Comments on 11/20 DAME Configurable Parameters Implementation Working Group Meeting

1. Please provide a summary of your organization’s comments on the November 20, 2025 DAME Configurable parameters implementation working group discussion.

Comments on Day-Ahead Market Enhancements Configurable Parameters

Working Group Presentation on November 20, 2025

Department of Market Monitoring

December 10, 2025

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Day-Ahead Market Enhancements - Configurable Parameters Implementation Working Group presentation on November 20, 2025.[1] While DMM supports the ISO testing the sensitivity of the configurable parameters on market results prior to go-live, DMM continues to recommend caution when interpreting results that use unrealistic market data.

The ISO conducted additional sensitivity analysis of the envelope multiplier using the improved benchmark scenario. Similar to the previous analysis, the higher envelope multipliers continue to result in less imbalance reserves (IR) awarded to battery resources and substantially higher IR prices. As DMM previously noted, the multiplier value should balance real-time deliverability of storage capacity without overly constraining IR supply and causing inefficiently high IR prices.[2]

DMM recommends that after go-live, the ISO prioritize an assessment of the impact of the envelope multiplier on real-time performance of storage resources that receive IR awards to determine if the reliability benefits of a high envelope multiplier justify higher IR prices. While DMM supported the ISO’s relatively high initial multiplier value of 85 percent as a conservative starting point, if market results reveal that this value has limited impact on real-time storage availability, the higher IR prices caused by the high envelope multiplier may not be justified.

DMM appreciates the ISO including information about the bids for imbalance reserves in the recent presentation.[3] To better understand the interaction between IR bids and IR price, DMM requests the ISO provide additional figures similar to the ones in this presentation that show IR bid megawatt quantities by price bucket, but exclude the megawatt quantities of IR bids that correspond to energy schedules or are infeasible due to commitment status and start-up time.

Lastly, DMM supports the ISO focusing on the IR deployment factor and set of enforced constraints in December and January, as these are more easily configurable parameters that do not require a tariff change, unlike the bid cap and default imbalance reserve price.

[1]  Day-Ahead Market Enhancements: Configurable Parameters Implementation Working Group Presentation, California ISO, November 20, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Day-Ahead-Market-Enhancements-Configurable-Parameters-Implementation-Working-Group-Nov-20-2025.pdf

[2]  DMM Comments on Day-Ahead Market Enhancements: Configurable Parameters Implementation Working Group Presentation on October 21, 2025, Department of Market Monitoring, November 4, 2025: https://www.caiso.com/documents/comments-on-day-ahead-market-enhancements-configurable-parameters-implementation-working-group-oct-21-2025.pdf

[3]  Day-Ahead Market Enhancements: Configurable Parameters Implementation Working Group Presentation, California ISO, November 20, 2025, slides 28-29: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Day-Ahead-Market-Enhancements-Configurable-Parameters-Implementation-Working-Group-Nov-20-2025.pdf

2. Please provide a summary of your organization’s comments regarding the discussion on updates to benchmark setup and associated market results.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

3. Please provide a summary of your organization’s comments regarding the discussion on Sensitivity analysis #2 results – envelope constraint multipliers & imbalance reserve price.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

4. Please provide any additional comments.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

1. Please provide a summary of your organization’s comments on the November 20, 2025 DAME Configurable parameters implementation working group discussion.

Energy Division staff (ED staff or staff) of the California Public Utilities Commission (CPUC) develops and administers energy policy and programs to serve the public interest, advises the CPUC, and ensures compliance with CPUC decisions and statutory mandates. ED staff provides objective and expert analyses that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California.  

ED staff appreciates the opportunity to submit comments on the Day-Ahead Market Enhancements (DAME) configurable parameters implementation working group, which is focused on the implementation of the new imbalance reserves requirements. ED staff appreciate that CAISO released simulated historical data on the size of the imbalance reserve up and down requirements. ED staff also appreciated the sizable amount of material analyzed and released for discussion at the working group meeting that was held on November 20, 2025.

