Full Network Model Expansion Straw Proposal Comments Page 1 of 33
Full Network Model Expansion Straw Proposal
Comments
NRG Energy, Inc. ............................................................................................................................4
NRG supports the CAISO’s proposal to expand its full network model (FNM) to: ....................... 4
Pacific Gas & Electric (PG&E) ......................................................................................................5
Opening Comments ............................................................................................................................... 5
1. The CAISO should immediately begin to track all loop flow data. Key information on loop
flows should inform this initiative. ........................................................................................................ 5
2. CAISO loads should not pay for less efficient unit-positioning due to improper positioning or
flows in external Balancing Areas (BAs). ............................................................................................ 6
3. The CAISO should implement cost-allocation based on cost-causation for RTCIO ............... 7
4. The use of WECC tools is a good starting point, but the CAISO’s plan must also ensure
reasonable modeling inputs to ensure reasonable market outcomes. .......................................... 8
a. The scope and formulations of the proposed system-to-system exchanges between the
CAISO and WECC need review. ......................................................................................................... 8
b. The CAISO should address how it will manage flawed inputs or unreasonable model
results. ...................................................................................................................................................... 8
c. The specific formulas and details involved in estimating loop flows, generation distribution
factors, and external BAs’ load-distribution factors warrant high-level stakeholder review. ....... 9
5. The CAISO should review risks of pricing inconsistencies if unique constraints are used to
simultaneously enforce a physical limit and a scheduling limit. .................................................... 10
6. The expanded FNM’s effects on market solution times need review to ensure the time
leading up to a full market solution is used optimally. .................................................................... 10
Powerex ........................................................................................................................................ 11
Opening Comments ............................................................................................................................. 11
Full Network Model Expansion Straw Proposal Comments Page 2 of 33
The CAISO should require day ahead e-tags of physical interchange awards .......................... 13
The CAISO should ensure it has accurate information on the quality of day ahead and real-
time physical interchange offers ........................................................................................................ 19
The CAISO should combine its physical and scheduling limits on each intertie into a single
value that is coordinated with adjacent transmission providers .................................................... 21
SDG&E .......................................................................................................................................... 22
An Expanded Full Network Model Better Aligns Reliability Requirements with Market
Outcomes .............................................................................................................................................. 22
Obtaining the Data Necessary to Populate and Run the Expanded Full Network Model ......... 23
Which Surrounding Balancing Authorities will be Included in the Expanded Full Network
Model? ................................................................................................................................................... 24
Modeling HVDC Links in the Expanded Full Network Model ........................................................ 25
Shell Energy North America ....................................................................................................... 26
Transaction ID’s .................................................................................................................................... 26
Southern California Edison ........................................................................................................ 27
Opening Comments ............................................................................................................................. 27
(1) CAISO Proposed Activity 1: New scheduling point and load aggregation point definitions 28
(2) CAISO Proposed Activity 2: Enforce constraints for both scheduled and physical flow ..... 29
(3) CAISO Proposed Activity 3: Include variables in high voltage direct current transmission
modeling ................................................................................................................................................ 30
(4) Impacts to CRRs ............................................................................................................................ 30
(5) Impacts to the LMP calculation .................................................................................................... 30
Western Power Trading Forum .................................................................................................. 31
Opening Comments ............................................................................................................................. 31
WPTF Supports Improving the Modeling Representation ............................................................. 31
More Information is Needed about Physical and Scheduling Limits and Base Schedules ...... 32
Full Network Model Expansion Straw Proposal Comments Page 3 of 33
Process and Operational Transparency is Needed about the Rollout Schedule for Expanded
Modeling ................................................................................................................................................ 32
Full Network Model Expansion Straw Proposal Comments Page 4 of 33
Company Date Submitted By
NRG Energy, Inc. 6/25/2013 Brian Theaker
NRG supports the CAISO’s proposal to expand its full network model (FNM) to:
improve its capability to model flows between and around balancing authority area
boundaries;
improve loop flow modeling;
enforce both scheduling and actual flow limits between balancing authority areas;
improve HVDC system modeling; and
leverage WECC Reliability Coordinator data.
Following the CAISO’s June 18 call, NRG understands that the scope of the CAISO’s proposal
does not include modeling the impacts of the loss of external HVDC facilities on CAISO network
flows (e.g., the impacts of the loss of the Pacific DC Intertie on Path 26 flows). The need to
coordinate HVDC and parallel HVAC operations has been well known for a very long time, and
the CAISO’s inability to model this operational constraint and reflect the resulting need for, and
value of, SP26 capacity in its markets, remains a prominent deficiency in the CAISO’s market
model. While NRG supports the CAISO’s efforts to improve its market models, NRG urges the
CAISO to incorporate this long‐standing constraint in its market model and systems as soon as
possible.
The CAISO’s commitment to the quality and meaningfulness of its market prices hinges on its
ability to model the complex realities of operating the bulk power system under its control and
incorporating the impacts of the bulk power system outside of its direct operational control into
its market results. Merely tracking the volume of Exceptional Dispatch as a function of total
energy does not fully capture the detrimental impact of out‐of‐market actions, as Exceptional
Dispatch affects prices on the margin. Moreover, significant differences between the CAISO’s
day‐ahead and real‐time market models drive systematic price differences and non‐transparent
uplift charges, which some parties opportunistically seek to use to discredit virtual bidding. NRG
urges the CAISO to address all of these modeling issues so that the CAISO’s prices are reliable
signals of true reliability needs, and the CAISO’s reliability needs are addressed through, not
outside, its markets.
ISO Response
The ISO appreciates NRG’s comments. The ISO recognizes the ability to model high-voltage
contingencies such as the loss of HVDC facilities as one reason for its proposed FNM
Full Network Model Expansion Straw Proposal Comments Page 5 of 33
expansion. As mentioned, this effort should help the ISO reduce the use of exceptional
dispatch due to unscheduled flows.
Company Date Submitted By
Pacific Gas & Electric (PG&E) 6/24/13 Paul Gribik (415) 973-9267
Alex J. Morris (415) 264-4958
Opening Comments
Pacific Gas and Electric Company (PG&E) offers these comments on the California
Independent System Operator’s (CAISO) Full Network Model (FNM) Expansion straw proposal.1
PG&E generally supports the FNM expansion initiative as it will yield better loop-flow
management and prevention of system-wide disturbances. As a first step in this effort, the
CAISO should immediately begin tracking all loop flows in order to better understand the
problem and the effects of solutions. For the next straw proposal, PG&E requests more details
on the formulas used for calculating expected loop flows and on the processes for updating
features of the expanded FNM, e.g. incorporating updates to WECC’s databases. Such details
will enable stakeholders to further comment on the effectiveness and potential risks of the
CAISO’s proposal. More detailed comments follow.
_____
1 http://www.caiso.com/Documents/StrawProposal-FullNetworkModelExpansion.pdf
ISO Response
Please see ISO responses below.
1. The CAISO should immediately begin to track all loop flow data. Key information on loop flows should inform this initiative.
As PG&E understands it, the CAISO only tracks loop flows under certain circumstances. This
limited tracking may limit assessments of the size and prevalence of the loop flow. Without this
information, it may be difficult to gauge how complex a solution is needed, or to measure the
accuracy of loop flow modeling estimates.
Further exposition on loop flows can greatly inform this stakeholder process. The CAISO should
provide critical details on loop flows in subsequent papers, in addition to tracking the flows on an
appropriate basis, e.g. hourly. Information could include: How big is the loop flow “problem”?
Full Network Model Expansion Straw Proposal Comments Page 6 of 33
What are the key drivers? How is it settled today? How is it measured and reported?
