651 Commerce Drive Roseville CA 95678916 7813636916 783 - PDF document

1 651 Commerce Drive Rosevil
651 Commerce Drive Roseville, CA 95678(916) 781-3636(916) 783-7693webwww.ncpa.comPage 1of 4Subject: GMC Charge Code 4537 –Market Usage Forward Energy 1.Which of the options listed in the CAISO whitepaper as a potential change to the MUFE isnot just and reasonable. The only explanation provided by CAISO regarding athat said, NCPA generallysupports the use of a market stakeholder process to review any Market (DAM) functions and processes. As described below NCPA believesthat Option #1 proposed by CAISOdoes notaccomplishes this goal, does not provide an equitable basis for is superior to Option #1, and that with some minor adjustments, may be a validoption worth NCPA Comments –GMC Charge Code 4537 (Market Usage Forward Energy)Page 2of 4Commentson CAISO Recommended Option #1 opposesCAISO proposed Option #1. In this option the CAISO proposes to allocate costs for MUFEto net energyusage by Scheduling Coordinators in the DAM based onLoad, Generation, Imports and Export schedules, while excluding Inter-SC Trades (IST) from the calculation. Option #1 does not reflect cost causation or a Scheduling Coordinator’sactual usage of the DAMargue that all ISTsare “financial”transactionsand thus are not scheduled in the Integrated Forward Market (IFM) software, and thereforedo not impactanyDAM functio

2 ns or receive any benefits from the DAM
ns or receive any benefits from the DAM process. While ISTs may not be optimized in theIFM, theydo understands that theintent of the MUFE charge is toallocate costs associated with DAM market benefits resulting fromsuch process, andthat the MUFE isnotdesigned to allocate costs forDAM functions solely related to schedules that are processed or optimized through theIFM. The CAISO’s whitepaper clearly explainsthatthere are many costselementscollected through the MUFE charge code, andthatnot all of these costsare directly related to the IFM. For example, and associatedcosts that are collected through the Investigating and reporting potential gaming and market power abuses(congestion)Performingweekly, daily and hourly load forecasting CAISO GMC Charge Code 4573 Market Usage Forward Energy Discussion Paper; Page 7 NCPA Comments –GMC Charge Code 4537 (Market Usage Forward Energy)Page 3of 4Maintenance of market information postings(transmission/market OASIS)Developingand managing demand response participationMonitoring and reportingon market performancePerformance ofspecial studies on market efficiency, bidding behaviorDevelopment ofnew market rules or changes to market rules in response to market Implementationand calculation of penalties and sanctions for noncomplianceManyofthese market services are not directly related

3 to the amount ofLoad, Generation, Import
to the amount ofLoad, Generation, Import or ExportMWhs scheduled into the IFM. For example, the administration of Congestion Revenue Rights(CRR)is not directly related to the amount of Load, Generation, Import or CRRsare purely financial instruments. CRRs are used by market participants to manage The current methodology for allocating MUFE charges has been found to be just and reasonable by FERC. If the objective of Option #1is to calculate a market participant’s net usage of the DAMprocess,ISTs must be accounted for because many market participants use ISTs to serve load. Ifa methodology based on portfolio netting is employed ISTs must also be fully accounted for, or used as an offset,in a market participant’sportfolio;otherwise a market participant who harmedby this proposal, and will be unable to manage its exposure to MUFE cost allocation. Such a result will provide a disincentivefor market participantsto transact using ISTs. This NCPA Comments –GMC Charge Code 4537 (Market Usage Forward Energy)Page 4of 4 CAISO hasalso proposed, in Option #2,to allocate MUFE based onthe absolute values ofall Load, Generation, Import and ExportMWhs scheduled in the DAM,without netting sources and sinks in a market participant’s portfolio. NCPA believes thismethodology is more logical, and therefore superiortoCAISO

4 ’s Option #1, but themethodologypro
’s Option #1, but themethodologyproposed in Option #2must also account forIST transactionsand Ancillary of the associated costs under the CAISO’s current proposal. For example, a market participant who does not schedule Load, Generation, Imports or Exportsin the CAISO DAM, but ratherschedules IST and/or AS transactions, will receive benefits from the DAM functionswithout within the CAISO, fullyaccounts for all costs associated with IST, but this charge code is only intended to collect administrative costs associated with the processing andsettlement of such schedules. Charge code 4512fails to capture many of the costs that are allocated through the MUFE chargeassociated with functions that produce benefits for market participants who use IST. For example, the Locational Marginal Pricesused to value IST transactions are developedthrough the CAISO DAMsolutions. Many of the costs associated with market monitoring activities and reporting, which ensuring that prices assigned to ISTand AStransactions are accurate, are collected throughthe MUFE charge code. A market participant whose portfolio consists of a majority of these transaction typeswould not pay any of the costs associated with these activitiesunder the current proposal.allocates MUFE costs to all market participants who receive benefitsfrom the DAM, Option #