California Independent System Operator Corporation Fifth Replacement Electronic Tariff Table of Contents 8. Ancillary Services ................................................................................................................... 3 8.1 Scope .............................................................................................................................. 3 8.2 Ancillary Services Standards .......................................................................................... 4 8.2.1 Determination Of Ancillary Service Standards ....................................................... 4 8.2.2 Time-Frame For Revising Ancillary Service Standards .......................................... 4 8.2.3 Quantities Of Ancillary Services Required; Use Of AS Regions ............................ 5 8.3 Procurement; Certification And Testing; Contracting Period ........................................ 12 8.3.1 Procurement Of Ancillary Services ....................................................................... 12 8.3.2 Procurement from Internal And External Resources ............................................ 14 8.3.3 Ancillary Service Regions And Regional Limits .................................................... 15 8.3.4 Certification And Testing Requirements ............................................................... 18 8.3.5 Daily And Hourly Procurement ............................................................................. 18 8.3.6 Market-Based Prices ............................................................................................ 19 8.3.7 AS Bidding Requirements..................................................................................... 19 8.3.8 Procurement Of Voltage Support ......................................................................... 21 8.4 Technical Requirements For Providing Ancillary Services ........................................... 21 8.4.1 Operating Characteristics Required To Provide AS ............................................. 22 8.4.2 Ancillary Service Control Standards ..................................................................... 26 8.4.3 Ancillary Service Capability Standards ................................................................. 27 8.4.4 Ancillary Service Availability Standards ................................................................ 28 8.4.5 Communication Equipment .................................................................................. 28 8.4.6 Metering Infrastructure .......................................................................................... 29 8.5 Time Frame To Submit And Evaluate Ancillary Services Bids ..................................... 30 8.6 Obligations For And Self-Provision Of Ancillary Services ............................................ 30 8.6.1 Ancillary Service Obligations ................................................................................ 30 8.6.2 Right To Self-Provide ............................................................................................ 30 8.6.3 Services Which May Be Self-Provided ................................................................. 32 8.6.4 Time Frame For Informing CAISO Of Self-Provision ........................................... 32 8.7 Ancillary Services Awards ............................................................................................ 34 8.8 Black Start .................................................................................................................... 34 8.9 Verification, Compliance Testing, And Auditing ........................................................... 34 8.9.1 Compliance Testing For Spinning Reserve .......................................................... 35 8.9.2 Compliance Testing For Regulation ..................................................................... 35 8.9.3 Compliance Testing For Non-Spinning Reserve .................................................. 35 8.9.4 Compliance Testing For Voltage Support ............................................................. 36 8.9.5 Compliance Testing For Black Start ..................................................................... 36 8.9.6 [Not Used] ............................................................................................................. 36 8.9.7 Consequences Of Failure To Pass Compliance Testing ...................................... 36 8.9.8 Performance Audits For Standard Compliance .................................................... 37 8.9.9 Performance Audit For Regulation ....................................................................... 37 8.9.10 Performance Audit For Spinning Reserve ............................................................ 37 8.9.11 Performance Audit For Non-Spinning Reserve .................................................... 38 8.9.12 [Not Used] ............................................................................................................. 38 8.9.13 Performance Audit For Black Start ....................................................................... 