At a high level, ED staff has a number of questions about the data and methodology used by CAISO that was presented at the workshop, which we discuss in more detail below. ED staff also recommends that, in order to test and fully vet the configurable parameters that will be used in the EDAM market beginning on May 1, 2026 and through the summer, CAISO should continue to test various imbalance reserve requirements on high load days (e.g., 45,000 MW) and under various stressed system conditions, rather than on non-stressed, low-load days (CAISO presented data regarding the imbalance reserve prices and outcomes for a very low load day, i.e., Saturday, October 4, 2025). 

Finally, ED staff are concerned that the imbalance reserve requirements may be set too high and may prove costly, given the preliminary results provided at the workshop.  Therefore, ED staff recommends that CAISO proactively consider steps it could take should the preliminary results materialize in the market when CAISO implements the EDAM and DAME changes on May 1, 2026.

2. Please provide a summary of your organization’s comments regarding the discussion on updates to benchmark setup and associated market results.

ED staff appreciates CAISO dedicating time to conducting this data analysis on the implementation of imbalance reserves, but has a number of questions and recommendations. ED staff reiterates the questions from the previous presentation below (in normal text), some of which were partially addressed at the last meeting, but also include new questions and recommendations (in italics below).

• Were the imbalance reserve bids from market participants or did CAISO develop the imbalance reserve bids? If the latter, how were these developed?
• Is it correct that the demand curve sets the imbalance reserves requirements in many of the hours in the CAISO BAA and the other EDAM BAAs?

• If so, was that because there were insufficient bids or was it due to bids at or near the cap?
• ED staff requests that CAISO provide the bid stack for the imbalance reserve requirements for one of the hours when the demand curve set the clearing price and how the bid stack interacted with the demand curve.
• ED staff requests that CAISO explain how it makes sense to have imbalance reserve prices that are near to the energy prices in some hours.  For example, on page 24 of the October 21^st meeting shows a CAISO energy price of approximately $38/MWh at 9 am and an imbalance reserve price of $28/MWh.
• ED staff requests that CAISO explain the seeming shortage of imbalance reserves or imbalance reserve bids (based on the high clearing prices observed for the imbalance reserve product), when there are 60,000 MW of capacity resources available based on resource adequacy requirements, and 35,000 MW of load?
• ED staff requests that CAISO explain the price separation that is occurring on the low-load 10/4 test event (with CAISO’s prices being substantially higher than the other BAAs) and why this would occur with 60,000 MW of capacity resources and a large penetration of must-take solar resources on a day like the 10/4 low-load test event.
• It would also be helpful if CAISO could explain why the prices for the low-load test event October 4, 2025, in mapstage diverged so substantially from the prices in production on the same day.
• ED staff request that CAISO provide the effects of the imbalance reserves on not only the energy market prices, but also provide data on the ancillary service prices for all analyses and scenarios previously conducted and all analyses and scenarios going forward.
• ED staff requests that CAISO calculate the costs of the IR products to customers on an annual basis for each of the imbalance reserve up and imbalance reserve down scenarios, if the results occurred every day of the year.
• ED staff requests that CAISO address the functionality in OASIS mapstage, as it is not possible to download the imbalance reserve and reliability capacity price data. The inability to download this data hampers ED staff’s ability to conduct robust analyses.  ED staff has been in contact with CAISO staff regarding this issue, beginning on October 24, 2025.
• ED staff request that CAISO provide a timeline for analysis regarding the deployment scenarios and consider a range of options for the deployment scenarios, including full deployment and no deployment with no transmission constraints.
• In addition, if cost analysis does occur closer to EDAM go-live, does CAISO have a plan if these new costs are significant? Is there any mechanism being considered to protect ratepayers from potentially large non-forecasted costs? Has CAISO considered needing to open an expedited tariff revision process if costs coming out of parallel operations are unreasonably high?
• ED staff requests that CAISO consider changing the configurable parameters based on system conditions (e.g., with load less than 43,000 MW, using 0% for the envelope constraint and no deployment).
• ED staff requests clarification if and when CAISO will consider reducing the 97.5% level of uncertainty being used for procurement of imbalance reserves? Cal Advocates raised this question in the November 20th meeting, but was told that adjusting this 97.5% value is not in scope. If we consistently see over procurement of imbalance reserves due to the 97.5% level of uncertainty, a reduction in this value is warranted before EDAM go-live to ensure ratepayers are not being exposed to unneeded costs.
• ED staff requests that CAISO explain how imbalance reserve prices are roughly $10/MWh, when all bids are $0.  A fuller explanation is warranted as this result does not seem to make sense.
• ED staff requests that CAISO explain what is actually procured in the scenario where all bids are placed at $55/MWh and the demand curve reduces the price. It would be helpful to explain whether no imbalance reserves are procured under this scenario. That is, if all bids are $55/MWh, and the price is set at $30/MWh by the demand curve, it would seem that no imbalance reserves would be procured.
  • If this is the case, is there any penalty to not meeting the IR requirements or are bids forced to clear at $30/MWH, and if so can these generators, then receive BCR for the difference between $30 and $55?
• ED staff requests clarification on page 23 of the November 20^th meeting, how were bids above $55 simulated? It is not clear the rationale for testing bids above the bid cap. Thus far cost analysis has not been provided, and opening the door to a potentially higher bid cap at this time seems unwise.
• ED staff requests that CAISO provide more explanation of the price separation effects between the BAAs and how imbalance reserves is affecting price separation for each scenario and compare this to a base case, with no imbalance reserves or reliability capacity (i.e., business as usual case).  Further, ED requests that CAISO run a business as usual case for each case that it has run and will run in the future.
• ED staff requests further clarification on slide 45 of the November 20^th meeting, how many of these import bids are CPUC-jurdisctional LSE RA imports bidding at $0 versus actual economic bids?
• ED staff questions whether the amount of self-schedule bids for PACW on slide 27 of the November 20^th meeting is reasonable, it appears to be around 40%.  Can CAISO provide more clarity on the level of self-schedule bids being used in this modeling and the rationale for such a high amount of self-schedules?
• ED staff requests further clarification on the diversity benefit discussion around slide 30 of the November 20^th meeting, is this a purely mathematical reduction or does there have to be sufficient transfer capability for these flows to occur?

