Comments on EDAM Congestion Revenue Allocation Phase 2 working group - April 17, 2026

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

ACP-California appreciates CAISO’s continued engagement on EDAM congestion revenue allocation (CRA) and commends CAISO staff for the structured introduction of three design concepts to advance the Phase 2 discussion. Consistent with positions advanced by ACP in comments on the Phase 1 amended CRA design[1], ACP-California views Phase 2 as an important next step in developing a durable CRA framework that appropriately balances EDAM market optimization with the continued role of OATT transmission service across EDAM balancing areas, even after EDAM’s implementation.

ACP-California supports the Phase 2 objectives of reducing self-scheduling incentives and achieving greater symmetry in parallel flow congestion revenue allocation. And we look forward to further reviewing proposals and considering design specifics through CAISO’s ongoing working group efforts on this topic.

[1] See Clean Energy Associations comments on CAISO's ER25-2637 filing (July 17, 2025),

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

ACP-California thanks The Energy Authority (TEA) for the comprehensive presentation, which provided a useful retrospective on EDAM’s congestion revenue allocation design/history, a reminder of OATT foundations, and a recap of the Phase 1 CRA design effort. All of these serve as important pieces of information and context that should inform the next steps in Phase 2.

TEA’s articulation of long-term design principles (including compensation for holding rather than using the congestion/transmission right, direct settlement between rightsholder and the market operator, and footprint-wide standardization) aligns with positions ACP-California has previously advanced.[1] TEA’s near-term design options merit parallel consideration as complements, enhancements or alternatives to the design concepts introduced by CAISO. And we encourage CAISO not to dismiss TEA’s proposals out of hand or based on historical concerns or opposition from key stakeholders. There have been significant shifts in the Western market landscape which may warrant reconsideration of design concepts that have been rejected in the past, such as intertie bidding and transmission carve-outs. ACP-California looks forward to continuing to assess these additional design options to improve congestion revenue allocation and general market functionality in EDAM.

[1] See, for instance, Id., at page 3, describing the Phase 1 amended CRA design as "imperfect but a notable improvement" and a "foundation for addressing" outstanding concerns.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

ACP-California appreciates CAISO putting forward various design options for consideration and generally supports Design Concept #1 as an option for further consideration for near-term CRA improvements. Concept #1 directly advances improvements to CRA which ACP has previously advocated for. And it appears that Concept #1 could be implemented in a more timely manner than some of the other options, which will require more effort for stakeholders to come to agreement on. Thus, Concept #1 may be a useful near-term solution if stakeholders are not able to agree on specifics of the design for other, longer-term options (like Concept #3).

Several features of Concept #1 are particularly positive steps. Most notably, Concept #1 would extend parallel-flow congestion revenue eligibility to cleared economically bid schedules associated with firm OATT rights. ACP observed in July 2025 comments at FERC that many stakeholders had advocated for extending the Phase 1 alternative CRA approach beyond balanced self-schedules, such that the treatment could also apply to economically offered firm transmission rights. Concept #1 advances this enhancement and should serve to reduce (though certainly not eliminate) the self-scheduling incentive that is presently embedded in EDAM’s CRA design. It also promotes the symmetry between CAISO CRR holders and EDAM OATT rights holders, which is important for equity across EDAM.

That said, ACP-California recognizes that Concept #1 does not resolve all outstanding issues. Efficiency concerns raised by various stakeholders regarding self-scheduling incentives could remain (though likely in a diminished capacity) under this option, and the sub-allocation by EDAM Entities of congestion revenues would maintain the administrative burden and lack of standardization that has been identified in past comments.

While Concept #1 contains these positive near-term design elements, ACP-California believes Concept #3 is likely a preferable long-term structural framework, as discussed more in response to question #5.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

ACP-California strongly opposes Design Concept #2 and urges CAISO not to advance it for additional consideration in this stakeholder process. Some of the reasons ACP-California believes CAISO should no longer continue forward with exploring this design concept include:

• The historical baseline milestone would create a discriminatory two-tier transmission rights framework. Under Concept #2, firm OATT rights held prior to the defined milestone date (such as EDAM entry, EDAM Implementation Agreement execution, or another date) would receive parallel flow congestion revenue entitlements. However, rights acquired after that milestone either receive no parallel flow allocation or would be required to pass a simultaneous feasibility test against an already-allocated baseline.
  • This creates a structural asymmetry between historical and new firm transmission rights under EDAM Entity OATTs that is highly problematic and not justifiable. EDAM will change the operation of the EDAM Entity footprints, but EDAM was intentionally designed not to change the need to have OATT transmission rights within EDAM areas. It is, therefore, inappropriate for EDAM’s implementation in a given area to create two tiers of OATT transmission rights and to impart lower value to OATT rights that are acquired after an EDAM-set milestone date.
• The two-tier structure could disadvantage clean energy deliveries to CAISO. Clean energy projects sited outside California that will deliver into CAISO (including resources supporting CA RPS compliance, capacity obligations, and bilateral contracts with CA LSEs) very well may need to rely on firm OATT transmission acquired after the milestone date to meet contractual or regulatory requirements. These out-of-state resources may still require firm transmission rights to a CAISO intertie point to meet requirements that exist entirely outside the EDAM construct (such as California’s RPS delivery requirements, which require delivery on transmission to a California Balancing Authority). Accordingly, Concept #2, which would create a less valuable form of OATT service after an EDAM-related date, could disincentivize future investments by California LSEs in new clean energy resources located outside of California.
• Implementation complexity is high relative to benefit. Concept #2 requires resolution of numerous design elements. This concept would also be administratively complex to implement as it would require a two-tiered system to track OATT right eligibility in each EDAM BAA and determine whether it would be given full parallel flow congestion revenue allocation or not. The level of design complexity and administrative burden are another reason not to pursue this flawed concept.

For these reasons, and the general lack of stakeholder support for this option expressed at the April 17^th stakeholder meeting, ACP-California encourages CAISO not to pursue any further development of Concept #2 and instead focus its resources on Concept #1, Concept #3, and other enhancements proposed by TEA.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

ACP-California generally supports the continued exploration of Design Concept #3, which would establish congestion revenue entitlement for CRRs and OATT rights based on a simultaneous feasibility test (SFT). At this early stage in the stakeholder initiative, this appears to be the most promising long-term CRA framework among the three concepts introduced by CAISO. Concept #3 closely aligns with the structural direction ACP-California has previously endorsed.

ACP-California supports Concept #3 for a number of reasons, including:

• It may best enable direct congestion revenue allocation from the Market Operator to transmission customers in EDAM areas. Concept #3 could enable direct allocation of congestion revenues from CAISO to transmission customers, eliminating the EDAM Entity as the middleman in congestion revenue allocation. ACP-California views direct allocation as a critical structural feature for revenue allocation in EDAM and strongly supports CAISO developing a congestion revenue allocation design that enables direct allocation to transmission customers.
• Removal of self-scheduling incentives. Basing entitlements to congestion revenue allocation on a simultaneous feasibility test rather than scheduling behavior responds directly to existing stakeholder feedback to remove incentives to self-schedule and to promote market efficiency.
• Footprint-wide symmetry between CAISO CRRs and EDAM OATT rights through a footprint-wide simultaneous feasibility test to determine eligibility.
• Uniform treatment of pre-and post-milestone rights (avoiding the two-tier problem which makes Concept #2 undesirable).

While ACP-California supports further development of Concept #3, we also understand that it would require a complex design and implementation process and may not be an easily implementable near-term solution. And we recognize it may reduce the world of OATT rights/CRRs that are eligible for congestion revenue allocation, which is likely to be contentious. Regardless, there is still considerable value in Concept #3 as the preferable long-term design direction. ACP-California encourages CAISO to structure subsequent working groups to engage EDAM Entities and their customers directly on potential concerns so that development of Concept #3 proceeds with meaningful input from across the EDAM footprint.

ACP-California supports the development of Concept #3 (as a long-term evolution) which should proceed on a parallel development track with that of Concept #1 (which could be a more viable near-term solution).

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

ACP-California appreciates CAISO efforts to address congestion revenue allocation and continue to enhance EDAM. We encourage CAISO to continue to develop Concept #1 (as a near-term solution) in parallel with advancing a design for Concept #3 (which is likely a better long-term solution). Additionally, CAISO should also consider other enhancements that have been put forward by stakeholders, such as TEA, with a fresh set of eyes. Some of these proposals may improve EDAM and offer significant benefits and warrant consideration (or re-consideration) in light of the current dynamics in Western power market development.

As stated above, ACP-California supports a design which will allow direct allocation of congestion revenues from CAISO to transmission customers in EDAM areas, as this promotes transparency and consistency across the EDAM footprint. And we urge CAISO to seek to implement direct allocation as part of any near-term and long-term solutions that are put forward in this initiative. ACP-California also supports transparency in congestion revenue collection and allocation and urges CAISO to publish as much information regarding congestion revenue allocations in EDAM as possible as the market begins operations.

