Comments on Draft TEAM document and 9/17 meeting

1. Please provide your organization’s comments on the Draft 2026 Transmission Economic Assessment Methodology document and September 17 meeting.

I. Summary

The Bay Area Municipal Transmission Group (BAMx)[1] appreciates the opportunity to comment on the CAISO’s proposed revision to the congestion revenue allocation approach in the Transmission Economic Assessment Methodology (TEAM)[2], and thanks CAISO staff for the presentation, dated September 17, 2026.[3]

BAMx understands and supports the motivation for the change. Under the ownership-based approach in place since 2005, CAISO ratepayers are credited with the entirety of the congestion rent collected on CAISO-operated facilities, including the portion associated with flows serving load outside the CAISO.[4] When an upgrade relieves that congestion, the full rent is removed from the benefit calculation while the offsetting reduction in load payment reflects only the CAISO’s own share. That asymmetry can cause a genuinely beneficial project to score poorly, and correcting it is a legitimate objective.

BAMx’s comments are directed at a single question: does the revised approach correctly measure benefits to CAISO ratepayers, who fund these projects? If it does, BAMx supports it. If it overstates those benefits, the consequence is that CAISO ratepayers could fund projects that are not in fact economic to them — and on the record presented, that consequence would not be hypothetical. The Path 15 alternative in the CAISO’s own example moves from a benefit-to-cost ratio of 0.81 to 3.24[5], and Appendix G of the Revised Draft 2025-2026 Transmission Plan (Appendix G, hereafter)[6] indicates that nearly all Path 15 alternatives cross the approval threshold under the revised approaches.[7]

BAMx does not believe the record yet provides adequate support for its proposal on that question. In the CAISO’s own example, the measured benefit to CAISO ratepayers is approximately twice the total production cost savings available to the entire Western Interconnection. BAMx requests that the CAISO either demonstrate why that outcome is a correct measure of ratepayer benefit to the funders of the proposed project, or adopt a check that prevents the measured benefit from exceeding the actual project savings.

II. The Core Concern: The Measured Benefit Exceeds the Savings the Project Produces

BAMx has replicated both September 17, 2026 examples from Appendix G. Example 1 corresponds to Tables G.9-13 and G.9-14 (Path 15 corridor); Example 2 corresponds to Tables G.9-17 and G.9-18.[8] The replication isolates the mechanism. For Example 1, the gross benefit — the reduction in CAISO load payment less the reduction in CAISO generator profit[9] — is approximately $1,398 million per year and is identical under all three approaches. Total WECC production cost savings are likewise identical at approximately $383 million per year. The dispatch, the flows, and the real resource savings do not change across the approaches. What changes is only how much congestion revenue is credited to CAISO ratepayers, and therefore how much is deducted:[10]

Production cost savings represent the real resource savings created by the project. Under the revised approach, CAISO ratepayers are credited with roughly twice that amount. Because transfers internal to the CAISO are already netted out in the generator profit term, the excess does not appear to be  an internal transfer; it appears to represent a transfer from parties outside the CAISO, recorded as a benefit to CAISO ratepayers.

BAMx acknowledges that a transfer to CAISO ratepayers is a real financial benefit to CAISO ratepayers, and that the ratepayer perspective is the correct lens for a ratepayer-funded project. BAMx’s concern is narrower, that is, a benefit measure untethered from what the project actually saves can be large even when the project is not economic, because the measure rewards the redistribution of rent rather than the reduction of cost. Under the current methodology, the ownership-based deduction constrained that result, crudely but effectively. BAMx is unsure that the revised approach captures how the congestion revenues will be allocated in practice.

This matters because the effect is outcome-determinative across a broad set of projects, not just the illustrative example. Appendix G reports that “all alternatives, except for Alternative 2, showed benefit to cost ratios greater than 1.0 when the new congestion revenue allocation approaches were used,”[11] and indicates that the CAISO will consider recommending Alternative 6 for approval in the 2026-2027 TPP planning cycle.[12] A methodological refinement with a significant impact on the approval threshold warrants a demonstration that the new measure is sound.