ISO Response
The key drivers of unscheduled flow (USF) on COI (Path 66) during 2012 have been explored
by WECC’s Unscheduled Flow Administrative Subcommittee in a January 2013 report, which is
available at
http://www.wecc.biz/committees/StandingCommittees/JGC/02072013/Lists/Presentations/1/US
F%20Path%2066%20Analysis%20Update%20-%20Robin%20Chung.ppt. This report found
that the level of utilization (scheduled flows vs. SOL, including derates) of Path 66 was a large
contributor to the Path 66 USF events, significant outages of several phase-shifters eroded the
effectiveness of the Unscheduled Flow Mitigation Plan (UFMP) through off-path schedule
curtailments, change in generation dispatch patterns with higher exports from the Pacific
Northwest and higher imports to California contributed to USF events on Path 66, and
inappropriate execution of the UFMP and the Reliability-Based Control Field Trial had little
impact on Path 66 USF events. Because the sources of unscheduled flow are outside the ISO,
unscheduled flow is not settled by the ISO. The ISO does not routinely report on unscheduled
flow.
2. CAISO loads should not pay for less efficient unit-positioning due to improper positioning or flows in external Balancing Areas (BAs).
While the CAISO should always work to augment WECC reliability through better situational
awareness, coordination, and modeling, the CAISO should not, simply because it has the ability
to see a potentially less stable dispatch regime in other areas, mitigate the external area’s
problems to the detriment of its native customers. Put another way, CAISO loads should not
automatically pay for less efficient dispatches in the CAISO simply because the CAISO fears a
potential cascading event from another area, especially if the CAISO is compliant with WECC
reliability standards in its own right. Instead, all BAs should comport with WECC reliability
standards and rules on their own.
The CAISO should clarify its plan for communicating to other BAs about perceived risks of
system-wide disturbances originating in an external BA. If the CAISO can use its fairly
sophisticated modeling to better support reliability in the WECC, how can it communicate to
other BAs in real-time? How will BAs share in the responsibilities for resolving risks of a system-
wide disturbance, if WECC rules are not fully clear?
ISO Response
As a first step, the ISO has been closely coordinating with external balancing authorities
Full Network Model Expansion Straw Proposal Comments Page 7 of 33
involved in the September 8th event to improve the modeling of our collective systems to more
accurately reflect day-ahead and real-time conditions. As we gain more experience with the
expanded full network model and improve communications with external entities, the ISO will
evaluate next steps, including mechanisms for coordinating reliability responses with
neighboring BAs. This coordination needs to be developed through discussions among BAs,
and while the ISO’s FNM expansion is a necessary step in this process, the ongoing process of
coordination with neighboring BAs would be beyond the scope of this stakeholder process.
3. The CAISO should implement cost-allocation based on cost-causation for RTCIO
As this initiative proposes to deal with modeling of loop flows, it should also consider the costs
occasionally associated with imperfect modeling of these flows. Flow estimates and imperfect
modeling can create risks of Real-Time Congestion Imbalance Offset (RTCIO). RTCIO risks
have been material in the past2, and an expanded FNM may exacerbate these risks, in spite of
measures underway to reduce the total costs of unreasonable RTCIO.3
The CAISO should implement a causation-based allocation for RTCIO. This allocation rule may
reduce uplifts associated with certain bidding strategies through which profits are funded by
uplifts rather than from willing counter-parties. Information on the drivers of loop flows will
support implementation of this type of rule. The CAISO should initiate a stakeholder process on
RTCIO uplift allocation and should leverage ideas raised by the Department of Market
Monitoring (DMM) as a starting point.4
____ 2 “2012 Annual Report on Market Issues & Performance”, Department of Market Monitoring, April 30, 2013, pg. 92
http://www.caiso.com/Documents/Apr30_2013-2012AnnualReport-MarketIssues-Performance-Department-
MarketMonitoringZZ13-4-000.pdf
3 Initiatives include Transition Constraint Parameter Relaxation and Transmission Reliability Margin Enhancement.
Others may apply.
4 ”Discussion Paper: Real-Time Revenue Imbalance in CAISO Markets”, Department of Market Monitoring, Kurlinski,
Ryan E., April 24, 2013.
http://www.caiso.com/Documents/DiscussionPaper-Real-timeRevenueImbalance_CaliforniaISO_Markets.pdf
ISO Response
The ISO appreciates PG&E’s comments. The improvements in the expanded full network
model should lead to a decrease in RTCIO and improved reliability. However, RTCIO cost
allocation is beyond the scope of this stakeholder process.
Full Network Model Expansion Straw Proposal Comments Page 8 of 33
4. The use of WECC tools is a good starting point, but the CAISO’s plan must also ensure reasonable modeling inputs to ensure reasonable market outcomes.
PG&E supports the proposed idea of leveraging currently available WECC tools and data for the
CAISO’s FNM expansion through a phased approach. Generally, this plan will help the CAISO
to better consider loop flows and reliability needs.
Changes to the FNM, however, will affect market outcomes and so require several checks on
reasonableness.
ISO Response
The ISO agrees. WECC data will serve as a guide to the ISO for day-ahead conditions but it
will not be the only source. The ISO will also have historical flow data and it remains within our
discretion to adjust data received from WECC to reflect those real-time flows considering the
expected conditions. This serves as a reliable check on reasonableness of the WECC data.
See also discussion in Section 11.
a. The scope and formulations of the proposed system-to-system exchanges between the CAISO and WECC need review.
As PG&E understands it, the CAISO intends to calculate state-estimations and flows for
neighboring BAs for each market run by pulling information from the WECC, e.g. from the
WECC’s exchange tool. How frequent will these transactions occur? How often should the
CAISO “drop” new versions of its expanded FNM? With respect to sequencing the information
exchanges, when and how will WECC-wide information in the Day-Ahead (DA) feed into the
Integrated Forward Market, particularly if e-tags detailing the DA WECC interchanges are not
submitted to WECC until 3pm? The CAISO should thus provide step-by-step details on how its
market optimization will access and use information from the WECC. A general assessment of
this information technology work should show that the proposed plan is feasible.
ISO Response
See discussion in Section 11.
Updates to the expanded FNM are not expected to be any more frequent than current practices,
which is periodic and typically occurs on a 30-60 day cycle.
b. The CAISO should address how it will manage flawed inputs or unreasonable model results.
How will the process include new and relevant information such as major outages on a key BA
to BA intertie? What if the exchange process fails and market results become unreasonable?
What if RAS schemes are activated in external BAs, dramatically effecting transfer capabilities
Full Network Model Expansion Straw Proposal Comments Page 9 of 33
or resource loading and invalidating the CAISO’s assumed flows? The CAISO must develop a
process for addressing problems that may result from an expanded FNM which is out of the
CAISO’s control and perhaps also visibility.
ISO Response
The ISO appreciates PG&E’s comments. The goal of the FNM expansion is to model and
include as much up-to-date information as possible for the day-ahead and real-time to ensure
reliability. The issues PG&E points out are some of the concerns that have led the ISO to
pursue this initiative. For example, the current day-ahead schedules ignore loop flows from
external transactions (e.g., next day operating conditions of external systems, including
generation schedules and transmission outages). Consequently, the ISO takes several actions
in the real-time to mitigate such loop flows such as transmission limit reductions on power flow
constraints, the use of compensating injections account for the loop flow, and exceptional
dispatch. We believe an expanded FNM will provide us more visibility and options to manage
the system than today. See also discussion in Section 11.
c. The specific formulas and details involved in estimating loop flows, generation distribution factors, and external BAs’ load-distribution factors warrant high-level stakeholder review.
The CAISO should provide these formulas mathematically as seen by the market optimization.
Will the CAISO use the expanded FNM for all market runs? To support stakeholder
engagement, the CAISO should provide an example of a stylized optimization model with the
new constraints.