Finally, ACP-California reminds CAISO and other stakeholders that OATT rights were not only designed to be maintained under EDAM’s operation but are also necessary for compliance with programs and rules outside of EDAM’s purview. For instance, for California RPS compliance, clean energy resources may be required to have OATT transmission rights to demonstrate delivery to CAISO. Any design that is implemented for congestion revenue allocation should be mindful of these requirements and should ensure that the design does not disincentivize diverse, regional clean energy resources from supporting the needs of California LSEs.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

CDWR would like to thank CAISO for providing an opportunity to provide feedback for the EDAM Congestion Revenue Allocation Phase 2 stakeholder process. CDWR appreciates the Design Concepts presented by CAISO and believes that in general, Design Concept #3 is the most feasible option on how Open Access Transmission Tariff (OATT) transmission rights should be represented within the EDAM footprint.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

No comment. 

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

CDWR does not believe that this concept is feasible as this proposed design will not include the Simultaneous Feasibility Test (SFT) for eligible OATT transmission rights. Since the SFT ensures that the grid can physically and financially support all allocated transmission rights, the absence of the SFT for OATT transmission rights may create underfunding scenarios that will affect all CRR holders, resulting in reduced payouts to CRR holders and increased risk for hedging.   

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

A numerical example would be helpful.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

CDWR considers Concept #3 to be the best possible option of including eligible OATT transmission rights by incorporating SFT to establish congestion revenue entitlements. CDWR agrees that performing the SFT on an annual and monthly basis, similar to CRRs today, will help align the CRR and eligible OATT transmission rights products between the CAISO BAA and EDAM entities.?Although the CAISO lists the potential complexity and implementation as a con, CDWR believes that the pro of accounting all parallel flow congestion revenues may help reduce underfunding of CRRs through the allocation of collected congestion revenues, reduction of loop flows, and relaxing binding constraints with the addition of new transmission.  Nevertheless, as might be seen above, A numerical example would be helpful.  

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

Within the Stage 1 Analysis, CAISO confirms that 75% of congested constraints are unaffected by parallel flows, of the remaining 25%, 21.5% are in the CAISO area. On Figure 4 of the CAISO analysis1, of these 21.5% CAISO impacted constraints, CDWR seeks clarification whether the Flow Contribution (%) is based on an average quarterly basis, or on contingency cases. CDWR is concerned that although congestion originating from PACE/PACW averages to approximately -0.01 to 0.04 $/MWh, but in the case of a contingency, such parallel flow congestion may potentially spike up exponentially. Therefore, CDWR would suggest a follow-up study prepared by CAISO to demonstrate the impact of Flow Contribution on CAISO constraints from PAC transactions during contingency cases and the associated congestion price impacts. 

In addition, any update to the EDAM CRR revenue allocation design as part of Phase 2 should not exacerbate the existing CRR auction efficiency problems. CDWR is aware that CRR enhancements initiative has identified CRR auction efficiency and revenue adequacy as an issue to be resolved (problem statement 3 and 4 related to congestion revenue allocation).  

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

Comments on Extended Day-Ahead Market Congestion Revenue Allocation

Phase 2 Design Working Group Meeting - April 17, 2026

Department of Market Monitoring

May 1, 2026

Comments

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Extended Day-Ahead Market Congestion Revenue Allocation Phase 2 Design Working Group Meeting – April 17, 2026.[1] At the working group meeting, the ISO presented three alternative design concepts for the Congestion Revenue Allocation (CRA) for stakeholders to consider:

• Concept #1 would allocate congestion revenues, including from parallel flows, to all balanced schedules with eligible firm open access transmission tariff (OATT) transmission rights that clear the market, whether economically bid or self-scheduled.
• Concept #2 would establish flow entitlements for congestion revenue rights (CRRs) and eligible OATT transmission rights to allocate congestion revenue across balancing areas based on historical data.
• Concept #3 would establish congestion revenue entitlements for eligible OATT transmission rights and CRRs through a common simultaneous feasibility test.

DMM does not believe Concept #1 is a viable path forward. As DMM stated in previous comments:

…the replacement allocation should not be tied to the actual schedules in the market—including schedules resulting from cleared economic offers. A congestion revenue allocation that depends on cleared schedules creates incentives for market participants to submit offers that are not consistent with their true marginal costs. This can undermine the purpose of the market and potentially lead to market dysfunction.[2]

Concept #2 to create flow entitlements between balancing areas could be a workable path forward particularly for the near term. If designed correctly, these flow entitlements would avoid the poor incentives created by the current CRA and design concept #1. DMM believes it is reasonable to assign these entitlements based on historic data to recognize the existing norms for parallel flows across balancing areas while not tying the allocation to market scheduling.

DMM believes that the best solution, particularly in the longer run, is Concept #3 which would create CRRs for the eligible OATT rights in a common simultaneous feasibility test used for allocating CRRs within the CAISO balancing area. CRRs were designed to allocate congestion revenue without creating significant incentives to distort bidding behavior in the energy market. Allocating CRRs would also be more flexible over time allowing the allocation of rent to change as generation, load, and transmission conditions change.

Allocating CRRs in this manner should not be conflated with the current CRR auction design in the CAISO balancing area. While the design would need to ensure transmission ratepayers in the extended day-ahead market (EDAM) areas are protected from undue losses that occur under the current CRR auction design, a CRR based approach would be the best option from the concepts presented by the ISO for allocating congestion rent among the transmission ratepayers within the EDAM.

[1]  Extended Day-Ahead Market Congestion Revenue Allocation Phase 2 Design Working Group, California ISO, April 17, 2026:  https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Extended-Day-Ahead-Market-(EDAM)-Congestion-Revenue-Allocation-Apr-17-2026.pdf

[2]  Comments on Extended Day-Ahead Market Congestion Revenue Allocation Phase 2 Design Working Group Meeting - February 23, 2026, Department of Market Monitoring, March 9, 2026: https://www.caiso.com/documents/dmm-comments-on-edam-congestion-revenue-allocation-phase-2-design-feb-23-2026-working-group-mar-09-2026.pdf

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

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 your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

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 your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

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.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

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.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

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 your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

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 Phase 2 of the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation (CRA) Initiative. ED staff is encouraged by CAISO’s progress thus far on designing a new methodology to replace the methodology that is set to be in place for EDAM go-live. The current adopted interim methodology in the tariff is flawed for a number of reasons, as documented by the Western Energy Markets (WEM) Expert Susan Pope and the Market Surveillance Committee (MSC) in 2025.

At the most recent workshop, CAISO introduced three conceptual design options.  At this point, ED staff is most interested in the third design option, as it appears to be the best long-term workable design. Below, ED staff discusses potential issues with the other proposals, additional questions, and ED staff’s reasons for primarily supporting the third conceptual design.. At the same time, ED staff encourages CAISO to continue to further develop all three proposals, so that stakeholders are able to fully understand the potentially benefits and drawbacks of each of the three conceptual design options.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

No comment at this time.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

ED staff appreciates CAISO’s recognition of the asymmetry that currently exists in the CRA methodology used at EDAM go-live. This asymmetry arises because the current interim methodology in the EDAM tariff for go-live does not allocate the parallel flow congestion revenue that CAISO creates in other BAAs. The allocation of congestion revenue in the interim methodology is tied to the usage of open access transmission tariff (OATT) and network integrated transmission service (NITS) rights, which the CAISO BAA does not have because all OATT/NITS rights were converted to CRRs. This asymmetry likely has little effect at EDAM go-live, based on CAISO’s analysis conducted in Stage 2 of Phase 2, which indicates the amount of parallel flow congestion revenue that the CAISO BAA will not receive because this asymmetry is small. However, this asymmetry is likely to worsen as the EDAM footprint expands over the coming years. Therefore, replacement of the current design is critical in the long-term to ensure equitable treatment of the CAISO BAA.

ED staff is open to considering concept #1, with modifications, if stakeholders are unable to agree on concept #3 or concept #2. Concept #1 is an expansion of the interim methodology that is currently in the EDAM tariff. This expansion would allow the CAISO BAA to be allocated the congestion revenue tied to parallel flows the CAISO BAA causes on other BAAs’ transmission grids. Specifically, the allocation of congestion revenue will be tied to balanced cleared schedules and eligible transmission rights. For the CAISO BAA specifically this would be tied to the source/sink CRR pairs, since the CAISO BAA does not have OATT/NITS rights. However, ED staff does not support concept #1 to the extent that allocation of congestion revenue is tied to economic bidding (self-scheduling is already allowed). Allocation of congestion revenue needs to be decoupled from energy market clearing prices, otherwise entities could manipulate the energy market by lowering their energy bids because they will recover the additional revenues with the allocation of congestion revenue.

