Mar 12, 2025 - Congestion Revenue Rights Enhancements - Analysis Follow up

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Summary

The California ISO hosted a follow-up meeting on Congestion Revenue Rights (CRR) enhancements. Key stakeholders from ISO discussed advancements and challenges in tackling congestion issues, focusing on root cause analysis and the scoping of proposals for improvements. The meeting included in-depth discussions on auction efficiency, revenue adequacy, and the implications of transmission constraints and outage reporting. Participants were encouraged to engage in dialogue, sharing insights and concerns, with plans to continue refining problem statements for future policy design phases.

Highlights

Christina Gim outlined the meeting's agenda focused on CRR root cause analysis and proposal development. 📅
Discussions delved into the February 27th meeting outcomes and planning for future policy phases. 📜
The meeting examined the contribution of operator conformance and outage reporting to revenue inadequacies. 🔍
Participants offered suggestions for CRR market enhancements, emphasizing auction efficiencies and pricing. 💬
ISO plans to investigate benchmarking CRR practices from other regions as part of future strategies. 🚀

Key Takeaways

Understanding CRR dynamics is crucial in addressing congestion effectively, and ISO is keen on engaging stakeholders for input. 💡
Transmission constraint adjustments and outage reporting remain pivotal in solving revenue inadequacy challenges. ⚙️
Auction efficiency discussions highlighted the need for better modeling and pricing mechanisms. 📊
Participants voiced the necessity for better alignment between CRR markets and actual market operations. 📈
Future workshops are anticipated to benchmark CRR strategies against other ISO practices. 🌍

Overview

The California Independent System Operator (ISO) recently held a significant meeting focusing on enhancing Congestion Revenue Rights (CRR) processes. This follow-up session aimed to dive deeper into the root causes of congestion and to set the stage for developing effective solutions. Christina Gim facilitated the meeting, which involved multiple stakeholders discussing the complexities of the CRR market.

Key areas of discussion included auction efficiency, where the current mechanisms were scrutinized to identify inefficiencies and misalignments with market realities. The analysis from the previous February 27 meeting was revisited, with additional focus on transmission constraints, operator conformance, and the operational alignment between day-ahead markets and CRR markets.

Looking ahead, the ISO aims to incorporate feedback from this session to shape future policy initiatives. The organization intends to benchmark its CRR strategies against other ISOs to adopt best practices. Stakeholders were urged to submit comments to further refine the problem statements, leading to a more cohesive policy design that addresses congestion challenges comprehensively.

Chapters

00:00 - 01:30: Introduction and Agenda The chapter introduces the meeting on congestion revenue rights enhancements. Christina Gim from ISO stakeholder affairs welcomes participants and will facilitate the meeting. It's noted that the call is recorded, and any transcriptions require ISO's permission to reprint.
01:30 - 04:30: February 27th Meeting Recap The chapter titled 'February 27th Meeting Recap' is a summary of the instructions given to participants during a meeting. Attendees were informed on how to ask questions, either by raising their hands virtually via a participant panel or by pressing a button if they joined by audio only. They were asked to state their name and affiliation before speaking. Attendees could also send questions or comments through chat to the presenter, identified as Christina, who also prompted for the next slide showing a visual representation of the meeting's progress.
04:30 - 09:00: Root Cause Analysis Overview The chapter titled 'Root Cause Analysis Overview' discusses a stakeholder process focused on developing a proposal. It begins with opening comments by someone named Hillary. Following the introduction, individuals named GMO Aash and Kyle address questions from a meeting held on February 27th. The session concludes with Hillary providing closing comments and outlining the next steps.
09:00 - 17:40: Open Q&A Session The chapter titled 'Open Q&A Session' begins with a greeting and a welcome message to all the participants. It marks the start of the second working group meeting focused on root cause analysis. The host acknowledges participants who had attended a previous meeting on February 27th and states that this session serves as a follow-up to allow more time for discussing the market analysis team's findings.
17:40 - 18:00: Closing and Next Steps In this chapter, the team conducts a quick round of introductions, welcoming those who missed the prior meeting. The group consists of members from market analysis and market policy design. The discussion then shifts towards a brief recap of the past actions and future plans, setting the stage for continued analysis and strategic planning.
18:00 - 18:20: Final Remarks and Operator Instructions The chapter focuses on the initial meetings that centered on understanding and analyzing the current CR (Change Request) structure. There is a strong emphasis on the scheduled root cause analysis dated for February 27th. Participants are encouraged to ask questions and revisit any parts of the analysis or specific slides they are unsure about. The chapter highlights the commitment to ensuring a thorough understanding by addressing any inquiries or confusion.

Mar 12, 2025 - Congestion Revenue Rights Enhancements - Analysis Follow up Transcription

00:00 - 00:30 morning everyone on behalf of the iso I'd like to welcome you to today's congestion Revenue rights enhancements call to discuss some follow-up items my name is Christina gim representing ISO stakeholder Affairs and I will be facilitating today's meeting next slide please this call is being recorded for informational and convenience purposes only any related transcription should not be reprinted without the iso's permission next slide please
00:30 - 01:00 ask questions during the meeting you can open the participant and chat panels on the bottom right you can then raise your hand by selecting the raise hand icon or if you joined Audio Only please press star three on your device for everyone joining us today please state your name and affiliation first before speaking you may also send comments and questions via chat to all panelists or to Myself Christina gima next slide please this here is a visual representation of where we are are in
01:00 - 01:30 the stakeholder process for this item we're here where the arrow is at the beginning of the proposal development stage next slide please today's agenda will include opening comments by Hillary before GMO aash and Kyle discuss questions on the February 27th meeting afterward Hillary will give closing comments and wrap us up with some with some next steps so with that I'll turn it over to Hillary
01:30 - 02:00 to get us started and if you could please go to the next slide all right good morning everybody thank you for joining us welcome back this is our second working group meeting dedicated to the root cause analysis this is for those of you who joined us on February 27th a follow-up meeting to that conversation in order to dedicate more time to talking through the analysis that our market analysis team
02:00 - 02:30 has put together for any of you who are not present at that meeting and joining today welcome we're glad to have you here before we get kicked off uh here we've got quick round of introductions in the room here we have guo aash and Kyle from market analysis and we have myself partha and denesh from Market policy design and before we get into the analysis I wanted to do just a quick recap of where we've been and where we're going because as a reminder you
02:30 - 03:00 our first couple of meetings we focused on scoping and doing a couple different layers of Deep dive as to how our current CR structure works we've got we have February 27th dedicated to the root cause analysis and we'll spend more time on that today and on that I'll note you know anything that you have questions about uh is is fair game today whether there are sections of the analysis that you'd like to go over again or specific questions uh about certain slides
03:00 - 03:30 feel free gam is going to start us off with a quick recap of of what we covered last time and then as we're talking through this today just to provide a reminder of where we're going uh as we move through the working group where we're eventually going to be focused is on solidifying the problem statements that will take us into the policy design phase and so our next meeting which is going to be in early April tentatively April 1 uh we're finalizing that now we are going to be
03:30 - 04:00 responding to some of the requests we got earlier in the working group about benchmarking to some other ISO and RTO uh CR structures so looking at how other isos have approached these uh design challenges and then later in the spring we're going to be focusing more exclusively on discussing potential problem statements and and eventually finalizing them so I'd encourage everybody as we're discussing the analysis today to think to approach that part through the lens of what does this
04:00 - 04:30 mean for the problem statements uh and how we might frame those going forward so with that uh I will unless anyone else in the room we're good all right G mod the Flor is yours sure thank you Hillary can we move to the next slide please and one more one more let's go to the beginning of the analysis section okay so on February 27 we
04:30 - 05:00 introduced the analysis that we packaged for this working group session H we have a very busy agenda to cover different areas of the analysis that we provided in the deck there were a few main areas that we wanted to focus on one of those was the revenue adequacy for the CRS the second one was the auction efficiency of the CR
05:00 - 05:30 Market there were some additional miscellaneous items that we covered like the performance of the markets overall for a period of time typically going back all the way to the 2019 threshold when we changed the the policy in the CR market and at the end there is also some slides to start giving some idea of potential interest for the topics of the
05:30 - 06:00 P of congestion the implications for the release of trading C counter flows that have to be released in the allocation process to ensure feasibility and for most of the time we focus on the root causes of the revenue inadequacy Kyle went through a detailed example of how the mask the conditions work we specifically cover also the the
06:00 - 06:30 case where given the prata funding application there are cases specific constraints in which there are flow reversal meaning the national value of the CR is positive once we apply the pra funding it becomes negative from being a payment becomes a charge we have some statistics we overall heard back some feedback about being more surgical with some statistics and potential expanding
06:30 - 07:00 some areas of the analysis but at the end of the session I believe we were able to cover the intended scope and there were many questions that we tried to answer along the way and given the extent of the material that yes we couldn't go over every single slide of the deck much of the information is intuitive once you hear the the original discussion that we have but we felt that
