Comments on 5/27 hybrid call

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

Appian Way appreciates the opportunity to provide these comments on CAISO’s EDAM Congestion Revenue Allocation Revised Draft Final Proposal (DFP). We believe EDAM and Western market expansion with a broader regional market, if it is well designed, will bring greater market efficiency, reliability and cost savings for consumers. The Revised DFP makes significant progress over the initial DFP, and we appreciate the effort CAISO has put in to improve the proposal. However, we remain concerned that certain aspects of the Revised DFP that are patently discriminatory are either not addressed or not addressed in a timely fashion.

Key improvements that we see in the Revised DPP include:

• The proposal appears to acknowledge that CAISO CRRs are the ISO-equivalent to firm transmission rights and should be treated equivalently to non-CAISO BAA OATT NITS and PTP rights.
• The revised DFP commits to a “near term enhancements process” to address self-scheduling concerns and non-discriminatory treatment of firm rights holders (CRR, OATT) access to congestion allocations on parallel flows. This process will commence prior to EDAM go live with the goal of “implementation within year 1 of EDAM operations or soon thereafter (2027).” This reflects an appropriately more urgent timeline than in the prior DFP – thank you. We believe this process should start this year, prior to 2026.
• In the revised DFP, CAISO commits to modify EDAM rules to allow CRRs that have parallel flows on constraints external to CAISO to receive congestion allocations for these parallel flows. It is positive that CAISO acknowledged the asymmetrical treatment in the DFP between CAISO firm transmission rights and the equivalent firm PTP and NITS rights for external entities. However, Appian Way believes that this issue could easily be fixed in the initial implementation of EDAM, rather than waiting for the near-term enhancements process to commence. There is no technical reason that this very basic and straightforward fix cannot be implemented merely by changing a few words in the Revised DFP.
• The revised DFP commits to addressing self-scheduling incentives which several market participants including Appian Way and the CAISO MSC identified as flaws in the EDAM market design and do so during the “near-term enhancements process.” Addressing the self-scheduling concerns is significantly more complex than the aforementioned non-discriminatory parallel flow treatment, and requires a thoughtful process with both expert and stakeholder input. Nevertheless, the self-scheduling concern is a matter of great urgency as it will be problematic at best to commence EDAM with incentives for uneconomic self-scheduling that could worsen rather than improve efficient and reliable transmission usage.

Remaining Concerns

Appian Way still has two major concerns with the Revised DFP, focusing on the area of non-discrimination. The proposal still, at its core, does not treat CAISO firm rights on an equivalent basis to non-CAISO OATT firm rights.

First as noted above, we acknowledge that the challenge of addressing EDAM self-scheduling incentives is complex and requires time and complex policymaking and is subject to implementation challenges that might require software development. However, this is not the case with respect to CRRs having comparable treatment to EDAM OATT rights regarding congestion allocation of parallel flows. This is easy to implement and simply requires changing the Revised DFP to align with the straightforward solution that CAISO proposes to implement as part of the near-term enhancements, as discussed in the Revised DFP. Socializing this change with stakeholders could easily be accomplished prior to EDAM’s initial go live date. Moreover, it does not make sense to tie the timeline of a basic and straightforward fix that was likely an oversight to the more complex issue of honoring legacy physical OATT rights in the context of a broader regional market with LMP.

Second, while the Revised DFP near-term enhancements proposes to address unequal treatment of CAISO CRR firm rights when CRRs flow on external constraints; the Revised DFP is silent with respect to unequal treatment of CAISO CRR firm rights with respect to internal constraints within CAISO. The issue is what to do when outages or transmission derates cause a reduction in transfer capacity and not all firm rights can be accommodated. As CAISO has confirmed during stakeholder meetings, the DFP makes whole the external OATT right holders that are flowing on CAISO’s system, while CAISO rights (CRRs) have to absorb not only the financial impact of their own pro-rata share of the reduction in transfer capacity but also pay to make whole the OATT rights holders that are provided perfect hedge status. This is not comparable treatment; but rather CAISO firm CRR rights subsidizing external firm OATT rights. The near-term enhancement initiative should address this issue as well. Even the Powerex filing in the Pacificorp case has acknowledged that “perfect hedge” status cannot be maintained when there are derates to the transmission system. OATT right quantities may be reduced proportionally as happens commonly with OATT rights when major physical flowgates in the WSCC are derated. It should be the same with respect to CAISO constraints. All firm rights holders should be treated equally and share in transmission derates/congestion rent shortfalls.   