ED staff would be interested to learn more about concept #1 and open to supporting concept #1 with the removal of economic bidding to the extent stakeholders and CAISO ultimately agree to adopt a new short-term methodology to replace the flawed interim design as an interim measure. However, ED staff do not find concept #1 to be a viable long-term solution but could provide CAISO more time to address this issue as the EDAM footprint expands and the market matures.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

ED staff appreciates CAISO presenting concept #2. Concept #2, which is a firm flow entitlements proposal, builds on the recommendations from WEM Expert Susan Pope and the MSC in 2025. The establishment of firm flow entitlements is a mechanism that has been used in the Eastern RTOs. Firm flow entitlements are established by using a historical baseline of congestion revenue entitlements for CRRs and eligible OATT rights, which would require a stakeholder agreed upon establishment date (i.e. EDAM entry date or EDAM implementation agreement date). ED staff believes that concept #2 would be less equitable and more contentious than concept #3, as proposed, primarily because establishment of firm flow entitlements in this version of the proposed concept #2 would require “locking-in” these entitlements. Updating firm flow entitlements is likely to be  contentious, and, as a result, ED staff is hesitant to support this proposal. There are significant unknowns regarding how power will flow once a substantial EDAM footprint is operational, how flows will be impacted by the launch of Markets+, and how flows will change as the overall EDAM resource mix changes as new resources come online. ED staff recommends CAISO continue to develop concept #2, with the addition of a process for regularly updating firm flow entitlements (e.g., every 2 years, 5 years, etc.)

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

ED staff appreciates CAISO presenting concept #3 as it appears to be the most durable long-term design of the three options presented. Concept #3 would apply a simultaneous feasibility test (SFT) to the entire footprint of the EDAM BAAs in order to determine the allocation of congestion revenue. In essence, this is the expansion of the current model used for CAISO’s Congestion Revenue Rights (CRRs).

However, the allocation of congestion revenue would not equal to the congestion revenue that is paid out. There are a number of reasons why the amount of congestion revenue collected would not equal to the amount of congestion revenue available to be paid out. Flows generated by BAAs outside of EDAM or in Markets+ generate power flows that flow across the Western Interconnection, causing congestion on the power grid for which no congestion revenue is collected. ED staff would encourage CAISO to continue to explore reducing the divergence between the shift factor threshold cutoff used to determine allocation of congestion revenue and the DAM flow which uses a larger shift factor threshold cutoff factor. This divergence produces a difference between the allocated revenue and the actual revenue collected.

ED staff supports CAISO’s pro-rata allocation underfunding proposal to deal with the revenue collection issues discussed above. This would, in effect, reduce the amount paid out to CRR and OATT rights holders to the level of congestion revenue actually collected, not the revenue as determined to be allocated in the SFT model. The CAISO should not pay out more congestion revenue than is collected, which would require some sort of uplift mechanism – an additional cost which would be borne by ratepayers across the Western Interconnection, and notably does not exist in the Markets+ CRA methodology either. In addition, the pro-rata allocation of underfunding considers the impact of out of market flows from Markets + which generate congestion, but do not produce collectible congestion revenue. Pro-rata allocation of underfunding effectively resolves revenue collection issues stemming from these seams, and any reliability issues stemming from seams should be resolved outside of this initiative.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

ED staff recommends the following modifications if concepts #1 and #2 are pursued further:

• Concept #1: Do not tie CRA allocation to economic bidding, as this increases perverse incentives in the energy market. In Phase 1 of EDAM CRA, the WEM Expert Susan Pope and the MSC advised against an expansion of the interim methodology to include economic bidding and this element was not included in CAISO’s tariff filing at FERC,
• Concept #2: Recommend establishing automatic firm flow entitlement allocation amounts on a fixed schedule (e.g., every 2 or 5 years, etc.). Firm flow entitlements would be magnitudes of order more complex than the other options because concept #2 would require establishing firm flow entitlements between each EDAM BAA not just between different markets. Updating firm flow entitlements has been a contentious issue at the seam between PJM and MISO, or just between two entities, let alone multiple EDAM BAAs.
• Concept #3: No additions at this time.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

DC Energy appreciates the CAISO’s focus on developing a path to transition to an integrated congestion management and revenue allocation system based on simultaneous feasibility that treats all transmission customers equally within EDAM. 

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

DC Energy agrees with the design principles outlined by The Energy Authority.  EDAM-wide CRRs with source and sink locations between and among locations in all EDAM BAAs that are allocated to all EDAM transmission customers with residual capacity allocated via centrally clearing auctions based on a simultaneous feasibility test is the best way to satisfy each of the principles The Energy Authority cited in its presentation.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

DC Energy has advocated for Design Concept 1 as a near-term enhancement to the existing congestion revenue allocation design under the assumption that it could be implemented quickly, shortly after EDAM’s initial go-live date.  It was DC Energy’s understanding that this Design Concept could be implemented while stakeholders continued to discuss further changes to congestion revenue allocation. 

If this Design Concept, however, cannot be implemented quickly as an expedient way to ensure more equal treatment for CAISO CRRs compared to OATT transmission rights in other EDAM BAAs, then the CAISO and stakeholders would be better served developing a more comprehensive and endurable re-redesign of congestion revenue allocation under EDAM.  DC Energy continues to support the adoption of this Design Concept to the extent it can be implemented while stakeholders continue to discuss further congestion revenue allocation reforms because it would provide greater parity between CAISO CRRs and OATT rights in other EDAM BAAs and would help address CRR underfunding in the CAISO. 

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

The CAISO should avoid establishing a historical baseline of congestion revenue entitlements for any class of transmission customer.  Historical entitlements become stale as generators retire and the transmission system, load profiles, and markets evolve.  Furthermore, historical entitlements could continue to insulate market participants from the cost of congestion that they cause in other EDAM BAAs via unscheduled parallel flows. Also, as the CAISO highlighted in the April 17^th EDAM CRA meeting, implementation issues would include how to treat different classes of transmission customers from different BAAs equitably, how to account for entitlements in a simultaneous feasibility test, and how to treat firm transmission rights or load obligations acquired after entitlements are allocated.  Thus, historical baseline entitlements would introduce complications that should be avoided in EDAM.

If the CAISO were to allocate entitlements to congestion revenue (i.e., financial transmission rights) to transmission customers in EDAM, it should do so for limited time periods and at regular intervals in a more dynamic manner based on recent transmission use and expected need, similar to its current CRR allocation in the CAISO, which does not rely on historical baseline entitlements.  If load serving entities or other transmission customers in EDAM BAAs outside of the CAISO have concerns with such a process, the CAISO should educate them on this approach.

If the CAISO finds it cannot, for whatever reason, transition to an integrated congestion management and revenue allocation system based on simultaneous feasibility without establishing historical entitlements, then, from the outset, the CAISO should include a plan to transition away from historical entitlements, in order to limit the additional complexity and inefficiency stale entitlements would create.  Also, the CAISO should not allow historical entitlements to continue to insulate transmission customers from congestion costs caused by their unscheduled parallel flows in other EDAM BAAs. Both the equitable treatment of all transmission customers and incentives for efficient market activity require transmission customers to be responsible for the costs of congestion they create, with, of course, available congestion hedges.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

The establishment of common simultaneous feasibility test for both OATT transmission rights and CAISO CRRs is the Design Concept most worthy of the time and attention of the CAISO staff and stakeholders.  The congestion revenue allocation among all OATT transmission rights holders and CRR holders should be determined by a market-wide simultaneous feasibility test. Conducting this test annually and then again in advance of each month would help ensure feasibility of allocated rights and help prevent underfunding.

This Design Concept also would address shortfall allocation that would be shared across all rights holders. Today, OATT holders outside of the CAISO receive full congestion revenue even if there is inadequate funding. This requires the CAISO to make whole those outside entities, which is an unfair shift of revenue to entities that are already receiving free access to the CAISO’s transmission system.  

If set up properly, this approach could remove the self-scheduling incentive, because it would allocate congestion revenue to OATT rights holders in the same manner regardless of whether they bid economically or self-schedule.  It should also provide equitable treatment to OATT rights holders and CRR holders in the allocation of congestion revenue, including accounting for congestion associated with parallel flows.  Thus, Design Concept 3 appears to be consistent with each design principle developed earlier in this initiative.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

Although DC Energy supports exploring Design Concept 3 in the current stakeholder initiative, the development of a common simultaneous feasibility test for congestion revenue allocation among otherwise distinct OATT transmission rights and CAISO CRR holders should be viewed as an  incremental step towards greater market and congestion management integration among EDAM BAAs.  Ultimately, the CAISO should allocate and auction CRRs across the EDAM market footprint regardless of BAA.  This approach would allow the market operator to manage congestion throughout the EDAM footprint centrally in the dispatch process.  It would also allow EDAM market participants to directly hedge congestion associated with sourcing power in one EDAM BAA and sinking it in another. 

Prior to the implementation of EDAM-wide CRRs, the CAISO should address the root causes of congestion revenue inadequacy currently affecting CRRs.  Namely, the CAISO should address unscheduled parallel flows associated with all neighboring BAAs, not just those that join EDAM.  Addressing unscheduled parallel flows includes not only better modeling but also limiting unscheduled parallel flows and/or obtaining revenue to offset the otherwise free use of transmission capacity.  Other modeling improvements, particularly modeling of outages, as well as efforts to ensure more accurate scheduled outage reporting, would also improve congestion revenue adequacy. 