07:00 - 07:30 given the extent of the material that is in the deck given that many areas of interest that are described and with so many numbers we believe that it is good to have this second followup session the expectation is that we are not going to go through any part part of the deck specifically this is more like question and answer a followup for any Ling item that you may have from the
07:30 - 08:00 first discussion and if there is need we can go and zoom in into the specific slides that you want to discuss further right but it will be more prompted from your end to see if there is any questions or any details that you want to hear about rather than us trying to cover all over again the the deck so it's an open forum and we want to ensure that there is an opportunity to address any pending question that we were not able to address in the first round and now that
08:00 - 08:30 you have a couple of weeks to review the material maybe now you have more questions that we didn't cover in the first round so uh we are happy to to tackle any questions you may have on the material I hope this doesn't become a memory test because there is so much material so many numbers that we may not remember at the tip of our fingers exactly the the specific but we're happy to entertain any questions followup that you may have from the first discussion
08:30 - 09:00 and for any of your interest after you have the opportunity to review the deck that is the way we structure this second call and with that we really are going to open the floor for participants to to see if they have any questions that we can start tackling and operator we may go through any hands raise or any people on the call but we are open there is no
09:00 - 09:30 specific area we are going to start first with is just open forum for participants to to ask for any clarification Let's see we have any any hands any any calls okay I see we have a raised hand okay let's start with Eric I believe that's the first one that show up and then we Kelly
09:30 - 10:00 Eric you are unmuted sorry about that double mute um Eric little from kcca I've actually got two questions for you the first one is when you presented on the auction efficiency you chose an example that was a case where historically what had been seen on the grid wasn't what happened right uh and I'm sure you could come up with other examples where that occurs as well but that's not really what people
10:00 - 10:30 seem to have been concerned with when it comes to auction efficiency what I've heard from DMM is their concern from auction efficiency is paths where historically the value has been there they have still uh sold at very low prices usually to entities that are not generators and not load serving entities is the iso planning to do any analytics associated with those types of points and the auction efficiency with those rather than the auction efficiency with the path that revers direction that
10:30 - 11:00 historically was unsupported sure ER thank you for the question let me provide the answer in two ways the first one is that as we start talking about auction efficiency we need to start putting in perspective what are the drivers for the auction efficiency right and I don't recall and it would be interesting to see you can point to any reference of the mm specifically pointing to PS because I believe their analysis has been at the system label by the typee of participant
11:00 - 11:30 but not on a specific path do you have any reference for that I don't off hand but I mean if they're if they're referring to it on the system level that it's being executed by entities like that then there have to be Source sync pairs that go along with it to produce those results I'm sure the DMM could probably sit down with you and identify them yeah could could I ask Eric at least like maybe could you help me understand what the um
11:30 - 12:00 like what type of analysis would be informative like I think we understand the uh problem statement that the DMM getting at is it is what could be helpful is maybe like specific path you know breakdowns to say which are the most profitable flow Gates based on Traders is that what you're trying to understand and I guess how would we use that information in terms of informing yeah like the process going forward yeah and before Eddie answers that let me complement the the original answer I went to give so the first one is still
12:00 - 12:30 on the analysis that we provided right we pick the case where the auction efficiency at the system level was the worst for the time being H it happens to be concentrated in one specific constraint so there is a lot of value to take on the top issue that we found to impact the auction efficiency for a a specific point on time and yes that is a very natural insulated case just because of the nature of the constraint that is an
12:30 - 13:00 intertie and the reason for that is obviously because it's the top cause of the auction efficiency that we see in the performance for the last five years so it's not just randomly picking one constraint that is an outlier it happens to be an out lier and because of that is a very good reference to see how we can stress test the concepts that we are dealing here with auction efficiency now in different rounds of analysis we have tried to to go into more General
13:00 - 13:30 rather than focusing on one specific event we have tried to analyze the same way DMM that is at the system level and we have put forward material in previous rounds for instance on on the PS right where the auction efficiencies is mostly driven it is from what source to what type of s and we have different matrices that we put I don't think we updated those here but if you look at for instance on the analysis that we provided in the MC of November 20 23 we
13:30 - 14:00 spend a lot of time going into that pathway of assessing is there any bases on the past definition and we couldn't find any because it's kind of random when you see how they are distributed by the different paths is just all over the place you cannot see a specific Trend over the last five years that we analyze so that information is out there and that effort is already done in the past we could update it but I can tell you is not going to show any
14:00 - 14:30 pattern that could be meaningful in that sense now what is the difference between picking one specific inter TI like the one that we pick for January 2024 versus any other internal constraint well the complexity is that once you start dealing with one internal constraint it's just not meaningful to analyze one constra isolation because the MCCS the marginal congestion components of any location is not composed from one single
14:30 - 15:00 constraint you may have at any time thousands if not hundreds of constraints impacting that definition of source to sync if you're analyzing the value of a CR for a month well potentially any constraint that was binding in any hour of the month is going to have an effect so trying to isolate this constraint by constraint we have tried and I can tell you it's not going to be that meaningful it's more about the systemwide level and that is the information that DMM has put in there rather than a specific PS Now why
15:00 - 15:30 there is still value to put this example of the outlier that we found for January because it goes to the core of what auction efficiency is and that core is basically how can you expect to have a reasonable valuation of the expected value of the crr and that was the whole point of this exercise and it's not exclusive of intert it's not exclusive of an extreme
15:30 - 16:00 event is just making it so obvious that that is a challenge the same way you have a challenge to assess the congestion in One Direction that in the end is reversed it's not different than any other internal concerns when you have the challenges that outages are going to reverse flows that the rates are going to potentially impact the the capacity made available so the essence of what the expected value is for the congestion is still on the table and this exactly the the issue that we
16:00 - 16:30 wanted to bring if there are cases that you cannot easily assess what the right value should be how can we in general expect that that is going to be true for any other type of constraint so I I understand that the odd things are going to happen and I don't think anybody has been arguing we should prevent the odd thing from happening the the reverse flow is something that the market doesn't forecast it happens it happens in every
16:30 - 17:00 Market where people don't forecast it and value it incorrectly I'm not worried about that I am worried about the situation that DMM has described where it sounds to me like there are entities who are bidding on Source sync pairs they are picking something up for about 40 cents on the dollar from an auction efficiency standpoint so in answer to part's question I think what you could do is take a look at your auctions take a look at source sync p pairs that were only that were producing a negative
17:00 - 17:30 result I.E the the the efficiency was was you were getting Less in the um in the auction than what the revenues were from the congestion and take a look at those pairs to see who's bidding on them because this has been the issue that DMM has has put forth so when you look at those entities if it's all Financial entities there is no load there is no generation bidding on those points then the question is does that information support what DMM is saying or does it
17:30 - 18:00 contradict what DMM is saying so you've said that DMM only did this on the aggregate basis okay fine so let's take a look at it at the individual basis because those two should match if they don't then somebody's analytics are wrong and we should understand that before we try to move forward with this that's all that I was trying to suggest by that um the second question that I had was we had asked a while ago and I know DMM had asked as well uh about the potential to do a a counter Factor ual of if DM's proposal had been in place
18:00 - 18:30 for the 2024 auction uh and allocation process what the results would have looked like um is there any progress on that do we know if the iso is going to be able to do that I don't think we have assess that and I don't have right now the conditions to answer whether that is something that we are going to do or is feasible to do is something that we just have to to assess okay all right thank you
18:30 - 19:00 thank you Eddie and thanks our next hand is from Cali okay and then we have two uh we have several more hands after call hey GMA it's Callie Wells of wptf um I just have a couple I think follow-up questions um from the prior meeting uh and I think they're just kind of confirming or clarifying A couple things um so hopefully they're quick the first one is um in the root cause analysis you guys identified one of the main drivers for revenue and adequacy as operator conformance of the lines um do you guys
19:00 - 19:30 have a sense as to different reasons why I'm assuming that means operators are reducing the line limit in the day ahead market for various reasons do you guys have a sensus to what those reasons are yes and I would say in a nutshell the what before I answer the question let me give you the the process how that works so we do have the day ahead and the realtime markets in which we enforce the transmission constraints effectively
19:30 - 20:00 the same constraints ideally we want to have the same enforcement the same limits in both markets for consistency and Alignment now as we are operating the realtime Market there are conditions in which operators in general are going to see Deltas between what the market is projecting in terms of power flows versus the actual power flow that are happening in the real life system right and when that Delta is Meaningful enough