III. The Baseline Used in Example 1 Should Be Identified

The “Pre upgrade” row presented on Slide 10 of the CAISO’s September 17, 2026 presentation corresponds to Alternative 1 in Table G.9-13 — the addition of 70% series compensation on the Gates – Los Banos #3 500 kV line — and not to the 2040 base portfolio case.[13] This is consistent with Appendix G, which states that the production cost savings for alternatives other than Alternative 1 “were calculated by using Alternative 1 as the base, since all these alternatives included the scope of Alternative 1,” and that the costs used in the benefit to cost ratio calculation for those alternatives “did not include the cost of Alternative 1.”[14]

BAMx does not object to the incremental convention. The Path 15 alternatives are nested, and Alternative 6 includes the full scope of Alternative 1, so measuring Alternative 6 against the unmitigated base case while excluding Alternative 1’s cost would mismatch benefits and costs.[15] The convention is also reasonable in context because Alternative 1 is separately recommended for approval as an economic-driven upgrade and therefore functions as a committed baseline for the next planning cycle.[16]

BAMx notes, however, that Slide 11 uses the identical label “Pre upgrade” to denote the actual 2040 base portfolio case.[17] The two examples therefore apply different reference cases under the same label, and a reader without Appendix G at hand would reasonably understand both to be measured against an unmitigated system. BAMx requests that the CAISO identify the reference case expressly wherever these results are presented, and state whether the reported project cost includes or excludes the cost of the reference alternative.

IV. CAISO Has Not Provided Adequate Support for its Proposal

Following the September 17 meeting, the CAISO identified Appendix G as containing the underlying data. BAMx has reviewed it. Appendix G permits replication of the reported totals, and Section G.3 provides the financial parameters underlying the benefit-to-cost calculations, which BAMx considers sufficient.[18] BAMx appreciates both.

However, Appendix G reports congestion rent only in total by constraint.[19] It contains no allocation of that rent among areas under any of the three approaches, no flow contribution factors, and no counter-flow accounting.[20] Because the allocation is the entire mechanism of the proposed change, the published record does not allow a stakeholder to test whether the revised measure is correct — only to confirm that the totals add up.

Specifically, the CAISO does not explain how approximately $1,065 million of base-case congestion revenue is reattributed away from CAISO ratepayers in Example 1, which areas receive it, or why the resulting ratepayer benefit should exceed total production cost savings.[21] BAMx notes that the CAISO has acknowledged that under the revised approach congestion revenue on CAISO internal constraints is only partially allocated to CAISO ratepayers.[22] But CAISO does not explain how that could be affected by proposed changes to congestion revenue allocation and thus whether the proposed approach is expected to be a durable basis for determining whether CAISO ratepayers should fund a project.

Specifically, BAMx requests that the CAISO explain how the proposed TEAM treatment relates to its treatment of congestion revenue in the Extended Day-Ahead Market (EDAM). Under the EDAM design, congestion revenue is allocated based on the location of the transmission constraint, with exceptions for self-scheduled transactions using transmission rights external to CAISO, so not all congestion arising on a constraint located within the CAISO balancing authority area is allocated to CAISO.[23] The revised TEAM approach appears to attempt to recognize the current EDAM approach, attributing a substantial portion of the congestion revenue arising on CAISO internal constraints away from CAISO ratepayers on flow contribution.[24] However, the EDAM congestion revenue allocation approach may change to address asymmetries in treatment for non-CAISO BAAs vs. CAISO.[25] BAMx observes that flow contribution is a reasonable organizing principle and has said so in the EDAM context,[26] but only if it aligns with how congestion revenues actually are allocated. The difficulty is not the principle but the coexistence of two different premises for the same congestion rent: the amount the CAISO is projected to receive under one construct is used to determine whether CAISO ratepayers should fund a project, while the amount actually allocated under the other construct may differ materially. BAMx requests that the CAISO address this relationship expressly, state whether the revised TEAM attribution is intended to capture only the current EDAM approach or whether it would be modified to address future changes in EDAM settlement, and confirm that the benefit measure used in the transmission planning process will remain reconcilable with the congestion revenue the CAISO balancing authority area is in fact allocated.[27] BAMx raises this to ensure the two initiatives proceed on a consistent factual basis.