The most significant root cause of congestion revenue inadequacy in EDAM will likely be the CAISO’s high and inconsistent shift factor thresholds. Within the CAISO BAA, the current bifurcated shift factor thresholds would prevent collection of most congestion revenue in other EDAM BAAs. This would allow transmission customers in those BAAs to continue to consume CAISO transmission capacity at no cost regardless of the ultimate allocation of congestion revenue.   Therefore, the CAISO should prioritize adopting a consistent, reduced shift factor cut-off threshold among all types of settlement points in the EDAM footprint.  This would help reduce CRR underfunding and promote a fairer allocation of congestion revenue across BAAs in EDAM under any congestion revenue allocation design.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

NV Energy understands and appreciates that the congestion revenue allocation phase 2 is still in the working group phase and has not moved into the stakeholder initiative phase. It is helpful that CAISO is taking the time to review analysis that was performed using WEIM data and discuss different potential options at a high level at this stage. However, NV Energy strongly protests the proposed schedule for this initiative which will preclude meaningful participation and consideration of such a critical issue. A list of the ongoing efforts includes the following:

• PacifiCorp go-live, further parameter tuning, resolution of operational and market issues, and examination of operational data from the initial congestion allocation.
• Implementation activities for potential new EDAM entities.
• Pathways – formation of the Regional Organization for Western Energy, resolution of issues associated with change in market oversight responsibilities, and stakeholder process enhancements with the RIF.
• Exploration of an EDAM/WEIM based resource adequacy program.
• Seams discussions and exit activities for departing WEIM entities.
• RC West changes due to departing entities.
• Other ongoing initiatives related to: gas management, commitment costs, storage participation, price formation, and the GMC.

Notably, participation in these activities is often on top of additional activities that are occurring outside the CAISO stakeholder process. NV Energy recommends that CAISO slow down and allow sufficient time during this process to allow participants who value this effort the opportunity to effectively participate in a meaningful way.

NV Energy strongly prefers that the CAISO stakeholder process begin to shift into more of a data informed process rather than the current theoretical approach. As stated in earlier comments, in a separate initiative, the market is entering a period of major transformation in the market footprint with new participants joining, others potentially exiting, and several foundational market designs shifting simultaneously. These changes will materially affect market dynamics. This environment makes it especially challenging for stakeholders to contemplate a comprehensive new congestion allocation framework without the benefit of market performance data from the new Day Ahead Market design. Simply put, we cannot effectively assess the consequences of another large-scale change while we are still waiting to see how the most recent reforms actually perform. In consideration of the goal of this initiative, to develop a “durable” long term approach, the CAISO should report out data analysis following the EDAM go-live illustrating the congestion allocation to each Balancing Authority Areas (BAA) utilizing the initial approach, the interim approach, and any proposed approach under consideration for stakeholders to review and compare the different options.

The initiative must remain consistent with EDAM’s prime directive – to facilitate day-ahead and real-time market participation by external BAAs, while recognizing they will continue to offer transmission service under their OATT tariff, continue to maintain their WECC/NERC reliability obligations, and continue to engage in IRP process overseen by their local regulatory authorities. EDAM Entities will not be joining the CAISO, consolidating their BAAs with CAISO, or utilizing the CAISO’s unique transmission scheduling paradigm. EDAM Entities have long-standing commitments related to transmission capacity based on customers’ annual 10-year plans, with allocations of existing and future rights.

The initiative should continue to focus on protecting, to the extent possible, transmission customers with firm transmission rights to be protected from congestion costs, when they are serving load. In its filing with the Nevada Commission, NV Energy stated,[1]

NV Energy’s evaluation of the DAM proposals is based on two key principles with respect to allocation of congestion revenues: (1) the allocation should provide a means of holding OATT customers harmless to the extent possible from any financial consequences from the actual use of their firm transmission rights; and (2) firm OATT customers should be treated equally – there should be no winners and losers.

Based on these criteria, NV Energy found the EDAM has a clearly superior congestion allocation methodology, expressing the concern that allocation based on reserved capacity can exacerbate any revenue shortfalls.

[1] Docket No. 25-10025

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

No comment.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

NV Energy has a preference to option 1 rather than the other options given that it is similar in design to the current interim solution with an addition to include economic bidding. NV Energy understands that this option does not resolve all the issues raised by the MSC, DMM, and others. However, the working group could consider discussing other design solutions that may alleviate these issues.

As stated in the overall feedback, NV Energy advocates than any and all options for congestion allocation be based on use and not the transmission rights. The customers that are most exposed to the congestion are those scheduling or using the system at that time and should be the ones eligible for the congestion hedge. Furthermore, the design should strive to be equitable to transmission customers whether they are using Network Transmission Service or Point-to-Point transmission service. If a perfect hedge cannot be achieved for all transmission customers, then all transmission customers should be subject to the same haircut based on their system use rather than one customer type holding another harmless.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

All comments for concept #2 and #3 are answered in question 5.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

During the April 17, 2026 working group meeting, a stakeholder mentioned that CAISO and stakeholders may have a solution for the current CAISO CRR underfunding issue from work being conducted in a separate stakeholder meeting. It might be beneficial for more educational sessions on this to bring all stakeholders up to speed. Regardless, NV Energy proposes that this working group move slower to review the data from the current interim EDAM congestion allocation design and the CRR enhancements that may have resolved the underfunding issue. If the intent of this working group and stakeholder process is to develop a permanent design, then the working group should wait to evaluate the current design and enhancements through market data.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

PG&E appreciates the opportunity to provide its feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation (CRA) Phase 2 workshop on 4/17/26.

PG&E’s goals are a solution that is durable, fair to all EDAM customers, and aligns with market design principles. Design Concept #3 is the only concept, PG&E believes, that could achieve these goals.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

TEA’s presentation does not align with PG&E goals for a durable, fair solution to all EDAM customers, that aligns with market design principles. Therefore, we do not recommend continued effort or development on TEA’s presented solution. 

We note, TEAs problem statement raises a concern that should be addressed.  TEA points out that firm transmission rights holders are only one part of what funds the transmission system in an Open Access Transmission Tariff (OATT) BA. After Transmission Customers purchase their transmission rights, any costs that are still leftover are picked up by Network Transmission (NT) customers. Often these NT customers must rely on non-firm rights to serve load, and it is unfair to give the EDAM CRA Phase 1 treatment to firm transmission rights holders and not NT customers.

PG&E believes a well-designed Design Concept #3 framework could address the concern raised by TEA.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

Design Concept # 1 does not align with PG&E goals for a durable, fair solution to all EDAM customers, that aligns with market design principles. Therefore, we do not recommend continued effort or development on Design Concept # 1.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

Design Concept # 2 does not align with PG&E goals for a durable, fair solution to all EDAM customers, that aligns with market design principles. Therefore, we do not recommend continued effort or development on Design Concept # 2.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

PG&E’s goals for EDAM CRA Phase 2 are to find a solution that is

• Durable
  • Fair to all customers, including resolving the asymmetry of EDAM CRA Phase 1
  • Permanent (as opposed to another temporary measure)
• Respects efficient market design
  • Allows the Market Operator to manage congestion efficiently
  • Incentivizes efficient bidding
  • Ideally, provides transparency into congestion prices and patterns
  • Preserves the ability for participants to hedge

PG&E believes that Design Concept #3 aligns with PG&E’s goals. We recommend further development of this concept.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

No comments.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

PacifiCorp appreciates CAISO’s approach toward identifying an improved congestion revenue allocation (CRA) design, including continued analysis of available data and identification of agreed-upon design principles. PacifiCorp supports CAISO’s presentation of multiple congestion revenue allocation design options, both from a congestion revenue rights (CRR) and open access transmission tariff (OATT) rights frame of reference, and outlining of perceived pros and cons of each design option. PacifiCorp believes that this is a good starting point to encourage robust discussion among stakeholders regarding improved CRA design.

Before proceeding further, PacifiCorp believes that stakeholders would benefit from a shared understanding of the goals and sequencing of this initiative. While it is understood that the current CRA design is transitional, PacifiCorp believes it is worth reaching consensus as to whether the immediate CRA design priority is to identify and implement urgent, short-term design enhancements to the transitional design, or to work towards a more robust long-term redesign. Before stakeholders reach that clear understanding, it will be difficult to constructively compare the pros and cons of each design, particularly when considering the timing, resources needed, and complexity that would go into implementing each option. Once that clarity is established, PacifiCorp supports moving forward in whichever direction encourages EDAM market expansion, as the Company believes that is ultimately the priority for any updated market design enhancements. If the consensus among stakeholders is that there are immediate fixes necessary to the current market design, then PacifiCorp would support prioritizing near-term enhancements. Regardless of the path forward, any congestion revenue allocation design must appropriately recognize and not undermine OATT transmission rights and remain workable for OATT rights holders.