20:00 - 20:30 that from them to align the market with the reality is when they start using this type of tool of conforming basically adjusting the limit one way or the other for a specific transmission element right for instance if they are seeing that the transmission element is the real power flow of the transmission element is already hitting the limit but the market is not seeing that limitation already happening in the market they are seeing that the market is missing to
20:30 - 21:00 capture the the congestion of the element so they are going to force align the realtime Market to capture that congestion and they're going to apply this reliability margin right there may be other conditions such as there may be fire threats for instance it's a very classical example that the capacity is is still available on the transmission element but they know that there is a high risk of potentially losing the line right and they want to ensure that when
21:00 - 21:30 that happens the balance of the generation is going to be adequate so they start creating this reliability margin to ensure that they can handle the the condition after the line trips offline so there are a series of operational conditions in the real time that prompt the need for operators to adjust the limits now as a practice what we have implemented is that once these
21:30 - 22:00 conformances are applied in the real time and they become persistent we want the day ahead Market to align to what the real time Market is seeing and doing so per process we want to transpire those conformances from the real time into the day ahead market so that we have alignment between markets and that is how now the conformances in the day ahead Market start to show up we
22:00 - 22:30 also have a process and this is where there are areas for improvement where the conformances reflected in the day ahead market and if they become persistent enough they should be reflected also in the crr market for both the allocation and the auction and realistically we don't expect those those two happen in the annual auction because we're talking about up to 14 months in advance right but most likely they are going to be reflected and eventually updated and through up in the
22:30 - 23:00 monthly processes so that is the process that we have implemented and ideally any conformance that realized in the real time transpires into the day ahead and flows eventually into the CR Market to gain that consistency and that alignment and that is where we see that given the timing given the tracking of those conformances in the day Ahad Market there are cases that were not reflected in the CR market and that
23:00 - 23:30 consequently leads to misalignment between the CR market and the dead Market because we may have been more restrictive more conservative in the day ahead market and the congestions are going to be collected only on that portion while if the conformance was not appli in the in the CR Market we may have released too many crrs and therefore we created the condition for the revenue in adequacy and does that answer your question yes
23:30 - 24:00 no it does thank you so much that was extremely helpful um so then I guess my other transmission related question and I can't recall if we touched on this or if you guys had any plans to touch on this um I don't think it was your analysis yet but back in 2019 one of the changes um that went into place was the transmission outage reporting requirement um so I was curious if you guys have seen an improvement in when those um planned outages are being
24:00 - 24:30 reported and if they're being reported in time for to be included in both the annual and the monthly auction so it was just I don't think sorry go ahead yeah I think you're referring to the change that we implemented that outages need to be reported by July 1st to be on time for the annual process I can tell you that we took a slightly different approach we start going after the top reasons for the revenue inadequacy to eventually find out what the reason
24:30 - 25:00 for that inadequacy was and rather than tackling specifically policy changes that we implemented along the way we may have found maybe one two cases where outages was a were a factor in the revenue inadequacy but we haven't surgically looked for the implications of the timing of the outages relative to the auction for the revenue adequacy so we have focused mainly on the drivers
25:00 - 25:30 for the revenue in adequacy and we started from chasing those that have the largest deficiencies and along the way we haven't found that the reporting of the outages is a significant driver for those top Revenue inadequacies granted as you indicated we could we could take the other approach that start looking into specifically how the outage reporting has played but as of now we started the other way
25:30 - 26:00 around and as of now they are not being seen to be the the top cost of the revenue inadequacy okay no that's really good to know and I understand the approach that you guys took and why you took that um that approach that makes sense and then uh my last real quick question and then I'll I'll give pass the mic to somebody else um so I know in one of your guys' slides you mentioned that when you're doing the underfunding um some of the deficits were offset by the Surplus and you guys do that on a constraint by
26:00 - 26:30 constraint basis so my question is do you guys have an and I don't know if you're going to have this off you know on the top of your mind um do you guys have an idea of how much Surplus was left over that was not used to offset deficits and went back to um load okay let me see there is at least two ways I could understand that question are you referring to the offsetting of surpluses and deficits within each specific constraint
26:30 - 27:00 or at the system level meaning that surpluses from one constraint can offset deficits from other constraints which one are you referring to um I guess I'm referring to after all the the surpluses used to offset deficits how much Surplus is left that goes back to load that's not to offset anything yeah we have a few metrics in there I oh I miss number but it is somewhere in the deck
27:00 - 27:30 so that is a matrix that we Shar and even in the mppf we share that metric that tells you how much Surplus we had at the end of the month that goes to the maor demand yeah and and even here in this deck somewhere in the 220 slides there may be one or two slides where we put that summary of the Surplus that is collected at the system level that eventually goes back to measure demand okay I will go back
27:30 - 28:00 and look I saw the slide where it showed how much of the deficit was offset um but I didn't see the Surplus number I will go back and look um apologies if I miss that thank you sorry I just don't remember where in the deck in that slide I don't expect you to it's a long deck thanks thanks for your questions Kelly um our next hand is going to be from Daniel and then we're going to go to Abram Todd and
28:00 - 28:30 Doug hi this is Daniel kzu with California Department of Water Resources uh my comment uh I think aligns a little bit with uh What uh Eric was talking a little bit earlier and um uh it's on regards to our previous um com um comment on the split of onp crrs when when the uh and they understand that the the outages and U
28:30 - 29:00 unforeseen events they're a main cause a big cause but and I I don't know to what extent is so could decide is the root cause but I also consider that a root cause might might be as well the fact that the arm Peak has um one the CR on arm PE is one PL product over 16 hours and in when determine this flat
29:00 - 29:30 allocating this flat product of 16 hours I also takes a a onetime shot of the sources and the sinks and the transmission and run simultaneous feasibility tests and determine the crrs and during that 16 hours we have sources different sources we have solar for 8 10 hours we have Peak that um um
29:30 - 30:00 generators generation PS that you know kick when after the solar dies or the super Peak so uh I I think the the power flows could be different in the day had settlement of the crrs because of this much different from this uh onetime shot when the crrs are located because on that one time shot we have at least 10 hours when you know the
30:00 - 30:30 sun generates and we could say can can we ask ISO find a way to run a scenario to find if those you on peak time of us will split at least in uh it does another proposal from uh April I think to split it in more but I think two split just to start with on I mean depend on time as well it more aligns
30:30 - 31:00 the flows in the when the CR allocation with the flows when the crr are settled and I I propose those hours being the regular on Peak our ending 7 to our ending uh 17 and then our uh ending uh uh 18 to our ending 22 for super Peak what what you guys think about this uh
31:00 - 31:30 proposal let me see if I understand are you describing this more in the context of Revenue adequacy auction efficiency across the board to what specific item you you want this exploration to happen I think CR revenue adequacy and CR auction efficiency will both benefit from from this um exercise or test or um and I I just
31:30 - 32:00 bring you to the discussion to see what uh I I think Eric was going in the same direction um it's it's more of I I don't know of a design issue but um so um yeah yeah well let me react to that because I think yes I can see the picture how this could be structure by different type of use I
32:00 - 32:30 think we have no limitations to go and do more analysis for revenue adequacy and break it down in different time of use and rather than just the standard 16 hour on Peck we can break it in maybe solar versus non-solar hours and that that could be feasible and reasonable given the fact that Revenue adequacy can be measured and estimated by hour I don't think we would be in the same place to try to apply that concept
32:30 - 33:00 for auction efficiency because for auction efficiency when a participant makes a bit it made the bit for the 16h hour Block H we cannot come and start making assumptions of how we're going to assume the price would be otherwise different for solar hours versus non solar hours when the only thing that we see is a price quantity bit submitted by the participant for that CR right that will require to go to a extra length of assuming how participant would have been
33:00 - 33:30 differently if there was a different structure even if we try to go and run a counterfactual with the current bits that we have that wouldn't be of any use right because how do you split the bits that are applicable for 16 hours into bits that are for different time frames and maybe this is part the iso follow up on that how would you use the analysis you're suggesting like let's just say it was broken down for a certain hour like what would be like
33:30 - 34:00 what's the takeaway that you that we might have that could sort of affect you know our problem statements or ultimately our policy Solutions I just be curious about how you how you how you think that that information could be informative to uh to us going forward well um one aspect in your analysis if it's um U could be done is that if um one consider might be that market
34:00 - 34:30 participants and participant in the CR auction they're not going to request the same way crrs you know if uh the solar generation is there they might uh have chosen different sourcing spays for for uh the regular on Peak and for the super Peak so I don't know if to to to what extent that could be modeled and it could be