V. Data and Analysis Requested

BAMx has narrowed its request to what is necessary to answer the core concern described in Section II above. BAMx requests that the CAISO post the following:

• Reconciliation of ratepayer benefit to production cost savings. For Example 1, an explanation of the components of the $1,398 million gross benefit, identifying how much represents production cost savings accruing to CAISO ratepayers and how much represents a transfer of rent from parties outside the CAISO, and the CAISO’s view on why the resulting measure is an appropriate basis for ratepayer-funded approval.
• Allocation bridge by constraint. For the Path 15 Alternative 1 and Alternative 6 cases, congestion revenue by binding constraint under each approach, reconciling to the CAISO transmission revenue totals in Table G.9-13. This will help with explaining the reattribution.
• Flow contribution factors and counter-flow treatment. The net positive flow contribution factors by area and constraint for the constraints in Table G.9-10[28], together with the gross positive, gross negative, and net contribution by area, and a statement of how rent otherwise attributable to areas providing counter-flow is treated and whether the denominator sums to unity.
• Settlement reconciliation. For one or more recent settled years, a comparison of congestion revenue actually credited to the Transmission Revenue Balancing Account on PTO-owned facilities against the amount the revised approach would attribute to CAISO ratepayers, so that the analytical measure can be compared to amounts ratepayers actually receive.[29]

VI. Recommendations

BAMx is not asking the CAISO to defer the TEAM update pending completion of the EDAM CRA Phase 2 initiative; the revised flow-contribution approach appears consistent with the congestion revenue allocation rules currently in effect under EDAM. BAMx’s recommendations are instead directed at ensuring that consistency is confirmed and that it is maintained as those rules evolve. BAMx recommends the following:

• Demonstrate that the revised flow-contribution approach, as proposed to be applied to constraints within CAISO territory, is consistent with the congestion revenue allocation rules currently in effect under the Extended Day-Ahead Market.
• Commit to updating the TEAM methodology and consider whether the economic viability of any project approval that materially relied on the basis of the interim measure should be revisited where practicable, if and when the EDAM congestion revenue allocation methodology is changed through the EDAM CRA Phase 2 initiative or otherwise.[30]
• State expressly in the TEAM document how counter-flow contributions are treated, how areas and embedded load are defined, and how the allocation factors are computed and weighted, so that the methodology is reproducible by parties other than the CAISO.
• Reconcile the TEAM document with current practice regarding the capital cost to revenue requirement screening factor, which Appendix G applies as 1.3 while the TEAM document continues to reflect 1.45.[31]

[1] The members of BAMx are City of Palo Alto Utilities and City of Santa Clara, dba Silicon Valley Power.

[2] CAISO, Transmission Economic Assessment Methodology (TEAM) Draft Update, September 10, 2026 (Revision 3.0), Revision History and Section 2.4.3, pp. 22-23.

[3] CAISO, 2026 Transmission Economic Assessment Methodology (TEAM) Document Update, Stakeholder Meeting Presentation, September 17, 2026 (“September 17 Presentation”).

[4] TEAM Draft Update, September 10, 2026, Section 2.4.3, p. 22 (“Ownership is used to indicate which transmission’s revenue and generator’s profit will be counted to offset ratepayer’s payment…”). TEAM was first proposed by the CAISO in 2004 and approved by the CPUC in 2005. See id., Revision History (Revision 1.0) and Executive Summary, Section ES.1.

[5] September 17 Presentation, Slide 10 (Example 1 — Path 15 corridor study in 2025-2026 TPP cycle).

[6] CAISO, Revised Draft 2025-2026 Transmission Plan, Appendix G: Production Cost Simulation and Economic Assessment Detailed Results, May 12, 2026 (“Appendix G”).

[7] Appendix G, p. G-70.

[8] September 17 Presentation, Slides 10 and 11; Appendix G, Tables G.9-13 and G.9-14 (Path 15 corridor, pp. G-68 to G-70) and Tables G.9-17 and G.9-18 (Las Aguilas — Moss Landing).

[9] September 17 Presentation, Slide 6. Net load payment = CAISO’s Gross load payment – CAISO’s Generator profit – CAISO’s Transmission revenue. See also TEAM Draft Update, September 10, 2026, Section 2.4.3, p. 22.