38 8.9.14 [Not Used] ............................................................................................................. 38 8.9.15 Consequences Of Failure To Pass Performance Audits ...................................... 38 8.9.16 Sanctions For Poor Performance ......................................................................... 39 8.10 Periodic Testing Of Units .............................................................................................. 40 8.10.1 Regulation Up And Regulation Down Reserves ................................................... 41 8.10.2 Spinning Reserve ................................................................................................. 41 8.10.3 Non-Spinning Reserve.......................................................................................... 41 8.10.4 Voltage Support .................................................................................................... 41 8.10.5 Black Start ............................................................................................................ 41 8.10.6 [Not Used] ............................................................................................................. 42 March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff 8.10.7 Penalties For Failure To Pass Tests .................................................................... 42 8.10.8 Rescission Of Payments For Ancillary Service Capacity ..................................... 42 8.11 Temporary Changes To Ancillary Services Penalties .................................................. 45 8.11.1 Application And Termination ................................................................................. 45 8.11.2 Exemption for Penalties Due to CAISO Software Limitations .............................. 46 March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff 8. Ancillary Services 8.1 Scope The CAISO shall be responsible for ensuring that there are sufficient Ancillary Services available to maintain the reliability of the CAISO Controlled Grid consistent with NERC and WECC reliability standards and any requirements of the NRC. The CAISO’s Ancillary Services requirements may be self-provided by Scheduling Coordinators as further provided in the Business Practice Manuals. Those Ancillary Services which the CAISO requires to be available but which are not being self-provided will be competitively procured by the CAISO from Scheduling Coordinators in the Day-Ahead and Real-Time Markets consistent with Section 8.3. The provision of Ancillary Services from the Interties with interconnected Balancing Authority Areas is limited to Ancillary Services bid into the competitive procurement processes in the IFM and RTM. The CAISO will not accept Submissions to Self-Provide Ancillary Services that are imports to the CAISO Balancing Authority Area over the Interties with interconnected Balancing Authority Areas, except from Dynamic System Resources certified to provide Ancillary Services or if provided pursuant to ETCs, TORs or Converted Rights. The CAISO will accept Submissions to Self-Provide Ancillary Services from Pseudo-Ties of Generating Units to the CAISO Balancing Authority Area if they are certified to provide Ancillary Services. The CAISO will calculate payments for Ancillary Services supplied by Scheduling Coordinators and charge the cost of Ancillary Services to Scheduling Coordinators based on their Ancillary Service Obligations. For purposes of this CAISO Tariff, Ancillary Services are: (i) Regulation Up and Regulation Down, (ii) Spinning Reserve, (iii) Non-Spinning Reserve, (iv) Voltage Support, and (v) Black Start capability. These services will be procured as stated in Section 8.3.5. Bids for these services may be submitted by a Scheduling Coordinator for resources that are capable of providing the specific service and that meet applicable Ancillary Service standards and technical requirements, as set forth in Sections 8.1 through 8.4, and are certified by the CAISO to provide Ancillary Services. Identification of specific services in this CAISO Tariff shall not preclude development of additional March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff interconnected operation services over time. The CAISO and Market Participants will seek to develop additional categories of these unbundled services over time as the operation of the CAISO Controlled Grid matures or as required by regulatory authorities. 8.2 Ancillary Services Standards All Ancillary Services shall meet the CAISO's Ancillary Services standards. 8.2.1 Determination Of Ancillary Service Standards The CAISO shall set the required standard for each Ancillary Service necessary to maintain the reliable operation of the CAISO Controlled Grid. Ancillary Services standards shall meet NERC and WECC reliability standards, and any requirements of the NRC. In setting Ancillary Service standards, the CAISO shall consider reasonableness, cost-effectiveness, and adherence to NERC and WECC reliability standards, and any requirements of the NRC. The standards developed by the CAISO shall be used as a basis for determining the quantity and type of each Ancillary Service which the CAISO requires to be available. These requirements and standards apply to all Ancillary Services whether self-provided or procured by the CAISO. 