34:30 - 35:00 tested from the previous um crr allocation and here are auctions and and and as you said the auction it the CR auction efficiency cannot be U verified is test because of the bids however the the payments the bids are put in sour sync payers as well even if if um it's not a
35:00 - 35:30 intended um physical generation and intended physical withdrawal with the load the bids are put there between source and sinks between anticipated power flows by uh the participating in the auction so I I think we need to discuss a little bit more to to find out but for sure don't know if I so can can
35:30 - 36:00 even um to this on on split of the on PE time of use period it could be assess for the let's say regular uh pck regular on PE on peak time use um the the crr allocation on auction will be different than what was in the previous years and for super PE will be different as well or to the super Peak it could probably
36:00 - 36:30 stay the same considering the loads are bigger and the generation is not solar anymore but it's the Imports and um uh um um Peak generation that it started or whatever batteries batteries they come for the past two three years in in in um the the generation that supply for super Peak and that withraw during the uh
36:30 - 37:00 solar hour so I think in more discussion we need to have the input from the other Market participants maybe they have better ideas uh if and as could discuss a little bit more on this thank you thank you for the comment Daniel um our next hand is from Eric is that a new hunt or the old hun I'm
37:00 - 37:30 not so sure oh that is the old hand our next hand is from Abram thank you yeah my I know this version of WebEx is not it it's really hard to see um I think when when their hands are up and or when they're down they don't get automatically cleared Abram go ahead hi thanks can you hear me okay yes yes who can hear you great this is abam from Aban way energy and I wanted to uh continue on the um I thought I thought Eric had a really
37:30 - 38:00 interesting observation there about um your analysis which which I thought was excellent by the way of the case study of the January 2024 storm and in the way that sort of extreme cases can result in that aren't necessarily expected can result in um auction inefficiency because there's congestion on something that the market didn't necessarily expect and and I do think it's important to parse out that
38:00 - 38:30 aspect um as Eric says relative to like are there chronic constraints which are going uh which are significantly undervalued even after discounting for say uh expectations of Revenue inadequacy or that sort of thing um it and and I think you did an analysis in the slide deck about you know what's causing different factors that cause the auction efficiency and the lack of
38:30 - 39:00 convergence and I think this factor of X anti expected values just due to spot Market volatility um is a big part of it and you know you don't necessarily always expect to have something unusual happen but CRS have a lot of different avenues for that and I think particularly important as you're looking back at the the study period since we did the reforms um a number number of the years you know we do the annual auction in
39:00 - 39:30 November and in each of the last several years I could think of really fundamental reasons why there was a lot more congestion in the actual Market compared to what the Market's expectations were just beyond that winter storm so so so I think that this type of thing is a feature rather than above and and I'll just give some some examples that I think will resonate with people that that that make sense you know in
39:30 - 40:00 2001 um when the annual auction occurred in in November of 2020 there's a tremendous amount of uncertainty about um the uh pandemic and covid and return of load and we actually had somewhat of an unexpected recovery um in 2021 relative to the market facing a lot of uncertainty in November so that could have been a reason that say okay well that might be a reason why uh CR in uh in 2021 uh experienced um auxin
40:00 - 40:30 inefficiency and obviously in 20122 there was a massive change in the market in terms of gas prices with the war in Europe and the spike and way more higher prices overall in 2022 compared to the Market's expectations in 2021 and anytime the prices go up obviously congestion is correlated and will go up as well I think you know I think I showed in in my slide deck um you know
40:30 - 41:00 the NP and SP prices forward prices were about $75 each uh in 2022 and if you looked at the spot realization they went up to about $100 in the NP and about $94 in Sp I don't remember the exact numbers but you can see that like there was maybe a $1 spread that moved to a $6 spread you know so 600% return in the market relative to that but which seems like
41:00 - 41:30 crazy but when you look at it as a spread it's different when you look at the spot prices where you know you had $75 expected prices moving up to either 100 or 94 and a lot more um congestion that came up and then likewise in 2023 and 2024 the market experienced new congestion on path 15 related to all the solar build that in in Southern California and if you looked at the
41:30 - 42:00 forign prices there um likewise you wouldn't necessarily see the market expecting the forward Market expecting a big npsp spread from all that solar congestion and that was also a surprise so so I think that that the um you know parsing this out uh this is definitely a big contributor to the lack of convergence is not necessar necessarily just um you know the crrs going for a
42:00 - 42:30 discount relative to what people expect a big part of it is just the way the difference between um X anti spot Market realized values versus what um you know the the I'm sorry the EXP poost realized values versus what people were expecting before the fact and I just um you know I agree with Eric that that's a really important factor I just wanted to point out that there are a lot of areas where those types of surprises are really
42:30 - 43:00 endemic to the congestion markets and it's precisely why Market participants um that are uh trading with counterparties or uh have physical assets that they need to hedge uh actually need to have access to these congestion products in an LMP system and and you know that that's uh I guess my um just wanted to add that to the discussion there with respect to Eric's
43:00 - 43:30 question great thank you a for for those insights and points taken thank you our next hand is from Todd morning Todd Ryan with Pacific Gas and Electric I have a very practical question which is um if we wanted to dig into the conformance percentage uh for the ifm limit for these transmission lines is it data that
43:30 - 44:00 we'll be able to see on Oasis like is it available through the market available transmission capacity or any other table no the O if you go to the section of outages for instance is typically referring only for inter ties the other display of ifm congestion is going to refer to Shadow prices basically the price of congestion on the different constraints that is not only intert but also nomograms and flow
44:00 - 44:30 Gates but there is no o information where you can see the actual Mega wats there is another system that is the MPP Market portal uh where there is additional information such as the constraint definitions I have to refresh my memory if there are limits included in there or it's only the LI the definition but for sure it's not publicly available this MPP portal is only available to
44:30 - 45:00 participants understood I guess you know I'm looking at Oasis and there's like a table current transmission usage and it includes values that are labeled constraint you know um even unscheduled flow value that is always zero and I'm just curious like why aren't those data reflective if there if we are seeing unscheduled flows across major transmission lines especially like major
45:00 - 45:30 interfaces um that might be contributing to underfunding why why aren't those data available yeah okay so let me try to unpack that because it has a lot of implications I think the OS information is closely related only to significant paths effectively the inter ties I believe J back we used to have even Pat 15 or Pat 26 that is no longer the case
45:30 - 46:00 it's only for inter ties so yes you can see outages and how that impact the availability of scal capacity on the inter TI there may be other information that you pointed out that may be more in the context of the realtime market now when we are dealing with the realtime Market yes we do know that there could be parallel flows Loop flows indeed the kaiso has operating procedures to manage
46:00 - 46:30 those on scale flows mitigation measures to to handle the on schale flows however that is more of a real time condition when we go and model and run the day ahead Market the only information that we have available is the basic scedule that may be applicable beyond the kaiso system and we do model those into the market they are not optimized flows they are taken as given because they are
46:30 - 47:00 outside our economic footprint and when we run the market those are going to be actually Incorporated so when we run the power flow those flows that are coming from other transactions that are not economically participating in the market they are going to indeed take capacity from the different constraints of the kaiso system and that is one of the reasons we are showing that in different root cause analysis cases that we show up that there is a component of the
47:00 - 47:30 parallel flows that are taking that capacity away so in that sense I want to answer that the ifm market is somehow incorporating those parallel flows it happens that they are not priced they are not optimized in the day ahead market and therefore they don't collect congestion rents got it um my understanding is that by we procedure anytime loot flows take up more than 5% of a line's capacity that
47:30 - 48:00 the the RC is required to help mitigate it I'm just curious um if you guys are working with the RC portion of kaiso to address these Loop flows either in day ahead or real time yeah I think you're referring to the operating procedures and yes there is I don't know like many different steps in that oper procedure to to mitigate for scale flows and that is a real time condition I think the
48:00 - 48:30 challenge here is how we model or how we account or price for those in the day Ahad Market that is a much bigger discussion that potentially has to happen as part of this effort okay great I look forward to to talking more about it and hearing any ideas you have really appreciate thanks G thank you D than our next hand is from Doug Doug Bo chinan with Flynn resource
48:30 - 49:00 consultants for the Bay Area Municipal transmission group um I wanted to bring something up but I at first something the conversation with Eric and auam got me thinking about something I during that January event you know there were a handful of parties that did seem to anticipate that there might be south to North flows and they they acquired in the auction south to North crr sinking at
49:00 - 49:30 Molin and you know they made a lot of money I I guess the question is that I have is and it wasn't priced you know I think in some cases that they were actually paid to take those monthly positions a small amount of money um but you know I I'm just curious did they actually schedule energy out of the iso were they actually EXP exposed to congestion and and those crrs were a hedge I I assume