[10] Appendix G, Table G.9-13, p. G-68 (Alternative 1 and Alternative 6 rows) and Table G.9-14, pp. G-69 to G-70 (Alternative 6 row). Figures in the table are as reported by the CAISO; minor differences from direct subtraction reflect rounding in the published values.

[11] Appendix G, p. G-71 (“In the longer term, all alternatives, except for Alternative 2, showed benefit to cost ratios greater than 1.0 when the new congestion revenue allocation approaches were used.”).

[12] Appendix G, p. G-71 (“The ISO will consider recommending this alternative for approval in the next planning cycle after conducting bulk system reliability assessment…”). Nineteen transmission alternatives were assessed for mitigating congestion on the Path 15 corridor. See Appendix G, pp. G-64 to G-65 and Table G.9-14.

[13] Appendix G, Table G.9-13, p. G-68. The “Pre upgrade” row on Slide 10 reports CAISO load payment of $20,121 million, CAISO generator profit of $11,207 million, and CAISO transmission revenue of $3,453 million / $2,388 million / $2,667 million, which correspond to the Alternative 1 row. The base case row reports $20,718 million, $11,388 million, and $3,845 million / $2,629 million / $2,922 million.

[14] Appendix G, p. G-69 (“The production cost savings of Alternative 1 were the base case’s ISO net payment minus the Alternative 1 case’s ISO net payment. For the rest of alternatives, the production cost savings were calculated by using Alternative 1 as the base, since all these alternatives included the scope of Alternative 1. Correspondingly, the costs of these alternatives used in the benefit to cost ratio calculation did not include the cost of Alternative 1.”).

[15] Appendix G, pp. G-64 to G-65. Alternative 4 is Alternative 1 plus a new Midway – Tesla 500 kV line; Alternative 5 is Alternative 4 plus a new Windhub – Midway 500 kV line; and Alternative 6 is Alternative 5 plus the new line ties to Gates. The CAISO applied the same incremental convention in the Path 26 assessment, calculating savings for Alternatives 9 and 10 using Alternative 4 as the base. See Appendix G, p. G-59.

[16] Appendix G, p. G-71 (recommending Alternative 1 for approval as an economic-driven upgrade).

[17] September 17 Presentation, Slide 11 (Example 2 — Las Aguilas – Moss Landing study in 2025-2026 TPP cycle); Appendix G, Table G.9-17.

[18] Appendix G, Section G.3, Financial Parameters Used in Cost-Benefit Analysis. A 7% real discount rate was used, with a 40-year economic life assumed for reconductoring and 50 years for new lines. See also Appendix G, p. G-69.

[19] Appendix G, Sections G.7.1 and G.7.2, Tables G.7-1, G.7-5, and G.7-9 (congestion cost and duration by constraint in the base portfolio cases), and Tables G.9-4, G.9-11, and G.9-12 (congestion cost by mitigation alternative). The “Cost Forward” and “Cost Backward” columns in these tables describe the direction of flow on the constrained element and do not report area-level contributions.

[20] September 17 Presentation, Slide 8. Congestion revenue benefitting CAISO ratepayers is the summation of the congestion revenue allocated to each CAISO load area (PG&E, SCE, SDG&E, and VEA), based on the net positive flow distribution factors of areas to the constraint.

[21] Appendix G, Table G.9-13, p. G-68. Base-case CAISO transmission revenue falls from $3,845 million under the ownership-based approach to $2,629 million under the revised approach applied to CAISO constraints, a difference of approximately $1,216 million. The corresponding reattribution measured from the Alternative 1 row is approximately $1,065 million ($3,453 million to $2,388 million).

[22] Appendix G, Section G.2.4 and Revised Draft 2025-2026 Transmission Plan, Section 4.2.2 (“With the revised flow contribution-based approach, congestion revenue on ISO internal constraints is only partially allocated to ISO’s ratepayers, even though ISO’s PTOs may have 100% ownership on the transmission lines.”).

[23] CAISO, Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation, Draft Final Proposal, April 16, 2025, at pp. 10-11 and p. 26 (describing allocation of internal congestion revenue and parallel flow congestion revenue “based on the location of the transmission constraint”).