ISO Response
In response to PG&E, the ISO has provided several examples in Section 10 of the revised straw
proposal.
d. Lastly, if the CAISO plans to include more detailed topologies or elements of external areas, information sharing rules should be developed.
More detailed information may require direct BA to BA coordination and information sharing.
PG&E believes such activities should be fair and equitable among transmission owners and
BAs. To pursue more detailed models based on BA–to-BA information sharing, the CAISO
would need to transparently detail which pieces of information it seeks and how it would obtain
the data beyond or outside of the WECC tools. The Universal Data Sharing Agreement, the
non-disclosure agreement that BAs and others have signed with the WECC RC, may not be
sufficient to address concerns from the affected entities in a BA-to-BA sharing approach.
To develop further BA-to-BA information sharing ideas or rules, the CAISO should consider a
Full Network Model Expansion Straw Proposal Comments Page 10 of 33
“FNM Expansion Working Group” which would support collaboration, detailed discussion, and
problem solving among the BAs and other stakeholders. This group could review the data
confidentiality concerns, communication protocols, network and outage data needs, and other
relevant information required to allow more detailed network model sharing, potentially
producing recommendations or roadmaps with approximate milestones to guide the effort.
ISO Response
The ISO appreciates PG&E’s comments and will consider such a working group. In this first
phase, the ISO has worked closely with the external balancing authorities involved in the
September 8th event and such collaboration can also serve as a blueprint for future cooperation
with other entities.
5. The CAISO should review risks of pricing inconsistencies if unique constraints are used to simultaneously enforce a physical limit and a scheduling limit.
The CAISO’s design should ensure pricing consistency. To the extent that the CAISO enforces
two incongruous flow constraints at an intertie, it seems possible for multiple prices to result.
This issue, as PG&E understands it, may be akin to the “dual constraint” issue discussed in the
Intertie Pricing and Settlement5 initiative where the optimization produced multiple LMPs at a
single node. Pricing disparities can produce illogical awards and potentially other market
inefficiencies.
The CAISO should further study how the added enforcement of physical limits may or may not
create disparities and related issues. To this end, PG&E recommends the CAISO provide an
example of the stylized optimization model, in line with 4c.
___
5 http://www.caiso.com/Documents/Issue_paper_IntertiePricingandSettlement.pdf
ISO Response
In response to PG&E, the ISO has provided an example of enforcing both scheduling and
physical limits on the interties in Section 10 of the revised straw proposal.
6. The expanded FNM’s effects on market solution times need review to ensure the time leading up to a full market solution is used optimally.
As PG&E understands it, the expanded FNM will not add many constraints to the market run but
will instead only add deemed flows between external BAs into its market optimization. As such,
there is little concern for prolonged market solution times. If, however, the expanded FNM
intends to augment the market solution with further constraints, the effects on solution-times
need review.
As PG&E expressed in its comments on the proposed FERC Order 764 compliance plan, the
CAISO should endeavor to run its day-of markets as close to real-time as possible in order to
Full Network Model Expansion Straw Proposal Comments Page 11 of 33
use the best forecasts for loads and variable energy resources. These inputs are critical to the
real-world optimality of the market solution. The CAISO should consider how to prioritize the
need for accurate forecasts against the desire for more time during or after market runs yet prior
to dispatch, e.g. to provide more time for tagging intertie transactions which ultimately update
the WECC’s interchange database. PG&E recommends the CAISO consider these trade-offs
comprehensively as part of this initiative or separately. The CAISO should also discuss the
interplay and prioritization of this initiative and others, such as the EIM Initiative or FERC 764.
ISO Response
The FNM expansion will not increase solution times because this has been provided as a
requirement to ISO’s software vendor. The proposed market changes to comply with FERC
Order 764 will be beneficial to this stakeholder process as we are able to incorporate more data
closer to the actual dispatch time. However, inconsistencies will remain such as e-tagging
deadlines, which is a trade-off that needs to be made at this point. Therefore, the ISO
welcomes cooperation with external balancing authorities. The first phase of the FNM
expansion will also include modeling of the EIM entity. While the EIM initiative is dependent
upon the FNM expansion, the FNM expansion can proceed independently.
Company Date Submitted By
Powerex June 26, 2013 Thomas Elgie
604-891-6010
Opening Comments
Powerex appreciates this opportunity to comment on the CAISO’s Full Network Model
Expansion Straw Proposal (“Straw Proposal”).
Powerex is supportive of the CAISO’s objectives of improving its visibility of external system
conditions in both the day ahead and real-time timeframes, consistent with the FERC/NERC
recommendations from the September 8th blackout. Powerex, however, strongly disagrees with
the CAISO’s approach in this initiative. In Powerex’s view, the CAISO’s proposal has three
significant deficiencies:
1. The CAISO should require day ahead e-tags for day ahead physical interchange awards
2. The CAISO should ensure it has accurate information on the quality of day ahead and
real-time physical interchange offers
Full Network Model Expansion Straw Proposal Comments Page 12 of 33
3. The CAISO should combine its physical and scheduling limits on each intertie into a
single value that is coordinated with adjacent transmission providers
These deficiencies have serious implications for the reliability of the western interconnect.
Failure to ensure that the CAISO has accurate e-tag information on the quantity, quality and
physical path of interchange deliveries in both the day ahead and real-time timeframes runs
directly counter to the transparency, data coordination and situational awareness
recommendations of FERC/NERC. Failure to coordinate transmission scheduling limits with
adjacent transmission providers via communication of a single value is also inconsistent with
these important recommendations.
In the past, the CAISO has taken market design actions to increase intertie liquidity, including
steps which may now be viewed as detrimental to reliability objectives. While increasing liquidity
at the interties is generally an appropriate objective, it should not come at the expense of
reliability and market efficiency. For example, a contributor to the lack of external transparency
and coordination, that FERC, NERC and CAISO now seek to cure, is the lack of next-day
generation and transmission information sharing between transmission providers and balancing
authorities. The CAISO’s lack of a day ahead e-tag requirement runs directly counter to this
important FERC/NERC information sharing objective, and such a requirement is only absent as
a direct consequence of the CAISO’s pursuit of increased intertie liquidity. As discussed further
herein, this omission of a day ahead e-tag requirement also has the result of devaluing
investments in firm transmission service outside of CAISO in favor of creating value for
congestion rights holders in the state, inconsistent with efficient market outcomes and
appropriate price signals for transmission investment external to CAISO markets.
In addition, the CAISO currently lacks sufficient information, as well as clear, unambiguous and
consistently enforced rules associated with the “quality” of interchange energy offers in both its
day ahead and real-time markets. This further undermines the external transparency and
coordination efforts FERC/NERC and the CAISO desires. Powerex makes the following
comments and recommendations on these issues.
ISO Response
No comment.
Full Network Model Expansion Straw Proposal Comments Page 13 of 33
The CAISO should require day ahead e-tags of physical interchange awards
The FERC/NERC report on the September 8th blackout, highlights the importance of a day
ahead e-tag requirement:
“some affected TOPs use models for external networks that are not updated to reflect next-day
operating conditions external to their systems, such as generation schedules...” [emphasis
added – Finding 2]
“TOPs and BAs should ensure that their next-day studies are updated to reflect next-day
operating conditions external to their systems, such as generation and transmission outages
and scheduled interchanges…” [emphasis added – Recommendation 2]
Unambiguously, both Finding 2 and Recommendation 2 highlight the need for the CAISO to
have accurate next-day interchange schedule information. In Powerex’s view, this necessitates
the CAISO implement a strict day ahead e-tagging requirement for day ahead physical
interchange schedules.