49:30 - 50:00 that information is knowable to the iso I don't think it's readily knowable to the general public um but I think that would be worth investigating because it you know it either would support the the idea that you know the crrs are Financial equivalent a firm transmission or it would of suggest that that may not be the case sure let me try to answer that in a way
50:00 - 50:30 that I don't disclose any sensitive information but I can tell you that you have a mix of conditions and among those there were cases where participants that have exposure in the vad market were at quir in CR yes there were cases like that and relative to the total amount of crrs that were acquired is it a small amount or a large
50:30 - 51:00 amount I would say it's in the middle of the pack it's not the small is not the largest but somewhere in between somewhere in between yeah because I mean I think that's and I appreciate I think Eric is making a good point you know maybe we shouldn't focused too much on some of these sort of extreme conditions because it's the dayto day that is happening more often but um you know it
51:00 - 51:30 just seems like the you know I I the way I look at the auction is that you know it's it's a mechanism to reduce risk for some parties but it's also shifts risk to the parties who are you know paying for the transmission all the time whether they get to use it or not and you know the allocation places you know some limitations on what parties can get
51:30 - 52:00 right because it's based on the load metric you know you have to actually have certain amount of load and you can't get more but they auction doesn't do that right it's sort of wide open the only limitation is the the network constraints that are modeled in the auction and it to me it looks like the auction can end up shifting a lot of risk
52:00 - 52:30 to to the basically mostly load load and exports who charge for any shortfalls um and I think sort of to that point well actually that that's just my my first point it just got me thinking about it based on that conversation um I did have a two questions one is I think it's on slide 35 of today's presentation you you had a slide about
52:30 - 53:00 the Arbitrage between annual and monthly and if if I'm understanding that slide it was basically and I think in the previous presentation it was slide 32 if people are you know the one that was used on the day of the meeting um but that showed that in the I think what it's showing is people took positions in the annual auction and then Unwound those positions
53:00 - 53:30 in the monthly auction is that am I interpreting that right yes let me just make a clarification that may not be that obvious through the deck in the annual auction the shortest life term of the CR is a season three months in the monthly is a month so so when somebody gets a position for the day ahead for the annual auction is a
53:30 - 54:00 position for the whole season right so when they go and unload that trr for the monthly they have to go and specifically do it month by month so in some cases we have seen that out of the three Monon life of the crra they unload that just for one of the months but they keep the other two months so it has to do also with the granularity of the options but you're right in some cases they have a position a seasonal position they go into the monthly and for that specific
54:00 - 54:30 share of the Season that belongs to that month they basically are able to sell that portion in the monthly auction gotcha thank thanks for that clarification that that's helpful so someone might have gotten all three months but only wanted one of the months or two of the months and might have sold off those um I I I guess sort of just looking at the magnitude of the dollars here it it strikes me that that's a pretty significant portion of
54:30 - 55:00 the the inefficiency numbers in the recent Years anyway right I think it's averaging like 60 million of inefficiency and I this is like 10 to 20 million something so yeah anyway just an observation um thank you and then I I just had a question Al's question about the sort of conformance and I got me
55:00 - 55:30 thinking some more about there was a discussion about the contribution of loop flow to the the in the last meeting the discussion about the global drate factor and you guys drilled in on specific constraints that sort of were big contributors um and you identify that one of the key factors was the you know loop unpriced loop flow or the
55:30 - 56:00 contribution of loop flow but and I I guess sort of thinking about the conversation you have with Cali it's it seems like you know I mean one one solution is to get the loop get more of the flows that create the loop flows modeled in the market which I think is you know the footprint expands with eam that's going to
56:00 - 56:30 happen um right right so partially it's going to get addressed but then what I'm wondering is how are we going to factor that into the crr allocation and auction because you know there is no Loop flow modeled in those in those processes yeah that that's a great point and I think you you are right there are
56:30 - 57:00 two pieces here the first one is that in the context of the day Ahad Market those parallel Loop flows effectively take capacity from internal constraints that means we have less flows to collect congestion rents from now in the context of the crr market we do not have explicit model consideration of blop
57:00 - 57:30 flows many years back when we implemented some changes to our Market that was called the full full Network model expansion I think it was 2014 2011 this is a few years back there was this specific concern how we could potentially account for loot flows in the release of CRS the I don't remember who made this
57:30 - 58:00 comment earlier in this call one of the complications is that in the CR Market you have one single snapshot right one model one set of limits that are going to be applicable for the whole term of the crra the whole month the whole season right even though in the day ahead Market they are changing hour by hour and the loop flows are going to potentially be changing hour by hour and they are going to potentially impact
58:00 - 58:30 different constraints in many different ways so trying to have this very Dynamic hourly profile that CR over a month into one single snapshot just right there is going to be very hard to to get a perfect alignment but then even if you are able to do that the complication is how do you incorporate that into the CR model right one may think and I think other at this one other so maybe doing some approximation like going after the top
58:30 - 59:00 constraint right they they have the assessment of what are the most impacted constraints because of the loot flows and they basically derate that limit in the in the CR Market potentially that could be an alternative if there are top constraints that are persistently chronically impacted by loot flows that would be something that we could go and more surgically Target there may be many other cases
59:00 - 59:30 where it's so Dynamic there are so many constraints that we cannot realistically go after every single constraint and it becomes a matter of practicality that together with the granularity of one snapshot versus out the profiles really makes this a non precise exercise and it's a practical challenge I I have to say there there's no perfect solution on these thanks guo yeah it just it sort of
59:30 - 60:00 strikes me that as as more of these parallel flows are going to get priced in the dead Market there some of these problems can get worse for the allocation and auction in terms of insufficiency and revenue inadequacy actually I may have a different perspective on that because let me put the the two scenarios the first one is let's say we are not pricing parallel flows when that happens like
60:00 - 60:30 the case that we have observed effectively there is capacity of kais internal constraints taken away from these parallel flows and that means that is capacity that we don't optimize we cannot price and therefore we cannot collect congestion rent so we are under collecting because we don't have that extra capacity available when we go into a different context and
60:30 - 61:00 now we have the market thead market expanded some of those parallel flows are going to be actually now incorporated as part of the extended dead Market they will no longer be parallel flows because the market is going to be managing those they are going to be priced and therefore we are going to be actually optimizing and therefore collecting congestion rents on
61:00 - 61:30 those flows that used to be parall flows and now they are explicitly Incorporated in exactly I think that's the problem I think that's maybe I misspoke that's going to make the auction inefficiency worse if we don't find a way to model that in the auction sorry I'm not following that can you unpack that a little bit so so if now we're
61:30 - 62:00 GNA as we're modeling more of the external system in the day ahead Market you're we're going to capture that's going to create more modeled congestion that's priced and settled in the day Ahad Market but if if we don't have some way in the auction to price those to to model those parallel flows then you know because we're only auctioning crrs within the kaiso
62:00 - 62:30 system people are nominating crrs in the kaiso system and those Source sync the flows created by those Source sync pairs won't have any contribution unless we introduce additional constraints you know a drate based on expected parallel flows that we're going to undervalue the auction crrs even even more than we already
62:30 - 63:00 do I I have to think about that doesn't seem to settle with my expectation but I will need to think more about that okay all right thank thank you yeah thank you Doug for all the comments thank you Doug um next we have Jordan and then NOA and then I think Abram has their hand back up as well hi thank you this is Jordan Min from the
63:00 - 63:30 CPC energy division um I was looking through my notes from the last meeting I have one question and I apologize if this is in the slide deck I missed it but because Kao know what extent would Revenue insufficiency be reduced if kaiso was able to reduce the mismatch between the CR and market and the ifm um my point of this question is just to understand how big is that mismatch contributing to the revenue in inadequacy that we're
63:30 - 64:00 seeing when you heard to mismatch between day ahead and CR which one are you specifically talking about because we talk about limit differences we talk about parallel flows we talk about shift factors or are you meaning all together uh more all together because I've seen comments about outages contributing to the mismatch I'm trying to figure out how s is that for Revenue impacts yeah okay yeah I I understand
64:00 - 64:30 the question and makes a lot of sense realistically it's something that we cannot precisely quantify uh the only way we were able to run these root causes is basically rerunning markets rerunning the calculations in a very controll fashion in order to give you a precise answer we would have to rerun basically every single day for the last few years just to see how much that would be impacted
64:30 - 65:00 the approach that we took was different going after the top causes and see how materially they were impacted by the different drivers the fact that we are able to understand and actually measure for those top cases the top two three causes give you a good sense of at least for this top constraints how how much we should be able to address if we are able to somehow magically wave our one and
65:00 - 65:30 fix all those yeah we have seen that there is no root cost for Revenue adequacy beyond the Shi Factor the parallel flows and the model differential right so effectively conceptually would be addressing everything but realistically depending on what type of solution we can approach for each of those you may end up somewhere in between right so
