Hello,
This seems to be working as expected, but if you are referring to the output saturation of the controller then you simply need to improve the gains. It looks like you have too much proportional gain and not enough integral gain. For example, if I tune Kp down several orders of magnitude to 0.1 and Ki up a couple orders to 1000 the response is similar to that of the Type 2 controller. Is this what you are asking about?
Kris