It is important to note that e-tags are the industry standard mechanism for communication of
important reliability information on scheduled interchanges between balancing authorities and
transmission providers across North America. In fact, day ahead e-tag requirements for day
ahead physical interchange schedules are, undisputedly, the norm outside CAISO markets,
including for transactions for firm energy under the predominant WSPP Schedule C firm
agreement in western bilateral markets, and for physical day ahead interchange transactions in
eastern ISOs. Indeed, the Federal Energy Regulatory Commission considers e-tags so
important that it has required FERC to be cc’d on all e-tags and plans to include reporting of e-
tag information as part of its Electric Quarterly Reports that it uses to monitor transactional
activities.
The CAISO’s unique practice of not requiring day ahead e-tags for day ahead physical
interchange transactions not only allows, but tacitly encourages, participants to submit physical
energy offers into CAISO markets without concurrently committing physical capability to deliver
on such awards. The lack of a day ahead e-tagging requirement for day ahead obligations has
at least three troubling reliability implications for the CAISO, and the broader western
interconnect.
First, until an e-tag is eventually submitted, if at all, in real-time, the CAISO will have little, if any,
Full Network Model Expansion Straw Proposal Comments Page 14 of 33
knowledge (other than vague historic patterns) in determining:
i) the location and characteristics of the generation resource;
ii) the contracted delivery transmission path, and;
iii) the likelihood of delivery.
This directly undermines the CAISO’s ability to have accurate next-day information on
operations external to its balancing authority, as recommended in Finding 2 of the FERC/NERC
Joint Staff Report on the September 8th Blackout.
Second, the CAISO lacks the necessary information to accurately commit sufficient generation
capacity in its RUC process to backstop “speculative” physical interchange deliveries in the
next-day timeframe. The CAISO can only, at best, make an “educated guess” on how much of
the un-tagged physical interchange may not show up, and thereby make a corresponding
guesstimate of its internal RUC requirements. While this framework of guesstimating hourly
RUC requirements has not yet resulted in a reliability event, there are no assurances that such
guesstimates will continue to be sufficiently accurate going forward.
Third, modeling of actual flows and reliability conditions of the entire western interconnect is
substantially undermined in the next-day window since no reliability coordinator, balancing
authority or transmission provider can be expected to have information on the source and
transmission path that each market participant intends to utilize for its CAISO IFM physical
interchange awards (that lack corresponding next day e-tags).
None of these reliability implications are acceptable.
Powerex believes it is important to re-evaluate the economic rationale for the CAISO’s decision
to not require e-tags, given it is clear that a day ahead e-tag requirement is consistent with the
recommendations of FERC/NERC and overall reliability objectives.
The CAISO’s decision to not require e-tags is based on economic, not reliability, interests.
To understand the CAISO’s economic motivations for not requiring next day e-tags for next day
physical interchange awards, the following quote from the CAISO’s 2010 Straw Proposal on e-
tagging timing requirements provides substantial insight:
Full Network Model Expansion Straw Proposal Comments Page 15 of 33
“There also may be potential unintended consequences that result from strict enforcement of
earlier e-tag requirements. An earlier requirement may reduce day ahead market liquidity by
reducing the time market participants have to secure energy and transmission to meet their day
ahead awards. Additionally, an earlier e-tag timing requirement may conflict with the timing of
when transmission routinely becomes available in other balancing authority areas. In
considering whether it is appropriate to implement earlier e-tagging requirements in the ISO’s
markets, it is important to assess the potential adverse impacts as well as the benefits.”
Powerex believes this viewpoint illustrates two important perspectives of the CAISO:
1. The CAISO believes it is consistent with its market efficiency and reliability objectives for
physical interchange awards in its IFM market to be backstopped merely by prospective
purchases of energy and/or transmission outside the CAISO in real-time – IFM awards do not
need to be backstopped by day ahead physical delivery capabilities.
2. The CAISO believes it is appropriate for the CAISO’s rules to ensure that “unused” firm
transmission rights that are released by external transmission providers as non-firm
transmission rights (after next-day e-tagging industry timelines) can be prospectively relied upon
by participants for performing on CAISO’s IFM physical interchange awards.
Powerex, respectfully, strongly disagrees with both of these perspectives, and provides an
alternative perspective as follows:
1. IFM physical interchange supply offers to CAISO, representing prospective purchases of
energy and/or transmission in external markets, must be treated as financial offers in the
CAISO’s IFM market.
Powerex agrees with the CAISO that prospective real-time interchange supply should be
encouraged to participate in CAISO’s markets. However, Powerex strongly disagrees with the
CAISO that prospective real-time interchange supply should be treated as physical supply in the
CAISO's day ahead markets- prospective real-time supply simply cannot be reliably relied upon
to meet firm load obligations in the next day window. Only when a participant has secured the
necessary rights to generation output and transmission, as represented by an implemented e-
tag, can the CAISO reasonably rely on such supply to meet its firm load obligations.
Full Network Model Expansion Straw Proposal Comments Page 16 of 33
Accordingly, it is prudent, consistent with reliability objectives and efficient market outcomes,
and consistent with rules developed across eastern ISOs/RTOs, for prospective real-time
interchange supply, (including un-tagged physical interchange awards) to be treated as financial
awards in the CAISO’s IFM and RUC processes.
The appropriate mechanism for enabling prospective real-time interchange supply to participate
in CAISO markets, thereby increasing IFM liquidity, is through the implementation of
convergence bidding on the interties, and settling un-tagged IFM physical awards consistent
with intertie convergence supply awards. Importantly, treating prospective real-time interchange
supply in this manner (i.e. as financial, not physical supply transactions) in the next day
timeframe would ensure that the CAISO could procure accurate quantities of RUC , with the
costs of this RUC capacity allocated to these supply offers, consistent with cost causation. This
alternative treatment would both protect reliability of the western grid, by directly addressing the
recommendations of the FERC/NERC Joint Staff Report on the September 8th Event, and be
consistent with efficient market outcomes.
In contrast, the CAISO’s current approach, which fails to treat prospective real-time interchange
supply as financial in the next-day timeframe, undermines the CAISO’s RUC process and thus
its reliability objectives, while inefficiently lowering marginal clearing prices in CAISO’s markets.
This price depression effect results from participants with prospective real-time supply being
able to avoid, and hence exclude from their offer prices, the increased dispatch of RUC capacity
necessary to backstop their prospective supply offers. In effect, the CAISO’s incorrect treatment
of prospective real-time interchange supply as physical supply results in “quality” supply under-
scheduling in the CAISO’s IFM physical markets, through the avoidance of day ahead
generation and/or transmission capacity commitments behind the un-tagged day ahead supply
offer. Put another way, the inappropriate co-mingling of un-tagged prospective real-time
interchange supply with physical supply that includes unit commitment (as represented by
implemented e-tags) as equivalent products, distorts CAISO's market clearing prices while
undermining the CAISO’s reliability objectives.
2. The CAISO’s efforts to access “unused” firm transmission to support IFM awards directly
subverts transmission investments and transmission priorities external to CAISO markets,
inappropriately shifting the value to CAISO transmission rights.
Full Network Model Expansion Straw Proposal Comments Page 17 of 33
Under the pro-forma open access transmission tariff (OATT) prevalent across western markets
outside the CAISO, priority access to use the transmission system is granted under tariff rules
set forth by the Federal Energy Regulatory Commission. Under these rules, investors in long-
term firm transmission rights receive priority access to utilize the transmission system ahead of
all non-firm transmission customers. On transmission paths that are fully subscribed on a long-
term firm basis, such as the transmission paths that enable deliveries from the Pacific Northwest
to serve demand in California, non-firm transmission is generally only available for sale during
hours when the firm transmission customer chooses not to utilize its priority rights. Importantly,
this "choice" appropriately rests with the transmission customer, granted by the respective
transmission provider, not with external entities such as CAISO.