65:30 - 66:00 that that is the reality of what practical Solutions we may have okay thank you that's good to understand okay thank you Jordan um we're gonna go to noan next hi I just wanted to sort of highlight a few things and and just ask GMA a few questions can you make sure you introduce yourself first oh yes energy trading Institute um apologies so I just wanted
66:00 - 66:30 to kind of touch base on some of the things we've covered G mod thanks so much for all of this really helpful analysis I know that you guys have been working on this for a really long time and we certainly appreciate it I'm wondering if there's any way to sort of look at I know there's been sort of talk about this differential between the annual auction and the monthly auctions and that difference um and if maybe you could do a comparison to other isos that have balance of planning because I think what sort of folks are seeing is what auam talked about earlier which is there
66:30 - 67:00 are so many unknowns when when you go into the annual auction and you're buying that whole strip so everybody is basically saying hey I've got to build in all of this risk into that price of of what I don't know because I'm buying further out the curve and we see this in in other markets and the other independent analyses that were conducted in pjam and myo also looked at this but for the other markets that have have balance of planning or auctions where you can then sort of rejigger your
67:00 - 67:30 positions as more information becomes available you see you know really good pricing for those positions as we get more outage information as we get more gas price information um and folks really then have more robust hedge portfolios because there's opportunities to buy those positions and reconfigure and I don't know if there's any way you guys can kind of do a comparison of you know markets that have that versus your market and kind of maybe address this efficiency issue in a
67:30 - 68:00 different way and sort of just because this isn't really an inefficiency this is in every commodity Market where people have to buy further out the curve and then as you get closer to the market price is in more of the knowledge that's gained yeah that's a good point NOA thank you for that feedback I believe with have an upcoming Workshop where we're trying to do some type of benchmarking I don't know realistically
68:00 - 68:30 we're going to be able to have that type of comparison but thank you for for the recommendation anything to Adda I know what are you looking to get out of that comparison again like what is like and maybe you know more about the practices of these other markets in terms of that aspect where you like what are you trying to highlight that like what should we be asking them to present on that would kind of give you a sort better sense of the difference sure so I think that there's sort of what is being called an inefficiency we
68:30 - 69:00 see in literally every single commodity Market um which is when people are buying a year two years out they're going to price something differently because they know that they don't have as clear picture as they're going to have perhaps 6 months from now with you guys there's more limited opportunities to buy further out uh in a shorter time span so what I'm hoping to share from that information is a that this is this is common in every Market
69:00 - 69:30 that's just commodity markets in general and that's actually a positive thing because if you're hedging that far out you also want a more economically priced contract for that hedge because you also have imperfect information so that's one one of the things that I'm I'm hoping this analysis will demonstrate the other is that you may get better pricing if you give people opport unities to reconfigure based on the knowledge they've built so for example let's say there is a
69:30 - 70:00 long-term outage that's not scheduled in advance of the auction and then we realize oh we have to do this work so now we're going to schedule it and if if you give people an opportunity to reconfigure their positions they will then pay up for that hedge when you give them the opportunity to as opposed to them only you know having one bite at the Apple well thank you appreciate that thanks um we have Abrams hand up I
70:00 - 70:30 don't know if that was a a hand from before that went up accidentally check no it's it's a new question um perfect thank you this is abam from Abby and way um G um one of our comments and I think uh uh wptf also had it in there was a question about and first of all I thought that the analysis that you guys did on the revenue inadequacy was really
70:30 - 71:00 terrific in terms of you know breaking it down into the um shift Factor threshold issues and the loop flows and the conformance issues and things like that one other questions that we raised is whether the um load aggregate Point modeling because those load aggregate points shift uh over the course of the year whether there's a difference between um a revenue inadequacy that's caused by
71:00 - 71:30 um you know maybe in the auction say there's average load in Fresno but in a hot day there might be a heat wave in Bakersfield in Fresno in the South and more of the load in pg& shifts down there and that's correlated with congestion and the ship factors associated with say the pg& dlap might be different in the actual day Ahad Market when you have the real weather compared to what is assumed in in the
71:30 - 72:00 auction and and I'm wondering if you have given any thought about whether it would be possible to model that um you know potentially by using the load aggregate Point ship factors from the auctions and seeing how much uh congestion they would have collected over the course of the year compared to what they actually collected and whether there's Revenue inadequacy coming from that whether that's an analysis you
72:00 - 72:30 could do to determine if if this is a material source of underfunding do you follow my concern and my question yes I do follow ab and thank you for the comments and the feedback of other areas of analysis that we could undertake I would say process wise we want to collect all the feedback that we get from participants and see how we can orchestrate some follow-up analysis right I think we are not saying that we
72:30 - 73:00 are done with analysis and this is it but we want to be surgical in terms of what brings additional benefits to the discussion to start helping shaping the the the problem statements and yes we are going to take this into consideration as part of the overall feedback that we get to see what we could realistically undertake okay thank you that makes a lot of sense to me okay thank you AB thank you our next hand is from
73:00 - 73:30 JK good morning GMO this is jk1 from PG uh first I want to thank you for the thorough and thoughtful analysis and this is really helpful I have a question but I apologize if just being asked it before so on the slides uh 21st and 14 and 15 we've seen some native bid volume and Revenue um can you explain what what exactly is that is that just the um the
73:30 - 74:00 obligation that flows in the other way or that represents counterflow uh what's the what's the interpretation of the netive volume and the revenues yeah I will need to refresh my memory operator can you go to the what slide you mention first J yeah if we can First Look at um slides 21 21 can we go to the 21 please operator 21 oh okay oh probably not not
74:00 - 74:30 that one that's a different display on my um yeah my shows uh operator can you please go to the next slide just say I I think that's the actually 22 are your side um no uh the title of the slides is annual and monthly auction bit volume for purchase the CRS can you going here we go
74:30 - 75:00 okay okay so your question is what does the negative ranges mean yeah the negative volumes okay so now let me refresh the memory annual and monthly auction bit volume for purchase CR okay yeah and there are first adult we don't have any bit floor for CR participants can be in
75:00 - 75:30 positive or negative we do see from time to time that there are CRS that are put for purchase right well let me step back there are we allowed uh the activity to buy and to sell CRS and participants can put a price quantity for that position so this one I'm trying to call if it only includes the purchase SS or also the S
75:30 - 76:00 CRS because naturally you are going to see negative flows from the perspective of the iso meaning we are paying participants for the transaction of the CRS if they are selling CRS they are going to get paid because they are saying I want to buy to sell my CR for this much money and K is going to pay them money now by the title iing this is only referring to buy CRS now there could be also the case that for buy CRS
76:00 - 76:30 a participant actually taking a type of counterflow position saying okay I want to buy the CR but I believe it's going to be a liability so I'm willing to take that CR if I pay this much money to to hold it okay so the nective volume represent buying but at a counter flow position right okay and the next slides
76:30 - 77:00 when we look at offer CRS um so if if you go to the next slide it's for offer CRS we see significantly more native volume that's because all the sold CRS are at the U um at the at the um yeah this after that uh the the title is annual and monthly auction volume for offer the CRS we see a lot of native um
77:00 - 77:30 position so that means the the so position are only or mostly on the counterflow position no the previous one when you have the negatives were mostly because of counterflow positions this one is actually the wording could be better we can do better than this it should refer to sell CRS these are par ipants selling CRS and basically they are expecting to be paid for selling their CR right so I
77:30 - 78:00 would say the negative values here are actually the expected direction of the flow because they are selling the CR kaiso has to pay them to get rid of the sers got it okay so the sign actually flipped due to the buy and and and selling position I see that's that's really helpful um so that makes make me really curious um it seems that when the seller sales CRS there are not many
78:00 - 78:30 counter flows available in the market but according to DM's analysis there seems to be sufficient counter flow offered in the market um to allow enough clearing of the CR position do you have an insight into that so sorry I I have a trouble with the with the linkage you you made so I got lost in that I don't let me make it clear so in
78:30 - 79:00 the DM's proposal um the Willing seller only Market um it's basically requires enough counterflow to back up the uh transactions in the auction and in their analysis it shows the market will have enough liquidity in 2018 and there will be enough um more uh you know the the counter flow um to be sold than whoever
79:00 - 79:30 wants to purchase from the generation side uh I guess this question maybe not not entirely fair to you but I want to say if any people from DMM could please respond to that too well I I don't know if there is anybody in the call but let me tell you what this material is telling you this material is just telling you the level of activity in both the buy and sell of CR in both the annual and the monthly
79:30 - 80:00 auction and we inde have other metrics I don't know if it's the next to follow but where we show the volumes of CR that are put for sale the Sal s and you can see that over the years they have increased and in those slides that we have in this deck we are saying that we have seen an increase of activity of participation from low serving entities selling allocated crrs by increasing the volume