3. Please provide a summary of your organization’s comments regarding the discussion on Sensitivity analysis #2 results – envelope constraint multipliers & imbalance reserve price.

ED reiterates our comments that were presented at the previous meeting. In this section, CAISO provides an analysis of the effect of imbalance reserve bid prices on the imbalance reserve and energy markets (as shown below), demonstrating that higher bids result in higher imbalance reserve prices and higher energy prices.

ED staff requests that CAISO provide the data underlying the calculations on pages 60 and 66, as well as the underlying data for this entire section, if possible.  While CAISO concludes, on page 66, that “energy prices are not very sensitive to IR bid price changes,” ED staff recommends that CAISO test this conclusion under high load and various stressed system conditions.[1] Similarly can all underlying data be provided for the section titled Imbalance Reserve Price Results starting on slide 81 of the November 20^th PowerPoint?

In addition, CAISO explains that the imbalance reserve prices are non-zero even when imbalance reserves are zero because of congestion and opportunity costs.  It would be helpful if CAISO can explain which of these factors are driving the results – congestion or opportunity costs and how this might change under various system conditions.

[1] These pages numbers correspond to the October 2025 meeting, not the November 2025 meeting.

4. Please provide any additional comments.

Some additional comments are provided below:

• It would be helpful if CAISO could explain why the imbalance reserve requirements are so high, when CAISO operators have been making few adjustments in the RUC process to address uncertainty (see CAISO DMM figure below, which shows historical RUC adjustments to address uncertainty).