It is important to note that this priority access for firm transmission investors is achieved largely through:
(i) transmission providers monitoring the utilization of firm and non-firm transmission rights on e-tags
(ii) transmission providers limiting the release of unused firm transmission rights as non-firm transmission rights based on path scheduling limits and firm transmission rights utilization as represented on e-tags
(iii) transmission providers curtailing non-firm transmission rights ahead of firm transmission rights during hours where scheduled use exceeds scheduling limits, via implementation of e-tag curtailments. For example, Bonneville Power Administration, the largest OATT transmission provider in the
region, attempts to ensure firm transmission rights holders are given priority access to
transmission on its southern interties in the day ahead markets, via designing the release of
unused firm transmission rights (offered as non-firm transmission rights) only after next-day e-
tagging timelines in western markets have expired. This release timeline attempts to ensure
that:
(i) non-firm transmission customers cannot “step ahead” of firm transmission customers as a
result of seams issues with neighboring jurisdictions
(ii) non-firm transmission rights are available to be utilized if the firm transmission rights-holder
chooses not to utilize its transmission rights in the day ahead timeframe, ensuring efficient
utilization of the transmission network
Full Network Model Expansion Straw Proposal Comments Page 18 of 33
The CAISO’s lack of a day ahead e-tagging requirement has the effect of nullifying BPA’s
transmission priority framework, enabling non-firm transmission customers to compete directly
with firm transmission customers, for use of the respective transmission path not only on the
CAISO transmission system, but on the BPA transmission system as well. This directly and
severely undermines transmission investment and transmission priorities under BPA’s open
access transmission tariff framework. In effect, this results in the CAISO allocating transmission
awards both on its transmission system and on the BPA system, directly inconsistent with the
BPA’s authority under its OATT and various statutes. In other words, the CAISO chooses which
participants utilize BPA's transmission system. This significantly undermines the value of
transmission investment in the BPA transmission system, by increasing the physical liquidity in
the CAISO’s day ahead physical energy markets potentially beyond the transmission capacity of
the BPA transmission system. Economically, this increases the value of CAISO transmission
rights through increased intertie congestion, at the direct expense of lowering the value of BPA’s
transmission rights, while undermining FERC/NERC’s and the CAISO's reliability objectives, as
previously discussed.
To be clear, Powerex is not seeking to resolve the seams issues between the CAISO and
adjacent transmission providers in a manner which seeks to disproportionately transfer value to
external transmission customers, such as Powerex. Powerex believes there are market design
solutions available which result in efficient market outcomes, are consistent with reliability
objectives, respect both the CAISO and external transmission providers open access
transmission rules and authorities, and result in equitable proportionate allocations of
transmission value to both CAISO transmission customers and external transmission
customers. The CAISO does not, and should not, need to sacrifice the transparency and
coordination objectives sought by FERC/NERC, via continued omission of a day ahead e-tag
requirement, in order to achieve its liquidity objectives and efficient market outcomes. Powerex
hopes such results will be achieved through open and transparent transmission market and rate
design and seams discussions, perhaps as part of the CAISO's EIM stakeholder process, within
the context of the CAISO’s desire to represent wider regional interests beyond California's
transmission customers and ratepayers.
Powerex does, however, oppose the CAISO’s current implementation of its e-tagging timing
rule, which, in its view, results from the pursuit of increased liquidity in its markets at the
expense of efficient market outcomes, equitable allocation of transmission value to both CAISO
Full Network Model Expansion Straw Proposal Comments Page 19 of 33
and external transmission customers, and reliability objectives. This viewpoint should not be
misinterpreted to suggest that Powerex opposes increased liquidity in CAISO markets. To the
contrary, Powerex generally supports the CAISO’s pursuit of liquidity in its markets but believes
this pursuit should not go beyond the CAISO’s reliability and market efficiency objectives, and
certainly shouldn’t transcend to the inequitable or confiscatory treatment of transmission rights
outside CAISO markets. Importantly, in the context of this stakeholder process focused on
reliability objectives, the pursuit of economic value for CAISO's transmission customers, via
omission of a day ahead e-tag requirement, runs directly counter to the reliability objectives of
FERC/NERC.
ISO Response
The ISO appreciates Powerex’s comments. Current WECC tagging rules only require tagging
20 minutes before flow.
The CAISO should ensure it has accurate information on the quality of day ahead and real-time physical interchange offers
The CAISO should ensure it has accurate information on the quality of day ahead and real-time
physical interchange offers The CAISO currently has three energy product codes applicable to
interchange transactions which are designed to reflect the “quality” of interchange deliveries
from a generation perspective – firm, unit contingent and non-firm. Each of these three products
carries different delivery requirements and different settlement treatment.
Conceptually, firm energy can be relied upon to meet CAISO’s firm load obligations, without the
need for additional CAISO generation capacity commitments to backstop potential failures to
deliver. Unit contingent energy can also be relied upon to meet CAISO’s firm load obligations;
however, additional operating reserves need to be carried by the CAISO in order to backstop
failures to deliver resulting from qualifying contingency events (i.e. unit trips or de-rates, which
can be backstopped by the activation of Contingency Reserves). Non-firm energy products
cannot be relied upon to meet CAISO’s firm load obligations, and hence must be fully coupled
one-for-one with operating reserves to serve firm demand. CAISO’s operating reserve costs
associated with these energy product types are allocated based on these differing requirements
for operating reserves, consistent with cost causation.
In practice, however, the CAISO has poorly defined the differing delivery requirements
associated with each of these energy products in its tariff. Moreover, although these differing
Full Network Model Expansion Straw Proposal Comments Page 20 of 33
energy products have different settlement and reliability implications, the CAISO takes little, if
any, direct action to ensure that participants utilize the appropriate energy product type to
represent their energy offers, in either its day ahead and/or hour ahead markets. It should not
be surprising, therefore, that deliveries of interruptible energy products to CAISO represented as
firm and unit contingent products appear to be increasing, as more entities become comfortable
with the CAISO’s lack of clarity in its tariff. This trend is exacerbated by the widespread
installation of VERs outside the CAISO and the cost pressures associated with VER integration.
In Powerex’s view, the representation of interruptible interchange supply as firm and/or unit
contingent products, results in “quality” under-scheduling of supply, which undermines efficient
market outcomes in both the CAISO and external markets, and more importantly, seriously
jeopardizes reliability.
To understand the impacts of quality under-scheduling of supply, Powerex believes it may be
helpful to consider the impacts of a similar activity - quantity-based under-scheduling of
demand. It is well documented that under-scheduling of demand from a quantity perspective
distorts efficient market outcomes, lowering day ahead energy prices and raising real-time
prices. It is also well documented that under-scheduling of demand can have serious reliability
implications unless the respective system operator both identifies the under-scheduling activity
and commits additional generation capacity day ahead.
FERC has taken significant steps to both prevent and counter the ability and consequences of
under-scheduling demand practices. For example, the standard design of the Residual Unit
Commitment process in RTOs ensures sufficient capacity is procured from a reliability
perspective to prevent under-commitment of capacity day ahead resulting from load-serving
entities under-scheduling their expected quantity of demand, in pursuit of lower day ahead
prices. Similarly, convergence bidding is a market design mechanism that nullifies the ability for
load-serving entities to benefit from under-scheduling demand through utilizing their monopsony
power to depress day ahead prices and thereby distorting efficient market outcomes.