Finally, as two of the three design options presented by CAISO were related to simultaneous feasibility tests (SFTs), PacifiCorp supports CAISO’s suggestion to provide an educational session for stakeholders. PacifiCorp would find such a session highly informative as the Company continues to evaluate potential CRA designs.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

PacifiCorp appreciates the time and effort that went into TEA’s presentation. When considering TEA’s presentation of “deep value” proposed CRA design improvements vs. “quick wins,” PacifiCorp maintains its position that prior to moving forward with CRA design discussions, it is critical that expectations are clear regarding the phasing and goal(s) of the initiative.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

See response to question #1.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

See response to question #1.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

See response to question #1.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

Once consensus is reached regarding CRA design priority and phasing, initial operational EDAM data is available, and additional information is provided on SFTs by the CAISO, PacifiCorp will feel more comfortable opining on explicit design options.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

Please see Powerex’s comments avaialbe here.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

Please see Powerex’s comments avaialbe here.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

Please see Powerex’s comments avaialbe here.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

Please see Powerex’s comments avaialbe here.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

Please see Powerex’s comments avaialbe here.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

Please see Powerex’s comments avaialbe here.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

SDG&E appreciates CAISO revisiting CRA to develop a long-term revenue allocation design that is fair to both existing CAISO entities and those joining via EDAM and agrees that Phase 2 is needed. The concepts presented offer a strong starting point to develop a longer term CRA mechanism.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

TEA provided useful background for CAISO’s proposals, SDG&E agrees with TEA’s framing of that participants should focus on creating a durable market design rather than an incremental fix in Phase 2.  SDG&E also agrees that progressing toward a durable CRA solution ahead of significant additional EDAM participation would help limit ongoing externalities under the existing framework. As such, advancing Phase 2 design should remain a priority.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

While Design Concept #1 is an improvement relative to the status quo and addresses issues around self-scheduling, SDG&E views this solution as a temporary fix. In particular, the concept does not appear to sufficiently address bidding behavior at or near the bid floor, which could create incentives misaligned with efficient market outcomes and introduce potential gaming concerns. At this stage, Concept #1 appears more likely to introduce additional complexity without resolving core issues in CRA. As such, SDG&E believes Concept #1 should be deprioritized for further development as Phase 2 continues.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

Design Concept #2 should continue to be explored during Phase 2, but SDG&E is concerned with the possibility of an entrenched two-tier system of OATTs rights holders and CRR rights holders that could become more complex or fragmented over time if additional entities opt-in to EDAM after Concept #2 is implemented. If an entitlements system is adopted, it would need to be periodically reevaluated to maintain alignment with actual system conditions, which inherently reduces the certainty or benefit around the entitlements. Although SDG&E has some initial concerns, given that the proposals are at an early stage these concerns could potentially be alleviated and SDG&E would like to hear additional details or perspective from supporters of this approach as Phase 2 discussions continue. In particular, SDG&E would be interested to see estimates comparing the relative impacts to CRR rights holders and OATT rights holders under an entitlements-based system.

Despite these concerns, SDG&E is open to additional detail or perspective from supporters of this approach as Phase 2 continues.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

At this stage, SDG&E views Design Concept #3 as the most promising pathway toward a durable and sustainable CRA solution.

A new SFT would most accurately capture physical system constraints and externalities that are not fully accounted for in Phase 1 and create consistent treatment among EDAM participants. A uniform approach at this stage feels most appropriate to prepare the market for long-term success. Given that this concept is more ambitious than the others, SDG&E has some concerns about the ability to reach consensus and implement Concept #3 in a timely manner. This approach is the most comprehensive and promising, so SDG&E looks forward to CAISO and parties providing additional detail on specific design elements. For instance, analysis of the impacts on existing CRR structures and revenue adequacy would be helpful in evaluating this concept.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

SDG&E recognizes that melding OATT right holders’ legacy positions with their role as participants in a new market requires compromise between CAISO CRR rights holders and OATT right holders which may be an iterative process. Any solution must avoid overly burdening groups of participants with the cost of externalities due to parallel flows. Ultimately SDG&E supports a durable, fair solution to all market participants that will improve the overall market landscape.  

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

SCE’s objective in the EDAM Congestion Revenue Allocation (CRA) Phase 2 initiative is to ensure that the market design reflects the principles of cost-causation, market equity, and economic efficiency. We believe that for a regional day-ahead market to be successful, the financial signals, specifically congestion rents, must accurately reflect the physical realities of the grid.

Our position is guided by the understanding that a nodal market is fundamentally a financial optimization of physical assets. Therefore, the most equitable and stable long-term solution is to move toward a framework where all BAAs use the same mechanism to create financial hedges. SCE recognizes that all EDAM BAAs may not be ready for such a solution, but it should remain the ultimate goal. This would also allow for the consideration of transmission rights to be available across the entire EDAM footprint, rather than the piecemeal system in place today. It would also help address the problems in the various Design Concepts with how to treat NITS rights. At a minimum, the Design Concept must ensure that CRRs are the functional and legal equivalent of physical transmission rights. This is not a new concept; it is the cornerstone of every successful, mature RTO in North America. We view the CRA Phase 2 process as an opportunity to modernize Western market design by moving away from the "physical path" paradigm that creates inefficient incentives and shifting toward a dynamic, financialized system that protects all ratepayers regardless of their Balancing Authority Area (BAA).

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

SCE appreciates the perspective brought by The Energy Authority (TEA), but we generally oppose the proposal for Point-to-Point (PTP) Carve-outs.

• Cost-Causation and Loop Flows: Carving out PTP transactions from the CRA framework does not remove their physical impact on the grid. Unseen transactions create unpriced loop-flows that consume capacity on other BAA lines. If these flows are not part of the market optimization, customers end up paying to manage the resulting congestion without receiving the offsetting revenue. This violates the principle of "cost-causation."
• Market Regression: The "carve-out" approach is essentially a regression to the Western EIM "Base Schedule" world. While appropriate for a real-time imbalance market, it is incompatible with a Day-Ahead market intended to optimize the entire region’s generation and transmission.
• Equity and Section 217: We believe that the concerns raised by TEA regarding the value of bilateral contracts can be better addressed through the Firm Flow Entitlements (FFEs) or the dynamic SFTs in Concept 3. These mechanisms provide the "equivalent financial rights" required under FPA Section 217 without fragmenting the market or shifting costs to CAISO load.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

While Design Concept 1 offers a necessary incremental improvement over the transitional Phase 1 rules by allowing economic bids to participate in revenue allocation, we view it as insufficient for a durable market design.

• Inefficiency: This concept fails to address the underlying incentive to self-schedule. As long as the allocation is tied to a "Balanced Schedule," market participants will be incentivized to bid at the economic floor to ensure they clear the market and protect their revenue. This reduces availability to the optimization and prevents the regional discovery of the most cost-effective resources.
• Lessons from the East: Early iterations of Eastern markets struggled with similar "must-run" behaviors. Design Concept 1 mirrors these early, less efficient stages of market evolution. We should avoid codifying a design that necessitates "side-payments" or "carve-outs" to fix price distortions that could be avoided through a more robust decoupling of hedges from schedules.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

Design Concept 2 represents a pragmatic middle ground, yet we caution against its long-term adoption due to the high risk of model obsolescence.

• "Snapshot": Relying on a historical milestone or "Freeze Date" to set entitlements would ignore the rapid transformation of the Western grid. New resource interconnections and transmission upgrades would quickly render a 2026 or any other year’s baseline inaccurate.

• The MISO Experience: We should look closely at MISO’s current challenges with its Auction Revenue Right (ARR) process. MISO has been forced to undergo significant reforms because its "historical" mapping has led to "dead nodes," where generators have retired but the financial hedges remain, creating a mismatch that causes severe underfunding. We urge the CAISO to avoid implementing a design that inherently requires a massive overhaul every five to ten years as the resource mix evolves.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

We endorse Design Concept 3 as the only Design Concept proposed that has a chance to provide a durable, long-term solution that achieves  equity across the EDAM footprint.

• Equity through Dynamics: By utilizing a recurring Simultaneous Feasibility Test (SFT) to award entitlements, Concept 3 ensures that financial hedges are always backed by the current physical capability of the grid. This protects against the "socialization" of underfunding risk and ensures that CAISO CRR holders and external OATT holders are treated with the same mathematical rigor.
• Proven Reliability: This design is the industry standard in PJM, MISO, and SPP. These markets have demonstrated that while the administrative lift of a monthly and annual SFT process is significant, the result is a transparent, predictable, and fair allocation of congestion value.