• Can CAISO provide additional information on the congestion impacts of the imbalance reserve product and when CAISO will be considering various deployment scenarios?
• ED staff understands that the results presented by CAISO are not necessarily indicative of what imbalance reserve prices might be when EDAM is implemented on 5/1/2026. However, based on ED staff’s analysis, the average imbalance reserve up price for 10/4/2025 averaged approximately $23/MWH.  If imbalance reserves average 1,500 MW per hour over the course of the year, this would result in imbalance reserve costs of approximately $300 million per year, not including potential effects on congestion and changes in the energy and ancillary services bid stacks.  It would be helpful to understand:

1. How CAISO expects this market to operate;
2. How CAISO will evaluate whether the imbalance reserve product is operating as intended; and
3. How CAISO intends to evaluate whether the benefits outweigh the costs.

• ED staff request further clarification and testing of the competitiveness of the imbalance reserve product, based on the high demand chart on slide 57 of the November 20^th meeting, for example 19 hours are being set by the demand curve, not submitted bids.
• Again, we would note here that it would be helpful to be able to download the price data so staff can undertake more thorough analysis and be prepared to evaluate similar information that is developed during parallel operation.

1. Please provide a summary of your organization’s comments on the November 20, 2025 DAME Configurable parameters implementation working group discussion.

PG&E appreciates the opportunity to provide comments on the CAISO’s DAME Configurable Parameters Implementation Working Group meeting. 

PG&E understands that CAISO plans to do much of the parameter tuning in parallel operations. Normally we think of parallel operations as a point where nothing changes but CAISO’s plan is to use the parallel operations results as a baseline.  CAISO plans take days from parallel operations and modify the inputs to reflect more stressed conditions. CAISO can then simulate those modified cases with different parameter values and compare the results to the parallel operations baselines. This should give stakeholders and CAISO an understanding of the sensitivity and dynamics between parameters and the market results; enough of an understanding to choose values for launch.

Given this understanding, we’d like to offer the following feedback:

• We need to see more of a plan.  If much of the tuning will be done in parallel ops, it gives the CAISO between February and April to perform all the sensitivity analysis and reach agreement with stakeholders on the final parameter values. This is a tight timeline, and the CAISO should gain alignment on timing, cases, and performance metrics as soon as possible.

• Don’t ignore the cost.  If the market cost with EDAM increases compared to today (i.e., the imbalance reserve costs outweigh the EDAM benefits), EDAM will not be judged as a success. We know that the market simulation and parallel operations data will never perfectly predict cost. But there needs to be a time and place to have the conversation around cost and the earlier the better to ensure stakeholder understanding and support.

• Test regionally diverse scenarios. The selected parameter values should work over a wide range of system and regional conditions. For example, PG&E suggests using cases that represent the following scenarios:
  • High transfers and exports out of CAISO. PAC at high load & CAISO at medium load with high low-priority exports out of CAISO to a non-EDAM BAA.
  • High transfer into CAISO from PAC. CAISO high load with PAC medium load.
  • Spring over-generation or near over-generation days

2. Please provide a summary of your organization’s comments regarding the discussion on updates to benchmark setup and associated market results.

The benchmark is fine for purely testing functionality of the market mechanisms in market simulation. If it is intended to help select parameter values, then it is insufficient.

PG&E would like a fuller description of the benchmark case:

• Was the case resource sufficient?
• Were any bids modified from those submitted in market sim?
• What reports in market sim’s OASIS are consistent with the base case?
• Does increasing the demand to 44 GW in October make it a representative “stressed” day? 

PG&E would also like visibility into the bid stack used. For this, we are interested in the elasticity of the price with respect to demand for Imbalance Reserves.

Lastly, while it is helpful that the CAISO provided the results for energy and imbalance reserves, the CAISO also needs to provide analysis of ancillary services as well since all three are co-optimized in EDAM.

3. Please provide a summary of your organization’s comments regarding the discussion on Sensitivity analysis #2 results – envelope constraint multipliers & imbalance reserve price.

For the Envelope Constraint Multiplier, even under normal circumstances, the 85% envelope constraint is likely to cause higher prices and lower procurement. The batteries are artificially restricted and removed from the supply stack. This increases prices and pushes the market farther up the imbalance reserve demand cure – reducing procurement. The net effect is higher cost for less reliability.  