In Powerex’s view, the CAISO’s failure to differentiate and/or enforce the delivery requirements
of different energy products results in under-scheduling supply from a quality perspective, with
the same troubling consequences as quantity-based under-scheduling of demand. By tolerating
delivery of a portion of its IFM aggregate firm and unit contingent interchange energy awards
from resources and/or balancing authorities that supply energy subject to interruption (outside of
Full Network Model Expansion Straw Proposal Comments Page 21 of 33
events that can be backstopped by Contingency Reserves) the CAISO IFM (and HASP)
markets run with an over-statement of supply “quality”. This has two undesirable consequences,
similar to those identified with quantity-based demand under-scheduling. First, it artificially
lowers day ahead energy prices for firm energy resources below efficient market outcomes, as
entities offering such supply do not have to include RUC costs in their offer prices. Second, it
increases the reliability risk to the western interconnect since insufficient residual unit
commitments may take place to backstop this quality shortfall.
Powerex urges the CAISO to re-examine and re-define energy product types in its tariff, and
develop sufficient prospective preventative procedures to ensure differing qualities of day ahead
and real-time interchange energy deliveries are treated appropriately from both a reliability and
cost causation perspective. To be clear, Powerex is not seeking a framework which penalizes,
or over-charges, participants that have elected to purchase insufficient capacity reserves to
deliver energy that can be reliably relied upon to serve firm demand, including interruptible
energy deliveries from VERs. To the contrary, Powerex urges the CAISO to identify and
differentiate such interruptible energy products from firm and unit contingent supply offers,
thereby enabling the efficient, reliable and transparent procurement of sufficient capacity
resources in the CAISO day ahead and real-time markets, with the associated costs allocated
consistent with cost causation and efficient market outcomes.
Powerex believes the additional information that would be provided by both a day ahead e-tag
requirement and by well-defined energy product types that are adhered to would go a long way
to increasing the CAISO’s situational awareness of operations in external balancing authorities
both next-day and in real-time. These steps would enhance CAISO reliability while helping
achieve efficient market outcomes. Additional steps such as modeling of external transmission
systems and potential loop flow, layered on top of this important foundation of a robust day
ahead e-tagging and energy product type framework, would go a long way to achieving the
Recommendations of the FERC/NERC Blackout Report.
ISO Response
The ISO appreciates Powerex’s comments. Please see the HASP reversal rule under the ISO’s
FERC Order 764 proposal
http://www.caiso.com/informed/Pages/StakeholderProcesses/FERCOrderNo764MarketChanges.aspx
The CAISO should combine its physical and scheduling limits on each intertie into a single value that is coordinated with adjacent transmission providers
Powerex does not object to the CAISO’s proposal to attempt to calculate physical limits, in
Full Network Model Expansion Straw Proposal Comments Page 22 of 33
addition to scheduling limits that are calculated today. However, Powerex believes it is important
that the lower of the physical and scheduling limit calculation becomes the official scheduling
limit for all purposes internal and external to CAISO markets. Of particular importance, the
CAISO should rely on the lower limit in coordinating ATC with adjacent transmission providers,
to ensure that both transmission providers limit transmission rights to the respective level,
thereby preventing an ATC mismatch. An ATC mismatch has the potential to result in
transmission providers external to the CAISO over-selling transmission rights on their systems,
inconsistent with their OATTs and efficient market outcomes.
Powerex appreciates this opportunity to comment and is hopeful that the CAISO will consider
and incorporate the proposals and recommendations suggested herein. Powerex looks forward
to additional details on the other elements of the CAISO’s Straw Proposal.
ISO Response
In response to Powerex, the ISO has provided an example of enforcing both scheduling and
physical limits on the interties in Section 10 of the revised straw proposal.
Company Date Submitted By
SDG&E 6/25/13
An Expanded Full Network Model Better Aligns Reliability Requirements with Market Outcomes
Overall, SDG&E believes the CAISO’s June 11, 2013 Full Network Model Expansion
Straw Proposal is moving in the right direction. It should improve the alignment of grid
reliability requirements and market signals and thereby reduce the need for real-time
out-of-market dispatch.
At the same time, market participants need to understand that because the proposed
expansion relies on information developed (i) outside of the CAISO’s market
mechanisms (e.g., information supplied by the WECC Reliability Coordinator), and (ii)
by the CAISO itself (e.g., where information is not available from the WECC Reliability
Coordinator), market outcomes will be increasingly dependent on decisions made by
non-market entities. To some extent, this is already the case today—for example, the
CAISO imposes its own forecast of CAISO Balancing Authority loads in the Residual
Unit Commitment process. The proposed expansion means that a wider range of
CAISO decisions can impact market outcomes. At some point, the CAISO’s market
Full Network Model Expansion Straw Proposal Comments Page 23 of 33
neutrality could be called into question. In developing the details of the proposed
expansion, stakeholders need to weigh the advantages and disadvantages of giving the
CAISO greater influence over market outcomes
ISO Response
The ISO disagrees that this initiative provides the ISO with “greater influence over market
outcomes.” In fact, the opposite is true. Today, the ISO uses compensating injections in the
real-time market to estimate unscheduled flows and may use exceptional dispatch to manage
the impact of such flows. With the FNM expansion, we would seek to reduce both, and replace
much of the needed compensating injection calculations with data from WECC, which should
lead to a reduction in the use of exceptional dispatch.
Obtaining the Data Necessary to Populate and Run the Expanded Full Network Model
SDG&E believes that to the extent possible, CAISO markets should rely on information
provided by CAISO market participants through price/quantity bids/offers. Where
additional information is needed to develop and operate an expanded Full Network
Model, SDG&E supports the use of information obtained from the WECC Reliability
Coordinator. This information is likely to better reflect non-market participants’
commercial intentions than would CAISO “estimate[s]” of the same information.
However, while the WECC Reliability Coordinator should have information concerning
the planned outage of transmission facilities and large generating units, it is less likely to
have information concerning generation start-up decisions, output levels, and shut-down
decisions that are driven by economics. The CAISO’s proposal recognizes that there
will be data gaps in the expanded Full Network Model that will need to be filled through
CAISO “estimate[s].” The straw paper states that “the ISO will rely on existing WECC
databases and resources but may have to estimate or extrapolate data that is missing,
incomplete, or not appropriately formatted.”
For example, the straw proposal states that if CAISO cannot obtain “base schedules for
supply directly from the relevant balancing authority area,” the CAISO “will estimate
them by distributing the demand, net of tagged scheduled interchanges, to supply
resources in each balancing authority area using generation distribution factors.” This
estimation process implicitly assumes that each of the “supply resources” that are not
Full Network Model Expansion Straw Proposal Comments Page 24 of 33
known to be on a planned outage, will be operational for purposes of running the Full
Network Model. In practice, some of these supply resources will actually be off-line for
economic reasons or otherwise running at an output level that is inconsistent with the
demand that is “distributed” to the supply resource by the CAISO. This estimation
process introduces imprecision into the results of the expanded Full Network Model
because the Locational Marginal Prices (LMPs) at every node in the Full Network Model
are affected, to varying degrees, by the specific output level of every supply resource.
ISO Response
The ISO agrees that there may be imprecision to the WECC data but it does represent the best
available information from WECC at the time. This is an improvement over the current practice
where we have very limited visibility into external balancing authority areas. As described in the
ISO’s proposal, the ISO’s market systems will need to use estimation processes when there are
data gaps in the otherwise-available information. See discussion in Section 11.
Which Surrounding Balancing Authorities will be Included in the Expanded Full Network Model?
SDG&E is unclear as to which “surrounding balancing authorities” will be modeled in the
initial version of the expanded Full Network Model. Modeling the Los Angeles
Department of Water and Power (LADWP), Imperial Irrigation District (IID), Western
Area Power Administration (WAPA) and Comision Federal de Electricidad (CFE)
balancing authorities offers significant advantages because each of these balancing
authorities has multiple ties with the CAISO balancing authority which means, inevitably,
that loop-flows will be present. The expanded Full Network Model will predict these
loop flows and should therefore provide more accurate price signals throughout the
CAISO balancing authority.