8.2.2 Time-Frame For Revising Ancillary Service Standards The CAISO shall periodically undertake a review of the CAISO Controlled Grid operation to determine any revision to the Ancillary Services standards to be used in the CAISO Balancing Authority Area. At a minimum the CAISO shall conduct such reviews to accommodate revisions to NERC and WECC Reliability Standards and any requirements of the NRC. If the CAISO modifies its Ancillary Services standards, including its rules to determine minimum procurement requirements for Ancillary Services, the CAISO will notify Market Participants. The CAISO may adjust the Ancillary Services standards temporarily to take into account, among other things, variations in system conditions, Real-Time Dispatch constraints, contingencies, and voltage and dynamic stability assessments. Where practicable, the CAISO will provide notice, via the CAISO Website, of any temporary adjustments to Ancillary Service standards by 6:00 p.m. two (2) days ahead of the Operating Day to which the adjustment will apply. Periodic reviews by the CAISO may include, but are not limited to: (a) analysis of the deviation between actual and forecast Demand; (b) analysis of patterns of unplanned resource Outages; (c) analysis of compliance with March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff NERC and WECC Reliability Standards and any requirements of the NRC; (d) analysis of operation during system disturbances; (e) analysis of patterns of shortfalls between Day-Ahead Schedules and actual Generation and Demand; and (f) analysis of patterns of unplanned transmission Outages. 8.2.3 Quantities Of Ancillary Services Required; Use Of AS Regions For each of the Ancillary Services, the CAISO shall determine the quantity and location of the Ancillary Service which is required using Ancillary Service Regions as described in Section 8.3.3. For each of the Ancillary Services, the CAISO shall determine the required locational dispersion in accordance with CAISO Controlled Grid reliability requirements. The Ancillary Services provided must be under the direct Dispatch control of the CAISO on a Real-Time Dispatch Interval basis. The CAISO shall determine the quantities it requires as provided for in Sections 8.2.3.1 to 8.2.3.3. 8.2.3.1 Regulation Service The CAISO shall maintain sufficient resources immediately responsive to the CAISO’s EMS control in order to provide sufficient Regulation service to allow the CAISO Balancing Authority Area to meet NERC and WECC reliability standards and any requirements of the NRC by continuously balancing resources to meet deviations between actual and scheduled Demand and to maintain Interchange Schedules. The quantity of Regulation Down and Regulation Up capacity needed for each Settlement Period of the Day-Ahead Market and in each fifteen (15) minute period in Real-Time shall be determined by the CAISO as a percentage of the applicable CAISO Forecast Of CAISO Demand for the Day-Ahead and Real-Time Markets. In HASP, the amount of advisory Regulation from Dynamic System Resources required for each Settlement Period in the next Trading Hour is also determined based on the CAISO Forecast Of CAISO Demand. The advisory awards of Regulation from Dynamic System Resources in HASP are not binding and are re-optimized through the FMM and RTD processes in the Real-Time Market. The CAISO’s determination is based upon its need to meet the NERC and WECC reliability standards and any requirements of the NRC. The CAISO will take into account the speed and accuracy of regulation resources in its determination of Regulation requirements, including as it qualifies self- March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff provided Regulation. Upon request of a Scheduling Coordinator, the CAISO will share with the Scheduling Coordinator its reasoning and any related data used to make the determination of whether the Scheduling Coordinator’s self-provided Regulation capacity meets its regulation obligation. The requirement for Regulation Down or Regulation Up needed for each Settlement Period of the Day-Ahead Market and in each fifteen (15) minute period in Real-Time shall each be accompanied by a requirement for Mileage as determined by the CAISO. The CAISO shall determine the Mileage requirements in any Settlement Period based on Regulation capacity requirements as well as the Bid-in Regulation capacity for that Settlement Period. Subject to operator adjustment, the Mileage requirement for either Regulation Up or Regulation Down will reflect the minimum of (a) the product of the respective Regulation capacity requirement and the System Mileage Multiplier; (b) the average Instructed Mileage for the applicable Trading Hour from the prior seven (7) days; or (c) the product of each resource’s resource specific Mileage multiplier(s) and its Bid-in Regulation capacity summed for all resources. The