80:00 - 80:30 of C CRS naturally you are going to increase the activity for the B because now you can have more capacity available to purchase because there are entities selling those shups I don't remember the slide that we have here in the day but there is a trend and you can see that trend for the selling CR okay and and just to clarify this is
80:30 - 81:00 the bids or this is a cleared amount no this is the clear volume what was already clear yeah okay and and uh finally I have a question I think it should be around slide 14 um the monthly auction revenues follow the seasonal pattern into 2024 um I think it's around sze 14 we may have a slightly different number um that
81:00 - 81:30 shows you have some B native revenue for the monthly auction can we move one slide before operator oh sorry maybe two more forward one more yes here we go um is the native Revenue the I'm trying to intergrate is this the the uh Revenue
81:30 - 82:00 associated with the with a counterflow offering or purchasing or this is something else it's all together it's just telling you the money flow whether it's positive or negative but there is no association whether it's a counterflow buy or a s crr is just telling you the net balance of the money flow so if it is netive it means the oh I see it means
82:00 - 82:30 the how much the seller receives the seller receives or maybe the buyer of a counter flow position here is just telling you the direction of the flow right whether it was a payment to the kaiso or a or a or a revenue to the kaiso okay is that the settlement amount after you calculate for example the um the flow flows in the in opposite direction of what is bid
82:30 - 83:00 for let me try so we have all transactions of CRS in the auction Buy sell whether they are in the prevailing flow in a counter flow position regardless they put a price quantity to buy and sell CRS once we clear the auction and we know which CR were sold or purchased at what price the only thing that this metric is capturing is what is
83:00 - 83:30 the net balance of money flows for the kaiso position how much it has to pay how much it has to get as Revenue positive and negative just to say overall what were the auction revenues for the kaiso and there are positives and there are negatives that that's the whole picture got it okay so this is a okay the the the aggregation of the notional value after settlement all right thank you so much
83:30 - 84:00 that's all my question so sorry let me clarify this is not about the notional value this is just the auction this is just the auction revenues the money the kaiso collected from selling and running the auction uh how can you have the I I I got a little confused like for example in in one
84:00 - 84:30 month um is that just like for some some some days you will have the positive and some days you have negative or is it possible that you have the positive and negative at the same time sorry maybe we can take this offline but let me make just one last statement before we move to the next one this one is only measuring the money that the kaiso collects from running the CR auctions by selling CRS and by buying
84:30 - 85:00 CRS the total flow is positive negative this just tells you how the money flows from the auction perspective this doesn't tell you anything about the actual value of the crra because that is the settlement of the CRS and we have many different metrics to tell you once they got the CRS in the auction how much they get PID once they settle in the day Head Market that is the notional value this is not
85:00 - 85:30 capturing anything of that this is just the money that the kaiso collected when it runs the auction okay thank you J you have any questions about this I'm happy to to follow up with you to ensure that there are no missing understanding here I appreciate it thank you um we've got two more hands in Q we have Kelly and then
85:30 - 86:00 Mark so let's go to Kelly it's call Wells of wptf again um quick question when I think Doug had a chart a question on I think slide 35 that conversation kind of um made me I want to confirm what's included in the slide 35 it's the one that shows the Arbitrage between annual yes perfect um so does the revenue and I think the answer is no but again just confirming does the revenue from cell include the revenues
86:00 - 86:30 from selling crrs that were allocated to lsse they are still selling them in the monthly auction but they were allocated them this is this is only for buying C in the annual and selling those in the monthly if they were allocated CRS that then are sold in either the annual or the monthly they are not part of this picture Okay that was what I I wanted to
86:30 - 87:00 confirm that so then if we move to slide 40 if I'm understanding the slide this is the volume of crrs that llc's are allocated and then they're turning around and selling them in the auction so there's another bucket of revenue generated from this activity that's going back to the lscs that's not captured in slide 35 yeah operator can we move to slide
87:00 - 87:30 number you said 40 Kelly I think it's 40 yes it's 40 on my on my version um I think I have the same version as you guys yeah operator can we move to a slate number 40 please I'll are you available yes can you move the SL 40
87:30 - 88:00 please thank you okay now I I can connect what you're indicating Kelly yes this is separate from the Arbitrage option from slide number 35 this is actually the one that I was referring to JK earlier today this captures the volume of CRS that were Sal in the auction and they are effectively coming
88:00 - 88:30 from the allocated CR so they get allocated CRS then around the corner they can come in the auction and put those for sale they have to put a specifically a price to be able to to sell those CR and we disaggregate this in the two variations of the allocation one is the the formal allocation process that is in that blue color and the gray one that is on the top to differentiate for the CR that are allocated through an
88:30 - 89:00 internal process that we have for load migration the differentiation here is important because they are even though they are allocated CR they are somehow different in nature one is they request they get accessed they get allocated the load migration is a straightforward allocated to low serving entities just by virtue of having in load migration in their area and this is the trend that I was
89:00 - 89:30 indicating to JK that we see that there is more and more activity of allocation CRS being sold in the auction when this activity happens obviously they get the CRS allocated at no cost it's an allocation process to low serving entities now they put that CR for sale in the auction typically they are going to get paid because most likely they're going to put a a prevailing flow position meaning they value that CR and
89:30 - 90:00 they want to get paid some money for selling that crr and once they sell that CR that capacity becomes available in the auction and now that may enable other sers to be purchased because that capacity is is available that money flow of no cost to get the CR and getting some revenue for selling the CR is not part of the auction Arbitrage that I mention in the slide 35 but this is somehow part of
90:00 - 90:30 what goes into the auction efficiency metric okay yeah thank you I I appreciate that clarification I just wanted to confirm my understanding there thanks thank you thanks Kelly um we're gonna go to Mark next and then Dan this is Mark Price from DC energy are you able to hear me okay yeah we can uh great I wanted to maybe expand on the comments that Noah from
90:30 - 91:00 ETI made earlier about auction structure and I think partha from kaiso had a question of what what could we gain from looking into um what and NOA was burning up auction structure comparing sort of how different isos do Bop auctions um and how that could be beneficial in terms of modeling in I think an important aspect of that comparison would be when the capacity is released
91:00 - 91:30 um across the different auction types um and what I mean by that is there's uh there's this residual capacity component um that's not what is allocated but what is left over in the system that's available that goes into these auctions and I know some members have expressed concerned that that residual capacity is auctioned off without a reserve price the allocation has reserve price because uh the LC's can bid those in and sell them at a price that they deemed worthwhile but the residual may not and
91:30 - 92:00 so I think it's an important thing to look at where that residual capacity is released is it released all up front and the annual is it more reserved for the Bops or when you get closer to the individual months and I think what you'll what you could see or what you might learned from this is like you do get better in what NOA was trying to bring up is modeling does get better as you get closer in um you have better transparency into outages um and if you're doing individual months instead
92:00 - 92:30 of a quarter like you the annual you have the better ability to perhaps model this more accurately and um members will have more visibility and comprise things in more uh so you might find that you can get some benefits um in terms of both modeling and valuation of that residual capacity that's being released if you release it closer to actual settlement date so I think if you guys do do that analysis or comparison at the next meeting of auction uh structure across the isos would be beneficial to S
92:30 - 93:00 to show uh how those isos are releasing that residual capacity through through those options thank you for that that feedback really really appreciate that thank you Mark thanks Mark let's go to Dan and then we have Abrams hand up as well hey G Dan Williams from the Energy Authority um I joined the call late and
93:00 - 93:30 uh hopefully we haven't talked about this already but um if you don't REM mind recapping some thoughts on it uh regardless so you know on slides 12 and 13 um there's some reference to shift factors uh thresholds being responsible potentially for some some issues and I was just curious if you could share some thoughts on how the iso um ship Factor threshold changes that went into place
93:30 - 94:00 back in September of 2023 have have or have not um impacted outcomes that that show up in the the data here and then uh if you are considering any further shift Factor threshold changes just uh you where where we might look for um you know more information or or any potential changes there and just whether kaiso would be looking at those just for your ba and crr Market or if there's some potential
94:00 - 94:30 look at ship Factor thresholds within the Edam context as well sure thank you Dan I think I understand the the reference to your question we did implemented an enhancement specifically to address some of the original but not new issues of the the revenue in adequacy that we identify after we implemented the 2019 policy changes we have that discussion back in
94:30 - 95:00 mid 2020 and then we pursue an enhancement I believe the enhancement effectively went live somewhere in May May 23 or May 24 I don't think it was it was September okay and the enhancement that we apply was to reduce well let me stay back we do have a ship Factor threshold and that is and was 2% across
95:00 - 95:30 the board across all type of locations whether they are intertie individual locations or aggregated locations it was slat 2% across the enhancement that we implemented was to reduce the threshold of 2% to basically close to zero I think was 02 per and from 2% to 0 2% only for trading hubs and daps which are aggregated locations