In addition to modeling loop flows between the CAISO and its adjacent balancing
authorities, it is important to model loop flows that traverse the larger WECC loop, i.e.,
the transmission network connecting southern California, the desert southwest states,
the Rocky Mountain states, the Pacific Northwest and northern California (sometimes
called the “eastern loop”). The eastern loop can be a significant contributor to loop flow
across the CAISO balancing authority. SDG&E is unclear as to whether the initial
version of the expanded Full Network Model will include all of the balancing authorities
Full Network Model Expansion Straw Proposal Comments Page 25 of 33
that comprise the eastern loop.
ISO Response
In response to SDGE, the ISO has provided an explanation of its phased approach in Section 4
of the revised straw proposal. The first phase (targeted for Fall 2014 implementation) will only
include the external balancing authority areas involved in the September 8th event and the EIM
entity. As we gain more experience with the expanded FNM, we can evaluate where additional
modeling would be most beneficial and that would likely be where there are significant loop
flows. It is important to understand that the ISO’s phased approach to detailed modeling of other
BAAs in the WECC region will be a matter of modeling detail, and modeling the high-level (e.g.,
220 kV or higher voltage) transmission topology and resource locations can precede the
detailed modeling of lower voltage facilities.
Modeling HVDC Links in the Expanded Full Network Model
The straw proposal states that “verified tags for intertie schedules on the HVDC links
[where the ISO does not have direct operational control] would provide a hedge for the
locational marginal price difference between the inverter and rectifier stations, in effect
exempting these schedules from marginal loss and marginal congestion charges
between these stations since the associated energy is flowing on the HVDC link as
opposed to the AC network.” SDG&E asks that the CAISO provide some simple
numerical examples to illustrate the point of this statement.
ISO Response
In response to SDGE, the ISO has provided an example in Section 10 of the revised straw
proposal.
Full Network Model Expansion Straw Proposal Comments Page 26 of 33
Company Date Submitted By
Shell Energy North America 7/12/13 Mike Evans
General Manager, Regulatory
Affairs
Shell Energy North America
4445 Eastgate Mall, Suite 100
San Diego, CA 92121
858-526-2103
Transaction ID’s
Shell Energy wishes to make the following comments to the proposal as described in the
stakeholder presentation on June 18, 2013 to incorporate impacts of neighboring BAA’s into the
ISO dispatch process.
Shell Energy requests that when creating Transaction ID’s that the ISO retains and uses the
existing Resource ID’s and does not require SC’s to modify or change the existing Resource
ID’s which were created during MRTU and have been incorporated extensively into existing
scheduling systems.
The CAISO proposes to create a new “Transaction ID” which would be broader than the current
resource ID’s presently used by SC’s. These Transaction ID’s would provide a broader input to
the CAISO model, to indicate load and supply in external BAA’s.
Shell Energy supports the ISO’s work to implement recommendations associated with the
September 8, 2011 blackout and the modeling work that is proposed. However, as part of the
implementation of Transactions ID’s, it would be very helpful to begin thinking about how these
would be created. It is anticipated that these are an internal tool which the ISO could use to
evaluate the feasibility of the DA schedule relative to external BAAs.
It would be very helpful if the ISO could use the existing Resource ID’s which were set up by all
SC’s in 2008 with the implementation of MRTU, in the creation of the ISO’s Transaction ID’s and
that SC’s would not be required either create new Transaction ID’s or to modify their existing
Resource ID’s.
Full Network Model Expansion Straw Proposal Comments Page 27 of 33
Resource ID’s can be numerous and in particular, were greatly expanded with the
implementation of MRTU to be very specific to the transaction and location, of, for example
imports and exports. It would be a substantial effort to modify these Resource ID’s. They are
used extensively in both ISO systems and SC’s internal systems to move transaction quantities
of energy to scheduling points, associate with energy sales and deliveries, and properly
schedule daily quantities of energy into and out of the CAISO.
We request that as the ISO contemplates how the implementation of external BAA’s daily
load/supply/import/export schedules are set up and evaluated within a new broader view to be
created by the ISO, that the ISO could allow the existing Resource ID’s to remain intact, and to
use them to create the new Transaction ID’s and that any changes to schedules could then be
fed backwards to the appropriate Resource ID’s, so as to not require SC’s to make a whole new
set of Resource ID’s.
ISO Response
The ISO appreciates Shell’s comments and will consider these points as we move into the
implementation stage.
Company Date Submitted By
Southern California Edison 6/25/2013 Wei Zhou (626) 302-3273
Opening Comments
Southern California Edison (SCE) appreciates the opportunity to comment on the California
Independent System Operator (CAISO), June 11, Straw Proposal on Full Network Model
Expansion1. Full Network Model (FNM) plays an important role as it provides a foundation for
the CAISO to run the day-ahead market and the real-time market.
In general, SCE supports the CAISO efforts on improving modeling accuracy to better reflect
physical conditions. As noted by the CAISO, expanding the FNM has the potential to increase
Full Network Model Expansion Straw Proposal Comments Page 28 of 33
the modeling accuracy and minimize the impact of loop flows2 on the market outcomes.
However, the FNM expansion is a major step and should be carefully evaluated to avoid
adverse impacts to the current system, the CAISO market, and commercial trading around the
CAISO’s markets. Therefore, SCE’s support on this stakeholder process is contingent upon its
further review of details of the CAISO proposal.
Below, SCE provides comments on specific items on:
CAISO Proposed Activity 1: New scheduling point and load aggregation point definitions
CAISO Proposed Activity 2: Enforcing constraints for both scheduled and physical flow
CAISO Proposed Activity 3: Include variables in high voltage direct current transmission
modeling
Impacts to CRRs
Impacts to the LMP calculation
____ 1
ISO Straw Proposal on Full Network Model Expansion: http://www.caiso.com/Documents/StrawProposal-FullNetworkModelExpansion.pdf 2 Page 6 of the straw proposal
ISO Response
The ISO appreciates SCE’s comments and questions. Please see ISO’s responses below.
(1) CAISO Proposed Activity 1: New scheduling point and load aggregation point definitions
The CAISO should clarify any impacts to today’s practice of submitting bids and scheduling
power on interties, including the timeline to submit intertie bids, the mapping between today’s
intertie points and expanded intertie points and the bid validation process. For example, parties
currently schedule power to the CAISO at Palo Verde, will they have to change the way they
scheduled (possibly to different or multiple scheduling points) under the CAISO proposal? The
CAISO should clarify whether it intends to price in its market optimization all of, or a part of, the
set of new scheduling points and load aggregation points outside the CAISO, and how a bid
placed at a new generation aggregation point will get cleared and whether that requires the
disaggregation of the bid involving generation distribution factors?
Regarding the CAISO statement on
“The expanded model will also allow scheduling coordinators to submit physical or virtual import
or export bids at each of the new scheduling points”3,
Full Network Model Expansion Straw Proposal Comments Page 29 of 33
While SCE understands that a possible outcome of this stakeholder process (i.e., FNM
Expansion) is the modeling capability gained by the CAISO to accept convergence bids on new
scheduling points, will such bids be allowed for points that are not part of the CAISO’s cleared
and settled market? If yes, the policy question and the market impact of whether participants are
allowed to place convergence bids on new interties should be addressed separately, perhaps
even in a forum dedicated to this issue.
____
3 Page 11 of the straw proposal
ISO Response
The bid submission process (including timeline and bid validation) will remain largely the same.
Differences are noted in Sections 5.1 and 5.2.