PG&E would like a more detailed presentation of results for different values of the multipliers that allows us to participate in a discussion of the ideal value of the multiplier. For the imbalance reserve price, PG&E would like to see the bid stacks that were used for the various outcomes.

4. Please provide any additional comments.

No additional comments

1. Please provide a summary of your organization’s comments on the November 20, 2025 DAME Configurable parameters implementation working group discussion.

SDG&E appreciates the work CAISO has done to evaluate the day-ahead market enhancements configurable parameters, including preforming sensitivity scenarios that consider a high-load day, different attenuation factors, and putting forward information on the imbalance reserve (IR) bid stacks. These steps demonstrate CAISO’s responsiveness to the stakeholder community as we seek to responsibly implement DAME.

As CAISO is aware, the appropriate tuning of the three non-tariff defined configurable parameters is critical to a well-functioning DAME and EDAM. As we approach go-live, it is important for stakeholders to understand how different configurable parameters impact the amount of IR availability and volume of procurement under various simulated scenarios. The purpose of the configurable parameter working group meetings is to proactively identify concerns and facilitate discussions between the CAISO and stakeholders so that additional testing can be completed via an iterative process prior to and during parallel operations. SDG&E recognizes that the scope and timeline of this working group is limited, but questions whether the data, such as the derived bid stack, is of sufficient quality at this stage to result in meaningful analysis of the costs of procurement. Stakeholders have clearly identified the need for an evaluation of the tradeoff between costs/reliability from the new products under different testing scenarios in this stage of the benchmark analysis, and we urge CAISO to be responsive to these requests.

SDG&E recognizes this is no small feat and will require continued efforts from both CAISO and stakeholders. Despite this difficulty, understanding the performance of alternative parameters prior-to go-live is imperative to EDAM’s ultimate success, and we encourage CAISO to consider how this information could be provided to participants as we continue this effort.

Additionally, SDG&E strongly encourages the CAISO to define evaluation criteria for each parameter. Without this criteria, SDG&E is unable to draw conclusions on the values at which the parameters should be set.

2. Please provide a summary of your organization’s comments regarding the discussion on updates to benchmark setup and associated market results.

SDG&E appreciates the analysis presented on the interplay of configurable parameters, especially the optimization results for CAISO in the benchmark case and the explanation for why the IRU requirement was not fully procured. As a next step, we recommend additional sensitivity analysis using an IR bid stack that differs from the one applied in the benchmark and high-load scenarios. This would help verify whether the conclusions drawn regarding the impact of configurable parameters on market outcomes remain valid under varying supply conditions. For example, an IR bid stack is likely to differ between a high-load summer day and a shoulder-month day. During summer months, batteries may be less inclined to bid low for IR due to higher energy price opportunities. Incorporating some additional variation into the analysis would provide stakeholders with greater confidence in the interplay of the configurable parameters across diverse system conditions.

3. Please provide a summary of your organization’s comments regarding the discussion on Sensitivity analysis #2 results – envelope constraint multipliers & imbalance reserve price.

Regarding the envelope multiplier constraint sensitivity analysis results, the 24-hour example outlining energy and IR awards under different attenuation factors, as well as the SOC with envelopes was incredibly helpful and we appreciate CAISO’s provision of this data.

However, while the sensitivity analyses illustrate directional impacts on IR procurement and pricing, which largely follow intuitive expectations, SDG&E requests the CAISO provide additional defined metrics and criteria—such as reliability performance and impact on co-optimized ancillary services awards and prices—to enable stakeholders to evaluate the impact of different envelope constraint multipliers. Without further evaluation criteria, SDG&E is unable to weigh the trade-offs between the various tested multiplier values, especially as we do not have data on the performance of batteries under differing constraints. SDG&E is unclear what concrete conclusions can be drawn from the CAISO’s analysis to date or how CAISO will determine at what value a parameter will be set and use the analysis to support its final choice. For example, how will this analysis definitively support the envelope multiplier constraint being set at 60% or 90%?