[24] See Appendix G §G.2.4 and Revised Draft 2025-2026 Transmission Plan, where CAISO states that “With the revised flow contribution-based approach, congestion revenue on ISO internal constraints is only partially allocated to ISO’s ratepayers, even though ISO’s PTOs may have 100% ownership on the transmission lines.”

[25] Even under a revised design, congestion attributable to parallel flows from non-EDAM parties is likely to remain unfunded by any party.

[26] See id. at pp. 10-11 (summarizing the BAMx-suggested option under which parallel flow congestion revenues associated with a transmission constraint are allocated to balancing areas “in proportion to the balancing area’s contribution to the parallel flows”).

[27] CAISO, EDAM Congestion Revenue Allocation Phase 2 – Stakeholder Working Group Meeting, July 28, 2026. The Phase 2 initiative remains under development, and the treatment of parallel flow congestion revenue is among the matters still being considered.

[28] Appendix G, Table G.9-10, p. G-66 (Path 15 corridor constraints).

[29] Appendix G, Table G.9-14, pp. G-69 to G-70.

[30] Revised Draft 2025-2026 Transmission Plan, Section 4.2.2 (“In this planning cycle, production cost benefit calculations were performed on the current ownership-based congestion revenue allocation approach and the revised approach. The ISO considered these results on a case-by-case basis to understand the implications on the viability of economic-driven projects. The ISO will update the congestion cost revenue allocation in TEAM in 2026.”).

[31] September 17 Presentation, Slide 15 (Schedule).

1. Please provide your organization’s comments on the Draft 2026 Transmission Economic Assessment Methodology document and September 17 meeting.

 Golden State Clean Energy, LLC (“GSCE”) supports the California Independent System Operator’s (“CAISO”) proposed updates to the Transmission Economic Assessment Methodology (“TEAM”). GSCE agrees that a change from an ownership-based approach to a flow contribution-based approach will improve the economic assessment in CAISO’s transmission planning process. The current ownership-based approach tends to negate the congestion relief benefits provided by a new transmission facility being considered in the economic assessment because the existing TEAM would see that congestion relief as a loss of congestion revenue for ratepayers, which on balance leads the economic assessment to not see sufficient value in reducing congestion. GSCE agrees with statements made during the September 17, 2026, workshop that the current ownership-based approach distorts the benefits of congestion relief. Considering the analysis provided in the 2025-2026 Transmission Plan using both the ownership-based approach and a flow contribution-based approach, the flow contribution-based approach seems to better capture the value of congestion relief and therefore enable projects that provide congestion relief to be better considered in the economic assessment. Therefore, GSCE supports CAISO’s proposed adoption of a flow contribution-based approach. Further, flow contribution-based approach S1 appears to be reasonable considering its focus on CAISO and its ratepayers.

GSCE appreciates CAISO examining the TEAM in the 2025-2026 transmission planning process and engaging stakeholders on this proposal. GSCE supports CAISO moving forward and seeking Board approval at the upcoming October meeting.

1. Please provide your organization’s comments on the Draft 2026 Transmission Economic Assessment Methodology document and September 17 meeting.

LS Power appreciates the opportunity to comment on CAISO’s proposed updates to the Transmission Economic Assessment Methodology (“TEAM”). LS Power supports the proposed revision to the congestion revenue allocation methodology and offers the following comments regarding its application to interregional projects and transmission entitlements.

CAISO has recommended a flow-contribution-based approach that would allocate congestion revenue arising from constraints within CAISO territory to CAISO ratepayers based on each area’s net positive flow contribution to those constraints. CAISO should clarify how this approach would apply to an interregional project that is jointly planned, funded, owned, or shared with another balancing authority area (“BAA”), as well as to facilities located in another BAA that are subject to CAISO operational control or from which CAISO holds capacity entitlements. Such projects or facilities may relieve constraints on both sides of a BAA seam, create parallel flows across multiple systems, and provide different capacity entitlements to participating entities. Consequently, the physical location of a constraint may be an insufficient basis for measuring the benefits an interregional project provides to CAISO ratepayers.

The examples presented by CAISO show no material difference between the two flow-based approaches examined. However, those examples do not test the circumstance in which the approaches are most likely to diverge: a project that materially changes congestion on constraints outside CAISO territory. Before treating the two approaches as functionally equivalent, CAISO should evaluate at least one interregional or import-enabling project. If CAISO determines that a particular class of projects warrants different treatment, the applicable criteria should be defined in TEAM in advance and applied consistently.