As we stated in our written comments to the 4/23 Stakeholder Call:

“It is fundamentally inequitable for non-CAISO EDAM members to be able to promise their firm transmission customers perfect congestion hedges whilst CAISO’s firm- or firm-equivalent transmission customers are expected to subsidize the firm transmission of neighboring BAAs. In this way, the DFP is patently discriminatory.”

Finally, with respect to addressing self-scheduling incentives, there are many possible options. We believe the near-term enhancement will need to avoid providing external EDAM LSEs with an hourly or daily option to configure their own-load resource mix and corresponding NITS rights to optimally capture each day's idiosyncratic congestion. Rather, there should be a process allowing LSEs to specifying their own-load resources on an annual or seasonal basis, as CAISO LSEs do in the CRR allocation. (I.e. LSEs entering EDAM with OATT rights should be provided grandfathered Firm Flow Entitlements, CRR equivalents, or some equivalent). Allowing for daily NITS reconfiguration of congestion rights would potentially create gaming incentives. 

            Thank you again for the opportunity to participate in the EDAM stakeholder process.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

See comments above.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

See comments above.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

See comments above.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

See comments above.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

The Balancing Authority of Northern California (BANC) generally supports the Congestion Revenue Alloccation Revised Draft Final Proposal as a workable interim solution while the CAISO and stakeholders take the necessary time to develop a more durable approach that addresses the identified issues surrounding incentives for self-scheduling.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

BANC generally supports the Revised Draft Final Proposal on this topic.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

Congestion revenue allocation issues are among the most complex issues debated in organized markets.  EDAM has the additional layer of complexity of being a security constrained dispatch layered on top of the Open Access Transmission Tariff framework.  BANC supports careful consideration of design options for EDAM that provide meaningful incentives for market participants to economically bid resources so that the efficiency gains of the new market can be realized.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

BANC is supportive of the decisional classification.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

BANC has none at this time.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

Bonneville supports the proposed interim EDAM Congestion revenue allocation method described in the revised draft final proposal. Bonneville appreciates the continued development of the EDAM congestion revenue allocation design associated with parallel flows.  Bonneville supports the revised proposal’s recommendation to allocate congestion rent associated with parallel flows to the EDAM balancing authority area where the congestion revenues are collected (and not where the constraint is located).  Like many other stakeholders, Bonneville has been concerned that the EDAM CR design potentially incents increased self-scheduling.  However, Bonneville appreciates CAISO’s commitment to continued monitoring and the intent to evolve the CR allocation design to address this concern. 

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

Bonneville appreciates the continued development of the EDAM congestion revenue allocation design associated with parallel flows.  Bonneville supports the revised proposal’s recommendation to allocate congestion rent associated with parallel flows to the EDAM balancing authority area where the congestion revenues are collected (and not where the constraint is located).  Like many other stakeholders, Bonneville has been concerned that the EDAM CR design potentially incents increased self-scheduling.  However, Bonneville appreciates CAISO’s commitment to continued monitoring and the intent to evolve the CR allocation design to address this concern. 

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

Bonneville believes that CAISO is appropriately planning for continued evolution of EDAM congestion rent allocation.  Launching a 12-to-24-month stakeholder process ahead of EDAM go-live is the correct thing to do.  Coupling this process with the proposed monitoring and reporting should allow stakeholders to see success or struggles with the interim EDAM CR design in a timely manner.     Bonneville notes that CAISO strives to implement the longer-term CR design in year three of EDAM operations.  This appears appropriate but should remain fluid.  If problems with the interim design arise, CAISO would be best served to consider pausing the longer-term design work to resolve interim design issues before returning to the permanent solution.   