CAISO will publish on OASIS the estimated quantity, or the percentage used to determine the estimated quantity, of Regulation Reserves required for each hour of the Day-Ahead Market and in each fifteen (15) minute period in Real-Time for the Trading Day. The CAISO will publish on OASIS the Mileage requirements for each hour of the Day-Ahead Market and each fifteen (15) minute period in Real-Time for the Trading Day. The CAISO will also publish on OASIS the average Instructed Mileage from the prior seven (7) days for each hour of a Trading Day no later than seven (7) calendar days after the applicable Trading Day. 8.2.3.1.1 Regulation Performance The CAISO will measure the accuracy of a resource’s response to CAISO EMS signals. The CAISO will sum a resource’s Automatic Generation Control set points for each four (4) second Regulation interval every fifteen (15) minutes and then sum the total deviations from the Automatic Generation Control set point for each four (4) second regulation interval during that fifteen (15) minute period. The CAISO will divide the sum of the resource’s Automatic Generation Control set points less the sum of the resource’s total deviations by the sum of the resource’s March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff Automatic Generation Control set points. The CAISO will apply the resulting percentage to a resource’s Instructed Mileage to calculate the resource’s Regulation performance payments. The CAISO will adjust a resource’s Automatic Generation Control set point deviations when the CAISO EMS signal sent to a resource changes direction and the resource under-responds in the prior interval. The adjusted Automatic Generation Control set point will reflect the Automatic Generation Control set point to which the EMS signal directed the resource to move in the prior interval. The CAISO will use a resource’s Historic Regulation Performance Accuracy and certified ramp capability to determine a resource-specific expected Mileage for purposes of awarding Regulation Up and Regulation Down capacity. The CAISO will calculate a separate Historic Regulation Performance Accuracy for both Regulation Up and Regulation Down. A minimum performance threshold of twenty-five (25) percent will apply for a resource to offer Regulation Up and Regulation Down capacity. If a resource’s measured accuracy, based on a weighted average of fifteen (15) minute intervals during a calendar month using Instructed Mileage as the weight, is less than twenty-five (25) percent for Regulation Up or Regulation Down, the resource must re-certify to provide the respective service within ninety (90) days from the date the CAISO provides notice to the resource’s Scheduling Coordinator of the resource’s failure to meet the minimum performance threshold. In the event of lost accuracy data, the CAISO will not use data from these intervals to calculate the resource’s Historic Regulation Performance Accuracy or to assess the minimum performance threshold. 8.2.3.2 Spinning and Non-Spinning Reserves The CAISO shall maintain minimum contingency Operating Reserve made up of Spinning Reserve and Non-Spinning Reserve in accordance with NERC and WECC reliability standards, including any requirements of the NRC. The CAISO from time to time may determine to use more stringent criteria. 8.2.3.3 Voltage Support The CAISO shall determine on an hourly basis for each day the quantity and location of Voltage Support required to maintain voltage levels and reactive margins within NERC and WECC March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff reliability standards, and any requirements of the NRC using a power flow study based on the quantity and location of scheduled Demand. The PTO or, from time to time, the CAISO shall issue daily voltage schedules (Dispatch Instructions) to Participating Generators, Participating TOs and UDCs, which are required to be maintained for CAISO Controlled Grid reliability. All other Generating Units shall comply with the power factor requirements set forth in contractual arrangements in effect on the CAISO Operations Date, or, if no such contractual arrangements exist and the Generating Unit exists within the system of a Participating TO, the power factor requirements applicable under the Participating TO’s TO Tariff or other tariff on file with the FERC. All Participating Generators shall maintain the CAISO specified voltage schedule if required under their Generator Interconnection Agreement, while operating within the power factor range specified in their interconnection agreements. For all other Generating Units, Participating Generators shall maintain the CAISO specified voltage schedule, while operating within the power factor range specified in their interconnection agreements, or, for Regulatory Must-Take Generation with Existing QF Contracts or Amended QF Contracts, Regulatory Must-Run Generation and Reliability Must-Run Generation, consistent with existing obligations. For Generating Units that do not operate under one of these agreements, the minimum power factor range will be within a band of 0.90 lag (producing