would get a lower priority if it came to manual curtailments if the market was unable to solve. So, I do think this has some teeth” and provides confidence level in the EDAM’s resource sufficiency evaluation.

The EDAM stakeholder meetings resume this week with sessions on Wednesday and Thursday, including an in-person option in downtown Sacramento.