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FINAL Attachment A Opinion on “ Modeling and Pricing Integrated Balancing Areas under MRTU

We have been asked to comment on the California Independent System Operator’s (CAISO) proposal for modeling and pricing Integrated Balancing Authority Areas (IBAA) under the Market Redesign and Technology Upgrade (MRTU). IBAAs are neighboring Balancing Authority Areas (BAAs) that are not part of the California ISO Balancing Authority Area, but are incorporated into the CAISO’s Full Network Model (FNM) because they are so closely interconnected with the CAISO through AC transmission facilities that the flows within these BAAs have substantial impacts on power flows within the CAISO. Multiple interconnection points between the California ISO BAA and the IBAA can result in loop flows in and out of the California ISO BAA and on the California ISO Controlled Grid that are difficult to model in the day-ahead market without detailed knowledge of the location of load and generation and the configuration of the transmission network in the IBAAs.