VARs) and 0.95 lead (absorbing VARs) power factors. Participating Generators with Generating Units existing at the CAISO Operations Date that are unable to meet this operating power factor requirement may apply to the CAISO for an exemption. Prior to granting such an exemption, the CAISO shall require the Participating TO, UDC or other utility to whose system the relevant Generating Units are interconnected to notify it of the existing contractual requirements for Voltage Support established prior to the CAISO Operations Date for such Generating Units. Such requirements may be contained in CPUC Electric Rule 21 or the Interconnection Agreement with the Participating TO, UDC or other utility. The CAISO shall not grant any exemption under this Section from such existing contractual requirements. The CAISO shall be entitled to instruct Participating Generators to operate their March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff Generating Units at specified points within their power factor ranges. Participating Generators shall receive no compensation for operating within these specified ranges. If the CAISO requires additional Voltage Support, it shall procure this either through Reliability Must-Run Contracts or, if no other more economic sources are available, by instructing a Generating Unit to move its MVar output outside its mandatory range. Only if the Generating Unit must reduce its MW output in order to comply with such an instruction will it be eligible to recover its opportunity cost in accordance with Section 11.10.1.4. All Loads directly connected to the CAISO Controlled Grid shall maintain reactive flow at grid interface points within a specified power factor band of 0.97 lag to 0.99 lead. Loads shall not be compensated for the service of maintaining the power factor at required levels within the bandwidth. A UDC interconnecting with the CAISO Controlled Grid at any point other than a Scheduling Point shall be subject to the same power factor requirement. The CAISO will establish voltage control standards with UDCs and the operators of other Balancing Authority Areas and will enter into operational agreements providing for the coordination of actions in the event of a voltage problem occurring. 8.2.3.4 Black Start Capability The CAISO shall determine the amount and location of Black Start Generation it requires through a system restoration plan that meets the requirements of Applicable Reliability Criteria. In making this determination, the CAISO shall consult with Participating Transmission Owners. Participating Transmission Owners with their own system restoration plans that include transmission lines and associated facilities that are part of the CAISO Controlled Grid shall upon the request of the CAISO provide the CAISO with these system restoration plans. The CAISO shall consider Participating Transmission Owners’ system restoration plans in developing a system restoration plan for the CAISO system and may identify Black Start Generation needs for the CAISO system not identified in Participating Transmission Owners’ system restoration plans. Scheduling Coordinators shall notify the CAISO of their Load restoration time requirements for any Loads that provide emergency services. This notice shall include the MW amount of Load, required restoration time, and associated Node on the CAISO Controlled Grid. For purposes of March 6, 2017 California Independent System Operator Corporation Fifth Replacement Electronic Tariff preparing system restoration plans, the CAISO shall consult with applicable Participating Transmission Owners concerning any Load restoration information provided by Scheduling Coordinators. 8.2.3.4.1 Black Start Units The CAISO will select Black Start capacity in locations where adequate transmission capacity can be made readily available (assuming no transmission damage) to connect the Black Start Generating Unit to the station service bus of a Generating Unit designated by the CAISO. Black Start Generating Units: (a) must be located in the CAISO Balancing Authority Area; (b) may be located anywhere in the CAISO Balancing Authority Area provided that the Black Start resource is capable of meeting the CAISO performance requirements for starting and interconnection to the CAISO Controlled Grid; but (c) must be dispersed throughout the CAISO Balancing Authority Area. 8.2.3.4.2 Black Start Services (a) All Participating Generators with Black Start Generating Units must satisfy technical requirements specified by the CAISO. (b) The CAISO shall from time to time undertake performance tests, with or without prior notification. (c) The CAISO shall have the sole right to determine when the operation of Black Start Generating Units is required to respond to conditions on the CAISO Controlled Grid. (d) If the CAISO has intervened in the market for Energy and/or Ancillary Services pursuant to Section 7.7.4, the price paid by the CAISO for Black Start services shall be sufficient to permit the relevant Participating Generator to recover its costs over the period that it is directed to operate by the CAISO. March 6, 2017