For interregional projects, CAISO should model the contractual or reasonably anticipated capacity entitlement available to each BAA or rights holder. CAISO should separately quantify the benefits attributable to CAISO ratepayers and the project’s total regional benefits, compare CAISO ratepayer benefits with the portion of project costs allocated to those ratepayers, and explain how benefits occurring on both sides of the seam will be treated without omission or double counting. Where ownership, cost allocation, or capacity entitlements have not been finalized, CAISO should evaluate reasonable sensitivities.

Given the material effect these assumptions can have on a project’s benefit-cost ratio, LS Power recommends that CAISO expressly address shared paths, interregional projects, and transmission entitlements in TEAM rather than leaving their treatment to case-by-case discretion.

1. Please provide your organization’s comments on the Draft 2026 Transmission Economic Assessment Methodology document and September 17 meeting.

Pacific Gas and Electric Company (PG&E) appreciates the opportunity to comment on the CAISO’s proposed modifications to the Transmission Economic Assessment Methodology (TEAM). PG&E supports accurately modeling the operations and economics of the transmission system. A more accurate representation of system operations and market economics should improve the identification and evaluation of economic transmission needs and result in a better set of economic transmission projects being approved through the CAISO transmission planning process. PG&E offers the following comments in response to CAISO’s proposed updates to the TEAM.

1. PG&E Supports the Proposed Flow-Contribution Method for Modeling the Allocation of Congestion Revenue

PG&E supports CAISO’s proposed change to the method used in TEAM to allocate congestion rents (revenue). PG&E understands that the current method allocates congestion revenue based solely on transmission ownership. Under that approach, in the base case (without the proposed transmission project), the transmission owner is assumed to collect all congestion rents associated with its facilities. This assumption may negate some of the modeled benefit of the transmission project/upgrade.

Although the LSE associated with the PTO may be allocated CRRs, it does provide a complete hedge against congestion costs. LSEs other than the PTO’s associated LSE may receive CRRs on the same path through the CAISO’s CRR allocation process. In addition, LSEs may nominate only a portion of their load for CRR allocation. Accordingly, CAISO LSEs, in aggregate, would not necessarily collect 100 percent of the congestion rents that exists before the project/upgrade.

The CAISO proposes to allocate congestion revenue based on positive flow contribution. PG&E believes this approach more accurately represents how different LSEs or regions within the CAISO may be allocated CRRs and, therefore, may receive congestion revenue in the pre-project case. Although the proposal may not perfectly represent the collection and allocation of congestion revenue, it is an improvement over the current transmission-ownership-based method. PG&E therefore supports the proposed change.

2. PG&E Recommends Further Improvements to TEAM Modeling Assumptions.
3. 1. Model WEIM and EDAM for All Economic Transmission Projects

PG&E recommends that TEAM model the WEIM and EDAM for all economic project assessments. WEIM and EDAM provide significant benefits to California, and excluding the benefits of these extended markets may skew the economic assessment of a proposed transmission project.

PG&E understands that the current methodology models the WEIM footprint only for interregional transmission projects. However, WEIM and EDAM affect flows on the CAISO-controlled grid across all hours. Their effects are not limited to projects categorized as interregional. The CAISO should therefore model the relevant WEIM and EDAM footprint in all cases for all economic transmission assessments so that TEAM captures the market footprint and system flows expected to exist over the study horizon.

1. 2. Model Ambient-Adjusted Ratings (AAR) in Economic Studies.

PG&E also recommends that the CAISO incorporate AAR into the TEAM. FERC Order 881 requires the use of AAR, and the CAISO is implementing the market and operational changes necessary to comply with that requirement. PG&E understands that the CAISO expects to begin using hourly-adjusted AAR in 2027, which will affect modeled transmission capability, congestion, dispatch, and power flows, and therefore may materially affect the economic benefits attributed to a proposed transmission project.

While it is not appropriate to use AAR for reliability studies in the TPP, for  economic studies, however, the purpose is to represent expected system operations and market outcomes as accurately as practicable. PG&E therefore believes it is appropriate for the CAISO to include and model AAR in TEAM economic assessments.