• Modernizing NITS: Concept 3 offers a pathway to modernize Network Integration Transmission Service (NITS) by converting it into high-quality nodal hedges. This allows utilities to maintain their physical dispatch flexibility while benefiting from a stable financial settlement that follows their load.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

N/A

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

Shell Energy appreciates the opportunity to provide feedback on the CRA Phase 2 working group. Overall, Shell Energy finds that this meeting helped advance this initiative from high-level design principles to specific conceptual options which can now be evaluated against the original intention to reduce self-scheduling incentives and improve symmetry between CRRs and eligible OATT rights while preserving equity and supporting efficient market outcomes.  

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

TEA’s presentation was extremely helpful in highlighting the structural differences among CRRs and LTF PTP rights and NITS as well as highlighting how the Phase 1 design creates materially different incentives for NITS vs. PTP customers. Shell Energy is generally aligned with TEA in thinking that a durable design should not force participants to choose between submitting economic bids or preserving a congestion hedge.  

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

Shell Energy feels as though this approach improves symmetry relative to Phase 1 by extending parallel flow treatment to CAISO CRRs and should help to reduce self-scheduling incentives however, the more significant factor driving participants to submit self-schedules is likely the two-tier congestion reversal mechanism adopted by the EDAM entities. While this solution seems to be lower implementation complexity compared to Concept #3, it may require several rounds of OATT revisions and FERC filings from the CAISO and alignment between the EDAM Entity OATTs for sub-allocation. This may be accomplished by filing narrow Section 205 compliance amendments that replace “self-schedule” language with “cleared balanced schedules.” This approach may be workable as a short-term bridging solution to a more durable long-term design. Consideration should be given the implementation effort and timelines involved in this process.  

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

Shell Energy is concerned with the equity challenges that may arise as part of the line-drawing decisions that would be necessary. We are concerned that agreeing upon a baseline entitlement milestone date will be challenging and ultimately, to some extent, arbitrary in nature.  

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

Shell Energy finds Design Concept #3 to be the strongest long-term design as it removes the self-scheduling incentive, applies symmetrically to the CAISO CRRs and eligible OATT rights, avoids arbitrary vintage distinctions (in concept 2) and aligns the magnitude of the congestion hedge with a common SFT across the EDAM footprint. This approach is the most well aligned with congestion hedging frameworks found in other ISOs/RTOs across the country. Further, any CRA design that allocates directly to the transmission customer avoids any dependencies on EDAM Entities OATT amendments, so this approach is favorable as a long-term solution. While Shell Energy perceives this approach as ideal, stakeholders will need a better sense of the design and implementation complexity along with an esimate of how long this may take. This would be a collosal undertaking and involve developing an SFT test, incorporating NITS, a nomination process, a means of settling directly with transmission customers, OATT amendments, etc.  

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

Shell Energy’s preferred approach is to seek a short-term bridging solution (implement Concept #1) while working to develop a more robust longer-term solution akin to Concept #3.  

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

At this time, the Six Cities are open to assessment of a range of options to address the problem statements in this initiative and appreciate the CAISO proposing options for the stakeholder community to consider.  Concept #1 might provide a solution that could be adopted as an initial process improvement to the status quo, while Concepts #2 or #3 appear to entail more extensive implementation complexity.  From the Six Cities’ perspective, a critical objective in this initiative is to revise the congestion revenue allocation rules to address asymmetries between the CAISO and other EDAM balancing authorities (“BAs”) in terms of eligibility to receive congestion revenues associated with parallel flows. 

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

The Six Cities do not have comments on The Energy Authority presentation. 

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

This concept appears to provide a potentially viable way to address the asymmetry in the current (i.e., Phase 1) congestion revenue allocation policy as between the CAISO and EDAM BAs, whereby the CAISO is ineligible to receive an allocation of congestion revenues due to parallel flows.  The Six Cities would appreciate an expanded discussion of the CAISO’s concerns that this approach may not adequately address self-scheduling incentives and, further, may create incentives for market participants to bid at the economic floor.  Are there are possible approaches to mitigating these concerns?  Additionally, it would be useful to understand the implementation complexity perceived by the CAISO, especially compared with the other design concepts.  Finally, the question raised during the working group meeting regarding whether this design concept could provide a path toward conversion of open access transmission tariff (“OATT”) rights to CRRs appears to merit further consideration. 

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

The Six Cities see value in further exploring Design Concept #2, and would like to understand the benefits and tradeoffs of Design Concepts #2 and #3.  In particular, are there concerns with reliance in this design concept on historical baseline values, and what would the process be to update these values?  It seems that the historical baseline approach may not adequately recognize changes in usage patterns of the grid as markets in the West evolve (or, alternatively, use of historical baselines could reinforce usage patterns that might otherwise change as markets evolve). 

The Six Cities previously proposed that the CAISO’s current (i.e., its Phase 1) methodology be limited in nature, either for a transition period and/or limited to OATT rights that were created prior to a date certain, such as the go-live date for EDAM.  (See, e.g., Six Cities’ Comments on Revised Draft Final Proposal, submitted June 2, 2025.)  Unless an acceptable degree of symmetry between the CAISO and EDAM BAs can be achieved, the Six Cities continue to support approaches that will limit the availability of the expanded congestion hedge due to parallel flows to OATT rights that were established before a date certain.  Therefore, the Six Cities believe that, at the beginning stages of this initiative process, the suggested limitation on the availability of the expanded congestion hedge based on a milestone should be considered as part of the market design. 

The Six Cities also recognize the complexity of the Design Concept #2 methodology, which may make this option, if pursued, preferable as a long term design change. 

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

The Six Cities see value in further exploring Design Concept #3, and, as noted above, would like to understand the benefits and tradeoffs of Design Concepts #2 and #3.  Creating a congestion revenue entitlement for CRRs and eligible OATT rights that is based on a common feasibility test may present a more durable design option than reliance on historic baseline values.  This option also appears highly complex, and the Six Cities are interested in understanding the CAISO’s concern about new upgrades potentially “diluting” (see CAISO Presentation, Apr. 17, at 28) congestion revenue available for others. 

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

The Six Cities note that the Congestion Revenue Requirement Enhancements initiative is proceeding on a separate track.  Because the issues in the CRRE initiative and this initiative are closely related, the Six Cities request that the CAISO take steps to ensure that the timing for and issues under consideration in both initiatives are closely coordinated. 

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

EDAM CRA Policy Importance

• EDAM’s Congestion Revenue Allocation (CRA) policy has very large impacts on net EDAM benefits for LSEs and implementation choices made by CAISO and the EDAM Entity BA/TSPs related to that policy likewise have very large impacts on market performance and efficiency for all participants. EDAM cannot be successful long-term without the identified issues being addressed first in the policy space and then in implementation.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

Summary of TEA Presentation Points:

EDAM CRA Policy History and Current State

• Understanding how the existing CRA evolved is critical for keeping an open mind about pursuing alternative solutions and evolving the program further over time.
  • There was not – and still is not – an available off-the-shelf, tested solution. All parties involved are learning as we go.
• Decisions were made across 2023-25 to prioritize implementing EDAM as soon as possible over developing a durable EDAM CRA policy. It was acknowledged repeatedly that pre-go live testing and initial market results would need to be carefully analyzed and changes made quickly if there were unintended outcomes. This is where we are today.
  • Informed stakeholders, CAISO’s MSC, the WEM GB Market Expert, and CAISO’s DMM all had serious reservations with the design but most of those parties ultimately supported it to avoid further delaying EDAM implementation.
  • Tariff level and implementation choices made by the first EDAM Entity BAs and by the CAISO over the past 6-12 months in multiple areas have unintentionally increased the likelihood of negative outcomes related to congestion impacts in EDAM for all market participants, with one exception: CAISO’s reversion to its SP-Tie model for CAISO’s intertie and CRR markets has prevented additional unintended consequences associated with meeting California LSE demand from materializing at EDAM go-live.
• Pre-go live testing has proven that stakeholder concerns were justified: the existing EDAM CRA policy and the EDAM congestion accounting framework in general is not up to the task of producing efficient, stable, or rational outcomes for market participants. Understanding how the existing policy came together is critical for thinking about how to fix the issues.
  • The starting point for the conceptual design in 2018 was driven by well-intentioned WEIM Entities that were not heavily experienced with organized market functionality.
    • That conceptual design was not tested against known, expected market fundamentals and yet was carried forward into the final proposal and CAISO Tariff, thereby setting the baseline for the initial EDAM Entity Tariffs.
  • Last-minute changes made in 2024-25 to CAISO and EDAM Entity Tariffs biased CRA policy significantly, presumably to appease the more vocal LT-F rightsholders on EDAM BA systems and prevent the FERC EDAM Entity Tariff approval process from stalling.
    • The deal brokered was not subject to an open stakeholder process and the design chosen was not tested before being locked-in as Tariff policy.
  • These last-minute changes initially and most obviously came at the expense of EDAM LSEs and the CAISO CRR market. Ironically, they also have proven unworkable in testing for the LT-F rightsholders they were presumably developed for due to other EDAM policy and implementation choices made following Tariff approvals.
    • It is only entities making long-term, RA- or RPS-qualifying sales to California LSEs off specified resources who held LT-F rights to export-from or wheel-through an EDAM BAA, specifically as a self-schedule from source-to-sink, that benefit under the existing CRA policy, and even then, the California LSE holding a CRR from the CAISO intertie to their load-sink may still lose value due to the parallel flow allocation made to the external delivering party.