95:30 - 96:00 under the basis that even though they may have a small shift factors when you apply that to the actual injection that may be 20,000 megawatt or so the contribution is still quite significant right different when you have an individual location of 100 megaw and a small ship Factor gives you a very small contribution that was the basis to apply that only to the trading hubs and daps and it was some type of compromise because we would
96:00 - 96:30 run into some technology complications to apply that across the board so we let some open discussion there that we would consider for future enhancement and considerations if we could apply that lower threshold to other type of locations but as of now the enhancement was only applicable to daps and trading HS I would say we track how that work in some cases well regardless of the outcome I would say
96:30 - 97:00 moving to lower and lower threshold of shift factors the only direction that you're going to get is that the flow calculation is going to be more accurate more accurate doesn't mean necessarily that it's going to improve or worsen the the revenue adequacy because it can play in either directions for the cases that we identified that Dro that enhancement it was hurting it was exacerbating the revenue adequate
97:00 - 97:30 inadequacy and that is the reason we implemented those we did some assessments after we implemented that and in some constraints actually it deteriorated the revenue inadequacy because the contribution now was making the revenue inadequacy worse and again it can play either way the whole point here is that having lower threshold overall is going to to make the power flows more accurate now we are coming to the second round and we are going through different
97:30 - 98:00 root CA analysis for many different top constraints and we continue to see that the Shi Factor threshold is still an issue a factor playing a role driving the inadequacy and I believe that is part of the discussion we will have to have what are the possibilities here to to improve in that area naturally conceptually would be get rid of the sh Factor threshold right just go
98:00 - 98:30 as low as it needs to be there are two challenges with that that were explained during the enhancement policy stakeholder process that we took one of those is the practicality in real life operation of the system we are not going to be moving a resource that is far in the PG area that may have a contribution or a effectiveness of .1% to relief congestion for a
98:30 - 99:00 constraint that is in San Diego right you would need to move a thousand Mew just to get some noise flow contribution relief in one constraint that is far away so there is that practical utility consideration of realistically how meaningful is to have this small sh factor in place and the second one is the computation LEL once you have a complicated Market predicated on congestion management dealing with the
99:00 - 99:30 every single small contribution can be prohibited in some cases so these are the two practical considerations that we will have to keep in mind when we start discussing potential uh Solutions and problem statements thanks K that was a really good explanation can reminder of of that whole um stakeholder initiative too and and everything that kind of went on with the trade-offs in that one it was just I
99:30 - 100:00 was kind of looking at a you know a couple points on the slides on on 12 and 13 and it seemed like the uh the takeaway was that there there may be some locations where uh making a change to a ship actor threshold could improve things in in to some extent but maybe not a maybe the as you're saying like the global reduction at all points other than the the ones that were already changed May um have other trade-offs so
100:00 - 100:30 I guess that's that's just something that we'll discuss more as looking at next steps in this initiative is that maybe the right way to to think of it just kind of assessing those tradeoffs yes that's correct and then is it um concept of thinking about shift Factor thresholds in the in the context of of of Edam um do you see that as as fitting somewhere else or is that sort of part
100:30 - 101:00 of this as well due to the the kind of the impacts of of kind of having one day ah Head Market um in the future yeah we we have to see how we organize the discussion because obviously it's a feature that applies to the market as a whole is but you raise the point whether that should be something applicable by ba so yeah I think that is more elements for discussion there yeah that I think that would be
101:00 - 101:30 something hopeful to just kind of talk through with stakeholders of sort of where it is because it it feels like um a lot of what's being discussed here does have some relevance when you start to think about both the um the imbalance resered noal deployment and the uh um you know the the market clearing day ahead of of resources that are outside of the isova and how that will have an impact on you know kaiso
101:30 - 102:00 crrs and funding and adequacy and and all of that is just it's it's part of the whole solution um but thanks for the extra thoughts and I look forward to seeing where this one goes thank you then for the comment thank you um we have one last hand from Abram right now I uh two quick com questions uh one just on the last discussion with Dan GMO I I
102:00 - 102:30 I think you're you're right about the practicality issues but I just point out that that you don't need to move units or resources um necessarily um in order to have them um pay for the congestion that they're that they are responsible for so so I think there are two separate issues is even though you might not choose or they may not respond to a price if they're that far apart if
102:30 - 103:00 there are a lot of very small uh price differences um that across a large area are impacting Revenue inadequacy in a m material way having the lower ship Factor threshold could um could uh basically uh fill that Gap um and certainly from from a cost causation standpoint you know um the pra allocation to the extent that it has a
103:00 - 103:30 cost causation basis um you know there's there's uh no reason that uh crr entity should be paying for um congestion that that um you know that other entities simply aren't paying for or aren't getting charged for as opposed to if there's say a transmission D rate where you need to PR allocate relative to
103:30 - 104:00 those so I I just wanted to point that out and and I did have a quick question on slide 40 here um which is you know have you had any thoughts about why the um uh increase in lsse selling allocated crrs and and and would it be valuable to to survey them to ask them um you know just to what extent um you know
104:00 - 104:30 potentially the the underfunding potentially um creating a lot of risk in holding the crrs might be contributing to them choosing to sell them um because one of the concerns I think that we would have and we've heard some physical Market participants on the generator side who have exited the market because of of the uncertainty you know if if you if the uncertainty with underfunding
104:30 - 105:00 is causing physical Market participants to leave it it's very easy for for it basically leaves the market and and and tends to bias the market more to Market participants who are more speculative because you know if you're a speculative Market participant you know you're just going to put in a lower bid to reflect the underfunding but if you're hedging you might say well this hedge isn't valuable to me because it could you know reverse or it could you know be worth
105:00 - 105:30 you know nothing near what what we paid for it you know you have very high levels of it and I'm wondering if it would make sense to have a survey of lscs to understand whether the the increase in selling of these products is because they're not finding the the products useful as a head thanks for ab and maybe I just offer to I'm not sure about the survey what that
105:30 - 106:00 would exactly entail I think part of our goal from this working group process was to have you know a common understanding about what people's uh concerns were with the sort of the current design and so to really that any uh llc's wanted to provide sort of feedback or context that'd be helpful I recognize in fact that some of these are sensitive commercial information that uh individuals might not want to share but uh any color that folks wanted to
106:00 - 106:30 provide I think would be helpful in terms of understanding kind of what the the context of the current market design in terms of their uh hedging activities I think it would be helpful but yeah thanks for that a okay thank you everyone and thank you everybody for all this comments and questions I think it was a very good discussion to complement the discussion we had back in February
106:30 - 107:00 27 and we're coming to the end of the session I think we fully utilize the two hours and I appreciate all the openness to to have this type of discussion and I think Hillary now we are scale for for the next session and I think there are opportunities for comment right yep yep we're going to we will be posting a comment template either today or early tomorrow and those will be due in two weeks on March
107:00 - 107:30 26th uh so there will be another opportunity here to to comment in writing on the analysis and those comments can cover both the analysis in the deck and anything that came up in the discussions on either February 27th or today so we're we'll do one set of comments on the the total root cause analysis topic and and then looking forward uh we will also be sending out a market notice for the uh next working group meeting
107:30 - 108:00 once we have that date finalized as we talked about that'll focus on uh crr or financial or FTR structures in other uh in other ISO spaces and then later this spring we'll start to focus more explicitly on discussion of problem statement partha yeah this partha I Kelly Wells I believe had her hand raised sort of I'm not sure if it's Associated and Bonnie blor as well I don't it's a process or analysis question but we have a few minutes maybe
108:00 - 108:30 will you know oper who I believe Kelly was sort of the next covered Kelly do you have any other questions yeah not on the analysis just on the comment template so um I appreciate you guys extending the deadline you had a comment template already posted but you just mentioned you'll be posting one so is it going to change or are we okay working off of the one that was um has been posted that one should be good then okay
108:30 - 109:00 great sounds good thanks okay and let's go to Bonnie I just I just wanted to confirm so the so the March 19th date is off and we're now targeting the 26th right that is correct we have extended it by a week to give two full weeks from this conversation okay I appreciate that thank
109:00 - 109:30 you all right thank you can we go to the next page here's the details here and then um just one last slide if there's no other hands and um Hillary or GMO do you have anything else for for wrap up here no Janina that's all what we have for today that's all thank you everybody for competion perfect okay next slide um is
109:30 - 110:00 just going to be our reminder to sign up for the energy matters blog if you're interested in that subscription um you can sign up there in this link and thank you everybody for your discussion and all your questions um have a good rest of your day this event has concluded thank you for using Event Services you may now disconnect