3. Conclusion

PG&E supports CAISO’s efforts to improve TEAM and supports the proposed flow-contribution approach for allocating congestion revenue. PG&E also recommends that the CAISO further improve the methodology by modeling WEIM and EDAM for all economic transmission projects and by incorporating AAR ratings into economic studies.

1. Please provide your organization’s comments on the Draft 2026 Transmission Economic Assessment Methodology document and September 17 meeting.

Viridon California LLC (Viridon), through its subsidiaries, constructs and owns transmission facilities and entitlements on the CAISO-controlled grid.  Viridon appreciates CAISO’s review of and efforts to update the TEAM methodology as the Western grid continues to evolve and the generation mix serving CAISO load changes.

Viridon supports CAISO’s use of the S1 methodology (flow contribution-based congestion revenue allocation, Draft TEAM Update Section 2.4.3) for its economic evaluations in the Transmission Planning Process (TPP).

The CAISO has indicated that the current methodology is outdated, especially in light of the evolution of the Western Markets with EDAM.[1] Other Balancing Authority Areas’ flows impact CAISO constraints; this has been demonstrated by the Department of Market Monitoring’s analysis and by CAISO staff evaluations of the congestion impact of non-CAISO member’s flow impact on CAISO constraints.[2] Modifying the TEAM methodology with the method indicated by S1 will allow the CAISO to evaluate the merits of potential economic transmission upgrades without the Production Cost Modeling results being biased by implied adverse congestion losses associated simply with ownership share.

Under the current approach, any reduction in congestion on a CAISO-owned facility is counted as a lost revenue to CAISO ratepayers, regardless of whose flows caused the congestion[3]. As a result, upgrades that lower total production cost can show a negative ratepayer benefit. CAISO’s own testing illustrates this result: both generic upgrades presented at the November 19, 2025 stakeholder meeting reduced WECC production cost but showed negative ratepayer benefit under S0 and positive benefit under S1[4]. Because the most congested facilities carry the most congestion revenue, S0 penalizes relief hardest where congestion is highest, which allows that congestion to accumulate from cycle to cycle without an economic solution.

The transition away from S0 is particularly important as the generation fleet serving CAISO increasingly consists of renewable generation that produces energy at or close to $0/MWh marginal cost. Historically when the generation fleet was primarily gas-fired resources, transmission upgrades could have produced significant fuel savings and reductions in costs to serve load. In the current market environment, however, much of an upgrade’s benefit comes from reduced congestion rather than fuel savings. Thus, a method that nets lost congestion revenue against ratepayer benefits, regardless of whose flows contribute to the congestion, systematically undervalues the benefit of such upgrade.

Viridon appreciates that the CAISO has tracked and compared outcomes produced by the current approach as well as S1 and S2 alternatives in the 2025-2026 TPP cycle. Viridon encourages the CAISO to implement S1 for use in its 2026 – 2027 TPP cycle.

Viridon supports the CAISO’s adoption of the proposed S1 methodology. By appropriately accounting for the flows contributing to congestion, S1 will allow CAISO to more accurately value congestion relief, identify cost-effective opportunities to optimize the transmission system, and maximize benefits to ratepayers.

[1] 2025-2026 Transmission Planning Process - Sept.25, 2025 stakeholder meeting, pages 56-58: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-2025-2026-TransmissionPlanningProcess-Sep2525.pdf; Draft TEAM Update Section 2.4.3: https://stakeholdercenter.caiso.com/InitiativeDocuments/Transmission-Economic-Assessment-Methodology-TEAM-Draft-Update-Sep-10-2026.pdf

[2] See, for example, DMM’s July 28, 2026 presentation regarding congestion cost for the EDAM footprint (https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Congestion-cost-analysis-Jul-28-2026.pdf))

[3] 2025-2026 Transmission Planning Process - Sept. 25, 2025 stakeholder meeting, page 55.

[4] 2025-2026 Transmission Planning Process - Policy & Economic Preliminary Assessment and Study Updates, Nov. 19, 2025, page 225: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-2025-2026-Transmission-planning-process-policy-and-Economic-Preliminary-Assessment-and-Study-updates-Nov-19-25.pdf