EDAM CRA Policy Alternatives

• Near-term, incremental changes to the existing CRA policy could somewhat rebalance outcomes for EDAM LSEs and CAISO CRR market participants; however, there are structural changes that could be made to the existing CRA policy that are achievable near-term. These structural changes would meaningfully improve market efficiency and fairness for all participants – and therefore should be pursued as soon as possible.
  • Available Incremental Changes:
    • Allow EDAM LSEs using 6-NN rights to receive Tier One allocation for balanced self-schedules;
    • Require CRN linkage for all Tier One eligible balanced self-schedules;
    • Disaggregate ELAPs into smaller sub-areas within large EDAM BAAs according to known cut-planes; and
    • Require EDAM BAAs to support economic interchange transactions at EDAM External Interties using the SP-Tie interchange model.
  • Preferred Structural Changes:
    • Support LT-F carve-outs for export and wheelthrough schedules not serving demand on the system where the rights are held;
    • Revert EDAM BAA CRA to measured demand pro-rata allocation based on standard coincident peak markers;
    • Remove parallel-flow reversal for balanced OATT self-schedules; and Require EDAM BAAs to support economic interchange transactions at EDAM External Interties using the SP-Tie interchange model.

Note: TEA views these structural changes as achievable, practical solutions whose benefits outweigh their costs in the near term but would expect only the last change – opening economic interchange transaction functionality – to carry forward into the long-term CRA program. LT-F carve-outs could remain an option; however, in-market incentives and more useful hedging opportunities provided by the long-term CRA solution would provide a better alternative in practice and likely lead to entities bringing their rights directly into the market.

• Long-term, ideally prior to EDAM BAAs adjacent to the CAISO BAA joining EDAM, deeper structural changes to EDAM CRA and the overall EDAM congestion management and accounting are necessary to prevent major cost-shifts and market inefficiencies from overwhelming the production cost benefits of EDAM that its LSEs are expecting to receive.
  • Recommended Principles for Durable Design:
    • Develop a consistent framework applicable across the entire EDAM footprint that allocates revenues and funding obligations to entities funding the transmission system and holding rights, regardless of their physical use of the rights;
    • Settle rents directly with rightsholders; and
    • Support market participants’ incremental hedging needs by making the rights transactable between parties.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

• TEA agrees with most of CAISO’s PRO/CON assessment but also believes the concept falls short in two additional areas:
  • Does not help import/export schedules that cannot be economically bid due to EDAM BA’s decision not to support economic interchange transactions;
  • Does not help entities that are unable to associate 7-FN rights with the economically bid resource, including for short- and long-term contracts that cannot be designated as network resources in time to get 7-FN rights and therefore must be scheduled using sheltered 6-NN rights; and
  • May create more issues than it solves when considering interaction with CAISO’s CRR market.
• TEA finds it unclear whether this enhancement would produce sufficient benefits to be worth the implementation effort, especially considering the extent to which parallel flow congestion allocation issues will grow significantly when BANC, TID, LDWP, and NVE join EDAM, and the overall need for more comprehensive changes long-term.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

• TEA does not see this Concept as being durable or scalable to the end-state EDAM footprint and therefore does not see it as a viable option or worth pursuing.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

• TEA sees the most value in this concept and believes it should be the focus of the long-term CRA solution around which other market enhancements are oriented, e.g., transactional market seams functionality and intertie scheduling and modeling policy.
• TEA believes it is critical to move to this solution as soon as possible, or at the latest by Fall 2028 – the point when the Western Interconnection will largely be divided into three stable and cohesive markets across DA and RT: EDAM/CAISO, Markets+, and RTO-Expansion.
• TEA questions whether CAISO would expect to maintain the separate Transfer Revenue and Congestion Revenue paradigm under this concept, or whether EDAM could revert to a single-SMEC model with traditional LMP formation, which would be TEA’s preference.
• TEA sees this concept as a natural evolution of the interim, near-term structural changes TEA proposed above.
• TEA underscores the importance of providing comparable treatment for all LSEs, regardless of whether they are Network Transmission rightsholders in a non-CAISO EDAM BAA funding their local system or have been allocated CRRs in the CAISO market due to their funding of CAISO PTO transmission facilities.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

TEA appreciates the opportunity it was given to present ideas for consideration. We would welcome an opportunity to respond to any questions or comments that come in through this comment period; and look forward to hearing other perpspectives and keeping conversations moving forward.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

TransAlta Energy Marketing U.S. (TEMUS) appreciates this opportunity to provide comments on the next steps for Phase 2 of the Extended Day-ahead Market (EDAM) Congestion Revenue Allocation (CRA) design.

There appears to be a general agreement among stakeholders that:

1. The incentive to self-schedule transmission should be dampened or eliminated;
2. Physical transmission rights (within EDAM) should be transitioned to financial rights.

There are near-term changes not outlined in the three proposals presented by the CAISO in the April 17 workshop that can be made that would advance the CRA towards these objectives, namely:

1. Allow economic bidding at all EDAM interties for all transactions;
2. Enable virtual transactions (convergence bidding).

Both elements are already included in the broader EDAM design, but presently limited due to implementation complexity. Enabling these elements across the entire EDAM footprint would immediately improve market liquidity and price convergence between EDAM and the Energy Imbalance Market (EIM), as well as significantly impact the goal of reducing the incentive to self-schedule. Implementing these elements now for the entire footprint should be a priority – the EIM went live in 2014 and market participants are still waiting for intertie bidding to be implemented outside of the CAISO.

TEMUS recommends that the CAISO develop a roadmap for this initiative with defined milestones — ideally targeting near-term improvements as suggested by The Energy Authority (TEA) — to advance the CRA initiative towards a long-term durable solution. Finally, when comparing design alternatives, TEMUS encourages the CAISO to evaluate not only engineering efficiency but also how each approach supports market liquidity, provides tradeable hedging instruments, and positions EDAM for scalable expansion as additional Balancing Area Authorities (BAAs) join.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

TEMUS appreciates TEA’s expertise and sustained engagement in this and other EDAM initiatives, as well as TEA’s willingness to suggest and present design alternatives.

There is no single reform that will resolve the problem statement for this initiative. Rather, a series of improvements—implemented in sequence and guided by a clear roadmap—is the most pragmatic path toward the ultimate goal of marrying physical and financial rights across the entire EDAM footprint.

TEMUS strongly recommends that the CAISO consider including TEA’s suggested near-term improvements into the Phase 2 roadmap as explicit implementation milestones.

There is no one step that will resolve the problem statement for this initiative: rather, there are a number of improvements that could be made towards the ultimate goal of marrying physical and financial rights across the entire EDAM footprint.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

TEMUS agrees with other stakeholders that Design Concept #1 does not provide a meaningful trajectory toward the conversion of physical to financial transmission rights and should not be adopted as the long-term design direction.

While Design Concept #1 may improve congestion revenue funding for the CAISO BAA in certain respects, it also raises the same equity questions that arose regarding the originally filed CRA design for all EDAM entities beyond PacifiCorp. As the CAISO has acknowledged these issues must eventually be addressed for the broader EDAM footprint.

TEMUS urges the CAISO not to allow a design that merely shifts the problem to future participants.

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

TEMUS is concerned that Design Concept #2 would create “winners and losers” based on timing and historical contract paths rather than cost causation or actual system contribution.

A baseline calibrated to historical usage would benefit entities with established transmission positions under prior market conditions, while penalizing newer participants that have adapted their transaction patterns in response to market signals. This is contrary to cost causation principles and it is inconsistent with competitive market

Design Concept #2 also risks creating perverse incentives going forward: market participants who anticipate a future baseline-setting period may have incentives to increase physical transmission usage during that period regardless of economic efficiency, in order to secure a larger allocation of congestion revenue. This dynamic could exacerbate the self-scheduling problem.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

TEMUS supports further exploration in future workshops of Design Concept #3, as it holds the most promise as the basis for a long-term CRA design and is most consistent with the Phase 2 design principles. By aligning rights with actual system capability rather than historical schedules or contract paths, Design Concept #3 provides the structural foundation necessary for a transition from physical to financial transmission rights.

Financial rights that reflect actual system capability are tradeable, priceable, and hedgeable—enabling market participants to manage congestion exposure through instruments with forward value, rather than through physical self-schedules that distort market outcomes. This is consistent with the experience of other organized markets. As other stakeholders have commented, every North American electricity market that has successfully implemented Locational Marginal Pricing (LMP)-based dispatch has ultimately had to transition from physical OATT rights to some form of allocated financial rights in order to avoid uneconomic self-scheduling and ensure equitable treatment of all market participants.