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

Bonneville supports the proposed near-term enhancements.  Specifically, Bonneville supports the modification to the design that would facilitate the allocation of congestion revenues with parallel flow based on cleared balanced day-ahead market schedules (either self-scheduled or economically bid).   This modification would help mitigate the stakeholder concern about incentivizing self-scheduling.    Bonneville looks forward to gathering a better understanding of the asymmetry issue impacting CRR’s which CAISO discusses in the issue paper.  Bonneville supports CAISO’s decision for further discussion and review of the design in a future stakeholder process.  Bonneville seeks to understand the potential impacts and consequences to EDAM BAAs as a result of modifying the design to mitigate the asymmetry issue.  

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

Bonneville does not have further feedback on the revised draft final proposal. 

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

Comments on Extended Day-Ahead Market Congestion Revenue Allocation

Revised Draft Final Proposal - May 19, 2025

Department of Market Monitoring

June 2, 2025

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Extended Day-Ahead Market Congestion Revenue Allocation Revised Draft Final Proposal.[1]

The current FERC-approved EDAM design would allocate congestion revenue to the balancing authority area (BAA) where the transmission constraint creating the congestion is located. The revised draft final proposal presents an alternative congestion rent allocation method to use on a transitional basis. The alternative method would allocate the rent like the current FERC-approved EDAM design, except that rent associated with balanced self-schedules on long-term firm and Network Integration Transmission Service (NITS) rights would be allocated to the EDAM BAA where the energy is scheduled, rather than where the constraint is located. DMM believes the allocation in the revised draft final proposal is an acceptable alternative transitional measure.

As discussed later in these comments, the proposed rule changes under the revised draft final proposal may create economic incentives for inefficient self-scheduling of resources. While this could reduce the benefits from managing congestion over an expanded EDAM footprint relative to the currently approved allocation, there should still be significant benefits from an expanded market relative to the current pre-EDAM market. The ISO has provided data showing there is reasonable hope that the potential for inefficient self-scheduling would be limited in the PacifiCorp BAAs. 

The revised draft final proposal addresses concerns raised by some stakeholders in response to the prior straw proposal, related to allocation of counterflow congestion revenue. However, the draft final proposal removes the possibility that balanced economic schedules on NITS rights could receive congestion rent from parallel flows. This feature is consistent with the approved EDAM design but represents a change from the prior straw proposal. 

In response to stakeholder concerns about this change and to address self-scheduling incentives, the ISO proposes to pursue another change within EDAM’s first year of operation that would extend the proposed congestion rent allocation to cleared balanced schedules that submitted price-based bids. DMM notes that this change may warrant further discussion, as it might spread incentives that result in inefficient scheduling to resources submitting price-based bids.

Additional data and experience from actual EDAM operations will help inform stakeholders for future design changes. DMM recommends the ISO continue to work toward a long-term approach that decouples congestion hedging from resource scheduling. Under any transitional approach, DMM will monitor and report on the congestion rent allocation and scheduling within EDAM.

Comments

DMM believes the allocation in the revised draft final proposal is a reasonable alternative transitional measure. While the changes outlined in the revised draft final proposal may create increased incentives to self-schedule that could reduce market benefits relative to the approved EDAM design, the implementation of EDAM with this allocation will still create market benefits relative to the current pre-EDAM market.  

The sub-sections below highlight some points for consideration when evaluating the revised final proposal. Table 1 at the end of these comments compares allocations for the current pre-EDAM market, the approved EDAM design, the straw proposal design, and the revised draft final proposal design. DMM’s comments on the straw proposal provide more detailed descriptions of the table categories.[2]

Self-scheduling issues

As highlighted in detail at the May 2 Market Surveillance Committee (MSC) meeting, the rule changes included in the draft final proposal—and also in the revised draft final proposal—may create economic incentives for significant inefficient self-scheduling of resources relative to the approved EDAM design. DMM previously commented that the initial straw proposal would also create incentives for self-scheduling.[3]

DMM initially envisioned that, in practice, self-scheduling incentives would be limited primarily to import and export schedules that were wheeling power through EDAM areas. However, discussions at the MSC meeting raised greater awareness of this issue. Based on ISO presentations and discussions, it appears the incentives to self-schedule may apply to a much broader set of resources, including resources of load serving entities in each area that utilize Network Integration Transmission Service (NITS). 