4. Please provide any additional comments.

SDG&E submits the following additional comments:

• We request that CAISO consider how it would be possible to provide the real-time deliverability of storage under different attenuation factors in the analysis. SDG&E understands CAISO does not consider this to be feasible at this stage of the analysis, or even during parallel operations, but understanding how storage resource performance would be impacted would be very informative for tuning this parameter.
• Further explanation of why the demand curve limits the quantity of imbalance reserves that are cleared in the market under both the higher and moderate benchmark cases presented. Is it possible to find and test a scenario where the IR requirement is fully procured in the market? What would the tunable parameters look like in that scenario?

1. Please provide a summary of your organization’s comments on the November 20, 2025 DAME Configurable parameters implementation working group discussion.

The Six Cities appreciate the CAISO’s continued efforts to work with stakeholders on the assessment of the configurable parameters.  As the CAISO explained in its DAME/EDAM Tariff Filing, “multiple stakeholders” within the Day Ahead Market Enhancements (“DAME”) stakeholder process “expressed concern about the difficulty of reaching final positions on the proposal without firmly understanding how the new products would work in practice.”  DAME/EDAM Tariff Filing, Transmittal Letter at 100.  For this reason, the CAISO “committed to implementing a range of configurable market parameters in the software design to permit the CAISO to make refinements readily based on experience during the market simulation period and during the initial stages of implementation. … to provide off-ramps and the ability to pivot quickly should the CAISO identify unintended adverse consequences.”  Id.  The Six Cities are concerned that the CAISO’s approach to evaluating impacts of the initial values for the configurable parameters to date has fallen short of the CAISO’s prior commitment to fine tune the parameters during the market simulation period.

While acknowledging the limitations of conducting certain analyses based on imperfect or incomplete data (given that assumptions must be made regarding products and market design elements that are new), it is critically important that this process enable stakeholders to have a clear—if qualified—understanding of the impacts of different configurable parameters under a range of realistic conditions.  This will aid in market participants’ understanding of and confidence in the initially-established parameters.  Looking at impacts from a single day, October 4^th, even with certain load adjustments, may not provide a full picture of possible impacts and outcomes.  Additional sensitivity studies would help reinforce that the initially-established parameters are reasonable choices under a range of conditions.

In terms of how to assess the parameter values, the anticipated cost of imbalance reserves (and co-optimized products) is a critical metric in evaluating whether the CAISO’s initially-established values are sound, or whether additional tuning appears to be needed.  This should not be put off until after implementation of the DAME/EDAM design.  While the Six Cities acknowledge the CAISO’s concerns regarding drawing conclusions about the price of the imbalance reserve products based on the analyses presented, the Six Cities stress that this is one of the only avenues for stakeholders to assess pricing impacts and consider if the overall cost of the imbalance reserve products at a particular parameter level justifies the products’ procurement.  It is in the interests of all market participants to ensure that the initial parameter values reflect a reasonable balancing between reliability and cost; if the parameters are not established consistent with this balance, the anticipated benefits of market expansion will not be realized. 

Recognizing the limitations on the CAISO’s ability to model the parameters fully prior to implementation of the market design changes, the Six Cities encourage the CAISO to communicate with stakeholders its plan to “provide off-ramps” and “pivot quickly” in the event of unintended impacts once the DAME/EDAM design is operational.  Of central concern is the potential need to make adjustments in the event that the costs of imbalance reserves are high—including on the levels indicated in the CAISO’s analyses provided to date.  For the parameters that are included in the tariff, it is of particular importance that a plan is in place to make adjustments on an accelerated timeline, as a filing with FERC will be needed in order to implement revisions.  If feasible, the configurable parameters review process should include establishing specific triggers and processes for accelerated modification of the parameters.

2. Please provide a summary of your organization’s comments regarding the discussion on updates to benchmark setup and associated market results.

Please refer to the general comments provided above.

3. Please provide a summary of your organization’s comments regarding the discussion on Sensitivity analysis #2 results – envelope constraint multipliers & imbalance reserve price.

Please refer to the general comments provided above.

4. Please provide any additional comments.

The Six Cities have no additional comments at this time.