Design Concept #3’s flexibility to accommodate changes in the EDAM footprint is a critical advantage given the ongoing expansion of EDAM participation. A rights framework tied to system capability rather than bilateral contract paths can scale naturally as additional BAAs join EDAM, avoiding the need for structural redesign each time the footprint changes.

TEMUS acknowledges that the implementation of Design Concept #3 will require careful attention to several questions, including: how rights are initially allocated across EDAM entities and legacy OATT transmission customers; how the simultaneous feasibility test (SFT) is applied across BAA boundaries; how revenue adequacy is maintained for CAISO Congestion Revenue Rights (CRR) holders as the design transitions; and how the resulting financial instruments are made accessible to non-TOR market participants, including energy marketers. TEMUS encourages the CAISO to engage stakeholders on these implementation details through the upcoming workshop sessions.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

Finally, TEMUS offers the following additional thoughts:

Interdependency with the CRR Enhancements Initiative

Given the close interdependency between the CRA Phase 2 and CRR Enhancements initiatives, TEMUS recommends that the CAISO develop a coordinated analytical framework that evaluates proposed CRA designs in light of their interaction with shift factor limits and the enhancements recommended in the CRR initiative. The Stage 2 Analysis Paper presents a useful starting point, but stakeholders would benefit from modeling that explicitly captures how different CRA approaches affect CRR revenue adequacy, auction feasibility, and underfunding levels at key constrained facilities. As noted previously, constraints such as Path 26 and Gates-Midway have experienced significant underfunding attributable in part to parallel flows—a problem that CRA design and CRR auction rules must address jointly.

Revenue Adequacy

TEMUS supports the addition of CRR revenue adequacy as an explicit Phase 2 design principle. The financial integrity of the CRR product is foundational to its usefulness as a hedging instrument. As Underfunding of CRRs associated with parallel flows from EDAM entities reduces the forward value of CRRs and impairs their use as delivery hedges for contracted resources. Without revenue adequacy, energy marketers and load-serving entities cannot rely on CRRs to hedge congestion risk effectively, which in turn reduces market liquidity and increases the incentive to self-schedule.

Scalability Across the EDAM Footprint

TEMUS urges the CAISO to ensure that any near-term or long-term CRA design is explicitly evaluated for scalability as EDAM grows beyond the initial PacifiCorp-CAISO footprint. A design that addresses the bilateral CAISO-PacifiCorp relationship but creates new asymmetries or bottlenecks for future entrants—such as Idaho Power, LADWP, or potential new EDAM members—will require costly redesign and may chill participation. Market designs must supports open, non-discriminatory access for the full range of market participants across WECC.

Market Liquidity

The current EDAM design, by limiting economic bidding at interties and not enabling convergence bidding, restricts the pool of participants who can engage actively in the day-ahead market. Energy marketers play a critical role in providing price discovery, risk management, and liquidity across the EDAM footprint. A long-term CRA design that includes tradeable financial rights—issued through an allocation and auction process analogous to the CAISO’s existing CRR system—would allow energy marketers to participate in secondary markets for transmission rights, deepening market liquidity and improving price signals. TEMUS encourages the CAISO to consider how the long-term CRA design can support the development of a secondary market for congestion revenue rights across EDAM.

Process and Roadmap

The CAISO should create a draft roadmap identifying: (1) which near-term improvements (including those recommended by TEA) can be advanced without a FERC tariff filing and within what timeframe; (2) which changes require a FERC filing and the anticipated filing schedule; and (3) the analytical milestones and decision points for the long-term design. Clarity on process and timing will allow market participants to provide more targeted input at each stage of the initiative.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group held on April 17, 2026.

We appreciate the continued engagement from CAISO and stakeholders as the initiative moves from high-level principles into evaluation of specific design alternatives. The April 17 working group was a constructive step in that progression and helped frame the key tradeoffs that will need to be addressed as Phase 2 develops.

At a high level, we believe the Phase 2 effort should remain focused on several core objectives:

• Ensuring congestion revenue allocation aligns with cost causation principles
• Preserving the value and functionality of existing transmission rights frameworks
• Reducing or eliminating inefficient self-scheduling incentives
• Supporting efficient market outcomes, including price formation and liquidity
• Developing a design that is durable as additional EDAM entities join

We also encourage CAISO to consider the sequencing of changes. There is clear value in identifying near-term enhancements that can improve outcomes ahead of a full long-term redesign, provided those enhancements are consistent with and supportive of the eventual end-state.

2. Please provide your organization’s overall feedback regarding The Energy Authority’s presentation.

We appreciate TEA’s presentation and the emphasis on grounding the discussion in how transmission rights function across the broader western footprint outside of CAISO. That context is critical as stakeholders evaluate how different design alternatives will impact not only congestion revenue allocation, but also the underlying economics of transmission usage and bilateral contracting and transactions.

The presentation effectively highlights the important distinctions between the different flavors of transmission rights, including CRRs, and how those differences translate into varying use cases, constraints, and value streams. This is particularly important given that EDAM is attempting to bridge fundamentally different frameworks, and any durable solution must respect those differences rather than abstract them away.

We strongly encourage CAISO and stakeholders to more fully evaluate the design enhancements TEA identified. These proposals should not be viewed as alternatives to CAISO’s Design Concepts #1 through #3, but rather as complementary elements that could be layered into those frameworks. Several of these ideas, such as PTP carve-outs, economic intertie bidding, and improved intertie modeling, could have value beyond congestion revenue allocation and could meaningfully improve overall market performance.

Importantly, we see an opportunity to implement some of these enhancements in the near term. Doing so could provide immediate benefits while also helping to inform and support the development of a longer-term solution. To the extent possible, these near-term changes should be designed so they do not need to be unwound later, but instead serve as building blocks toward the final design.

3. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #1.

While we appreciate the intent behind Design Concept #1, we do not believe it sufficiently addresses the core issue of self-scheduling incentives. Because congestion revenue allocation remains tied to cleared schedules, participants continue to have strong incentives to ensure those schedules clear. In practice, this can lead to either continued reliance on self-scheduling or bidding behavior that is designed primarily to guarantee dispatch rather than reflect true economic costs.

This dynamic risks perpetuating inefficient outcomes, including distorted price signals and reduced effectiveness of market-based dispatch. Although the concept may improve symmetry relative to the Phase 1 design, it does not appear to resolve the underlying incentive misalignment that stakeholders have previously identified.

For these reasons, we view this concept as an incremental improvement at best, but not a sufficient long-term solution. We would be open to further discussions around if this option could be used as an immediate short term improvement while we work on the long-term solution. 

4. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #2.

Design Concept #2 introduces a historical baseline framework that, in theory, reduces reliance on real-time self-scheduling behavior and therefore mitigates self-scheduling incentives. However, it raises concerns regarding equity and long-term market functionality.

By establishing a baseline, the design creates a distinction between rights that fall within the baseline and those that do not. Rights outside the baseline appear likely to receive treatment more akin to the earlier EDAM design that was ultimately revised, which could reintroduce some of the same concerns that led to the current transitional approach.

More broadly, anchoring outcomes to historical useage risks creating a system that is backward-looking rather than adaptable to future changes. As EDAM evolves and new entities join, this type of framework could introduce complexity, reduce flexibility, and create disparities that are difficult to justify over time.

While we recognize the appeal of a baseline approach for providing stability, we are concerned that it may ultimately represent a step away from developing a more durable, forward-looking solution.

5. Please provide your organization’s overall feedback regarding CAISO’s introduced Design Concept #3.

At this stage, Design Concept #3 appears to offer the most promising foundation for a long-term solution. The use of a simultaneous feasibility test to establish congestion revenue entitlements alongside CRRs represents a more principled and systematic approach to aligning rights with actual system capability.

This framework has the advantage of treating CRRs and OATT transmission rights more consistently, while also tying congestion revenue allocation to modeled system capability rather than realized scheduling behavior. In doing so, it more directly addresses the incentive issues present in the current design and moves toward a structure that is both more transparent and more economically efficient.

6. Please provide any additional feedback not already captured, including consideration of any additional issues to address, variations to the introduced concepts or new concepts to consider.

We strongly encourage CAISO and stakeholders to pursue both near-term improvements and long-term design development in parallel. There are clear opportunities to make targeted enhancements in the near term that address known issues and improve market performance, even as work continues on a more comprehensive solution.

In particular, several of the enhancements identified in TEA’s presentation appear well-suited for earlier implementation and could provide meaningful benefits not only for congestion revenue allocation, but also for broader market efficiency. These types of changes should be evaluated alongside the long-term design concepts, rather than deferred.

At the same time, it is important that the long-term solution remain the central focus. Any near-term changes should be assessed in terms of how well they align with and support that eventual framework. A coordinated approach that integrates both tracks will be critical to ensuring a smooth transition and avoiding unnecessary rework.

Overall, we encourage continued openness to combining elements from multiple proposals, as the most effective solution will likely draw from a range of stakeholder perspectives rather than relying on any single concept in isolation.