(2) CAISO Proposed Activity 2: Enforce constraints for both scheduled and physical flow
The CAISO proposes to use a dual approach to enforce both scheduled and physical flows on
each ISO intertie. Since minimizing the impact of loop flows is one of the main goals of this
stakeholder process, the CAISO should assess the marginal benefits on reducing loop flow
impacts by enforcing both scheduled and physical flows.
The CAISO should clarify whether the expanded transmission portion (outside the CAISO,
excluding interties) will be enforced in the model. In other words, will congestion outside the
CAISO be modeled, and if yes, what are the impacts to the CAISO market? Further, we request
details on how the LMP congestion components are associated to scheduling limit and physical
limit constraints on the same intertie. In addition, the CAISO should clarify whether loop flows
are estimated by AC load flow or DC load flow.
ISO Response
The ISO believes that enforcing both scheduling and physical flow limits on the interties will
improve reliability of the ISO grid and market solution accuracy.
Congestion outside of the ISO (excluding interties) will not be enforced. LMP congestion
components using the scheduling limit and physical flow limit constraints will use the existing
calculation methods, except that improved modeling of physical flows will allow the ISO to
enforce physical flow limits on interties in day-ahead, as well as real-time when both scheduling
and flow limits can be enforced today, and resource LMPs will reflect the resources’ designated
interties for scheduling as well as their physical locations. When scheduling limits are enforced,
Full Network Model Expansion Straw Proposal Comments Page 30 of 33
the resources’ LMPs include the shadow prices of their designated interties’ contract path
capacity. When physical flow limits are enforced, the resources’ LMPs reflect their contribution
to flows on congested branches in the network and the shadow prices of the congested
branches. Please see the examples in Section 10, especially example 2 in Section 10.2.
The FNM is solved by an AC power flow.
(3) CAISO Proposed Activity 3: Include variables in high voltage direct current transmission modeling
SCE believes further information is needed to understand how DC transmission is modeled in
FNM, such as a specific example with schematic diagrams showing the modeling difference
from the AC system. Without detailed information, SCE can’t comment on the impact or benefit
(for example, to unit dispatch and market price) of including variables in DC transmission
modeling as currently proposed by the CAISO.
ISO Response
In response to SCE, the ISO has provided examples in Section 10 of the revised straw
proposal.
(4) Impacts to CRRs
SCE requests the CAISO clarify potential impacts to CRRs. If an existing intertie point is
terminated or replaced with new intertie points, how will a CRR, either sourcing or sinking at the
existing intertie, will be settled? Is there any impact to a CRR for which the existing intertie is a
mid-point along its path? More broadly, how the existing CRR holding with current FNM will be
converted to the expanded FNM?
ISO Response
In response to SCE, the ISO has included a discussion on CRRs in Section 9 of the revised
straw proposal.
(5) Impacts to the LMP calculation
The LMP calculation requires detailed transmission topology information, as well as load
distribution information. While the FNM Expansion may provide additional information about the
topology and the load external to the CAISO, the CAISO should clarify how such information will
be used in the market optimization and assess the impacts to the LMP calculation.
For instance, the system marginal energy component (SMEC) of LMPs today is the weighted
average of the LMPs at individual Pnodes that represent load internal to the CAISO. Similarly,
the marginal congestion component (MCC) and the marginal loss component (MLC) at each
node are calculated based on shift factors with respect to the reference bus which is the
Full Network Model Expansion Straw Proposal Comments Page 31 of 33
Company Date Submitted By
Western Power Trading Forum 6/25/13 Ellen Wolfe, Resero Consulting [email protected] 916-791-4533
Opening Comments
WPTF appreciates the opportunity to provide comments on the ISO’s straw proposal for the
Full Network Model Expansion dated June 11, 2013 and the conversations from the
teleconference of June 18, 2013. WPTF offers the limited comments below.
ISO Response
See ISO’s responses below.
WPTF Supports Improving the Modeling Representation
Improving the modeling representation should both increase the ISO’s ability to operate the grid
successfully and should improve the market results by better representing flows in the day-
distributed load bus4. The transmission topology (e.g., a CAISO-only topology or an expanded
transmission topology) can affect the calculation of shift factors as well. With the expanded
FNM, the CAISO should identify any impacts to the selection of the reference bus, the shift
factor calculation, and the LMP calculation. Depending on the impacts to the LMP calculation,
the market impact can be assessed.
Also, how does the CAISO plan to model the output of generation outside of the CAISO? (Will
the CAISO obtain information from generators – and if so how? Will the CAISO use “bids” and
dispatch the generation economically? What will the CAISO do to model output of use-limited or
restricted units such as hydro?) If external generation output is modeled, how will this interact
with “contract path” bids at the CAISO boarders? Will modeling both external generation and
contract-path schedules result in “double counting” flows on the interties (e.g. the flow from the
contract-path schedule plus the flow contribution from the modeled external generation output)?
_____
4 Under rare conditions, the CAISO may switch to the distributed generation bus as the reference bus.
ISO Response
As a default, the ISO will obtain generation information from the WECC Reliability Coordinator.
We may also receive this information directly from external balancing authorities. The process
for modeling external generation output is described in Section 5 with examples in Section 10 of
the revised straw proposal. See additional discussion in Section 11.
Full Network Model Expansion Straw Proposal Comments Page 32 of 33
ahead (DA) model. Given the both benefits WPTF supports this initiative.
ISO Response
Thank you for your comment.
More Information is Needed about Physical and Scheduling Limits and Base Schedules
The ISO paper indicates that a second physical limit will be implemented and that the
scheduling constraint and physical constraints will be treated somewhat differently. We request
that the ISO add additional detail about how the limits will function and how their constraint
prices will affect the LMPs. Secondly, we ask for clarification about what transparency will be
provided operationally about the constraints. Will all the scheduling and physical limits be
posted on OASIS with a priori limits and ex ante flows and prices? Will the ISO publish
documents that explain the underlying basis for the set points of the physical and scheduling
limits? Can the ISO publish the base schedules that it will use to set the expanded modeling
parameters? Please offer additional detail into the design intention and to the expected
operational transparency that will be provided.
ISO Response
In response to WPTF, the ISO has provided an example of enforcing both the scheduling and
physical limit constraints in Section 10 of the revised straw proposal.
The ISO is not proposing to change the available information resulting from the Data Release
and Accessibility stakeholder processes for constraints that are enforced in ISO markets. To
the extent that the ISO’s input data is obtained from the WECC RC, the information is protected
by WECC’s non-disclosure agreements, but market participants may seek to obtain access
through WECC’s data access processes.
Process and Operational Transparency is Needed about the Rollout Schedule for Expanded Modeling
WPTF seeks additional information about the schedule for roll out of the enhanced
representation into adjacent BAAs. The additional modeling should improve the price
formulation for those areas but also may have other impacts on market pricing. WPTF asks if
the ISO can specify those BAAs for which modeling will be expanded for the initial release.
We also ask that the ISO clarify how it will provide transparency with respect to the ongoing
timeline be for which additional expansions will occur in each FNM release cycle and clarify
what public information will be available about the expanded representation. When will market
participants know which additional expansions will occur in advance of each FNM release?
Full Network Model Expansion Straw Proposal Comments Page 33 of 33
What information can the ISO release publicly that generally shows the expanded model
representation? (For example the expanded Four Corners modeling had publicly available
schematics of the expanded model in addition to any detailed representation that exists in the
protected network model.) Please clarify what information will be available about each area of
expansion and the timeline under which the ISO expects it will provide the information in
advance of the FNM release each cycle.
ISO Response
In response to WPTF, the ISO has provided an explanation of its phased approach in Section 4
of the revised straw proposal.