UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

)

Offer Caps in Markets Operated)

by Regional Transmission Organizations)Docket No. RM16-5-000

and Independent System Operators)

)

COMMENTS OF THE ISO/RTO COUNCIL

The ISO/RTO Council (IRC)1 submits the following comments in response to the
Federal Energy Regulatory Commission (Commission) Notice of Proposed Rulemaking
(NOPR) issued in this docket on January 21, 2016, proposing to revise the Commission’s
regulations to require that each Regional Transmission Organization (RTO) and
Independent System Operator (ISO) cap a resource’s incremental energy offer to the
higher of $1,000/MWh or that resource’s verified cost-based incremental energy offer.
Each of the IRC members will be submitting separate comments in addition to these IRC
comments.  The IRC limits these comments to (1) noting the importance of uniformity on
the treatment of offer caps at least as to contiguous markets, and (2) requesting that the
Commission provide for adequate regional flexibility in the implementation of the
proposed offer cap, including what constitutes “verified cost-based incremental energy
offers.”

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The IRC is comprised of the Alberta Electric System Operator (AESO), California Independent

System Operator (CAISO), Electric Reliability Council of Texas (ERCOT), the Independent Electricity
System Operator of Ontario, Inc. (IESO), ISO New England, Inc. (ISO-NE), Midcontinent Independent
System Operator, Inc. (MISO), New York Independent System Operator, Inc. (NYISO), PJM
Interconnection, L.L.C. (PJM), and Southwest Power Pool, Inc. (SPP).  The AESO, ERCOT, and IESO are
not subject to the Commission’s jurisdiction in this regard and are not joining in these Comments.

I.COMMENTS

If the Final Rule requires ISOs and RTOs to verify incremental-cost-based bids, the Commission should ensure there is clear direction on what is permissible in terms of verification, yet ensure that such guidance is flexible enough so that each RTO and ISO can comply with the order based on what is feasible and appropriate within its specific market design, timelines, and circumstances.  The Commission should consider the
comments from each ISO and RTO in this regard and ensure that the Final Rule allows each ISO and RTO to comply with the order in a manner that is consistent with their
circumstances, provided their regional context, and needs.  A uniform verification
process rule is not necessarily compatible with each ISO and RTO’s market design and their respective market power mitigation regimes.

The IRC is concerned that a literal interpretation of “verification” could require
verification of actual fuel invoices before the corresponding energy offer can be used for
purposes of calculating Locational Marginal Prices.  Such a verification requirement
could involve a series of steps that may not be feasible to accomplish within the price
calculation and posting time constraints of the respective markets.  The Commission
should clarify the intended goals of “verification” under this NOPR, as it relates to pre-
and post-market clearing price setting processes.  This clarification is necessary so the
respective ISOs and RTOs and their stakeholders may better identify what processes
currently in place support these goals and what challenges and concerns related to
verification within the respective markets may need to be further considered under a
potential final rule.  Concerns may include the availability of evidence for verification,

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such as actual invoices, and the potential volume of requests each ISO and RTO would need to verify.

Each ISO and RTO will be filing separate comments outlining whether, and

pursuant to what means, they can comply with the NOPR should it become a Final Rule.
The IRC urges the Commission to give due consideration to the individual ISO/RTO
comments as potentially acceptable means to achieve the goals of the NOPR, and to
generally provide for ISO/RTO market design flexibility in any Final Rule.  Although the
IRC believes any final rule in this proceeding should provide for adequate flexibility in
terms of how the rule is implemented in the respective ISO/RTO regions, there are
certain aspects of the rule where uniformity may be necessary to mitigate unintended
consequences.  Specifically, for all the reasons the Commission states in the NOPR, to
the extent ISOs and RTOs share seams, the IRC agrees that the changes to the offer caps
should be generic and applicable to all ISOs and RTOs that are neighbors.  However, to
be clear, the IRC does not believe providing flexibility in how each ISO and RTO
complies with the verification requirements exacerbates the seams issues.  Each ISO and
RTO can have different methodologies for cost verification yet still maintain uniform
pricing signals.  This is no different from today within the $1000/MWh cap limit.  The
ISO and RTOs do not all evaluate cost based or reference bids used for mitigation in the
same way.

The IRC appreciates the opportunity to comment on the NOPR, and urges the Commission to ensure that the Final Rule in this matter duly considers the positions presented herein.

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II.CONCLUSION

The IRC respectfully requests that the Commission consider these comments in

this proceeding.

Respectfully submitted,

/s/ Anna McKenna/s/ Theodore J. Paradise

Roger E. CollantonRaymond W. Hepper

General CounselVice President, General Counsel and Corporate

Anna A. McKennaSecretary

Assistant General Counsel-RegulatoryTheodore J. Paradise

California Independent System OperatorAssistant General Counsel - Operations and

CorporationPlanning

250 Outcropping WayMargoth R. Caley

Folsom, California 95630Regulatory Counsel

ISO New England Inc.

One Sullivan Road

Holyoke, MA 01040-2841

/s/ Stephen G. Kozey/s/ Raymond Stalter

Stephen G. KozeyRaymond Stalter

Senior Vice-President, Legal andDirector, Regulatory Affairs

Compliance Services, General Counsel andNew York Independent System Operator,

SecretaryInc.

Midcontinent Independent System10 Krey Blvd.

Operator, Inc.Rensselaer, New York 12144

P.O. Box 4202

Carmel, Indiana 46082-4202

/s/ Craig Glazer/s/ Paul Suskie

Craig GlazerPaul Suskie

Vice President - Federal Government PolicyExecutive Vice President, Regulatory Policy

Robert Eckenrodand General Counsel

Senior CounselSouthwest Power Pool, Inc.

PJM Interconnection, LLC201 Worthen Drive

1200 G Street, N.W. Suite 600Little Rock, AR 72205

Washington, D.C. 20005

Date:   April 4, 2016

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CERTIFICATE OF SERVICE

I hereby certify that I have served the foregoing document upon the parties listed on the official service lists in the above-referenced proceedings, in accordance with the requirements of Rule 2010 of the Commission’s Rules of Practice and Procedure (18
C.F.R. § 385.2010).

Dated at Folsom, California this 4th day of April 2016.

/s/ Anna Pascuzzo

Anna Pascuzzo