In response to requests by DMM and other stakeholders, the ISO provided data on the distribution of firm rights holders in the PacifiCorp BAAs. According to the ISO, about 88 percent of eligible rights, including about 95 percent of NITS rights, are held by PacifiCorp merchants. Based on this data and public statements by PacifiCorp, the ISO believes the total amount of rights that would self-schedule in order to receive congestion rent would likely be limited. As the ISO states:

PacifiCorp has publicly stated that the economic dispatch and commitment of resources that result from economic bidding in the market will create significant customer benefits. Additionally, PacifiCorp has stated that it believes the risk of congestion costs does not outweigh the benefits of economic bidding. With this context, it is assumed that PacifiCorp’s market participation will not be driven solely by the ability to self-schedule the exercise of transmission rights to derive a congestion hedge.[4]

DMM agrees these points provide some reassurance that self-scheduling for the purposes of parallel flow congestion hedging may be limited in the PacifiCorp BAAs. However, such data and statements should not take the place of a more efficient market design that will ultimately extend across multiple balancing areas. 

Transitional nature and “sunsetting” of the revised draft final proposal allocation

In response to stakeholder comments and questions on whether the approach described in the revised draft final proposal will sunset in three years or not, the ISO stated:

The ISO and market participants will continue to work together, through stakeholder working groups, to evaluate and consider a spectrum of potential near-term enhancements and long-term congestion revenue allocation or congestion hedging mechanisms that could be considered after the launch of EDAM.[5]

DMM understands this to mean that the proposal does not have an explicit sunset provision and that the proposed allocation will continue unless and until replaced by future design changes. 

Opting in and out of proposed allocation to avoid counterflow payment “claw backs”

To be eligible for the proposed congestion rent allocation, holders of firm rights outside the CAISO BAA would be required to submit balanced self-schedules and a contract reference number (CRN). If the energy is not self-scheduled or a CRN is not submitted for an hour, the schedules would not receive a congestion rent allocation. After the local BAA passes the allocation to the firm rights holder, the allocation will fully offset the congestion costs associated with binding constraints in other EDAM BAAs for the firm rights holder.

In cases where schedules on the scheduling of firm rights provide counterflow to CAISO constraints, the rent allocation would actually be a charge that offsets the counterflow payments the schedule receives in the market. A firm rights holder could avoid this charge and keep their counterflow payments by simply not submitting a CRN for hours in which they will be net counterflow. Thus, firm rights holders will have an incentive to opt in to the allocation to avoid charges by submitting a CRN when they think they will create flows, but will have an incentive to opt out by not submitting a CRN when they think their schedules will create counterflows. 

The ISO has clarified that rights holders can opt to not submit a CRN when they think schedules will create counterflows flows for which they may receive congestion payments, and that this will be allowable and expected under EDAM market rules. However, DMM notes that DMM would not view it as acceptable to utilize various types of circular schedules to receive such congestion payments while avoiding congestion charges. For example, this could involve submitting a CRN for one set of schedules in the congested direction, while also submitting an offsetting (or circular) set of schedules in the counterflow direction without a CRN.

Recommended direction for long-term approach

The actual difference between using one allocation or another in terms of settlement and market performance can only be accurately assessed once EDAM is implemented. However, DMM recommends the ISO continue to work toward a long-term approach that decouples congestion hedging from resource scheduling. As noted in numerous filings on this issue, the most efficient longer-term approach would be one that is decoupled from bidding and scheduling. For example, long-term options may include flow entitlements and/or financial approaches.

The ISO suggested in the revised draft final proposal that a near-term change could be extending the proposed rent allocation to cleared balanced schedules that submitted price-based bids, with the aim of mitigating incentives for inefficient self-scheduling. This near-term change within EDAM’s first year of operation is also intended to address stakeholder concerns that balanced economic schedules would not be able to receive congestion rent from parallel flows. DMM notes that this change might spread incentives that result in inefficient scheduling to resources submitting price-based bids.

Regardless of which approach is adopted initially, the ISO should closely assess the differences, keep stakeholders informed, and be prepared to develop other transitional and longer-term options. DMM will also monitor and report on the congestion rent allocation and scheduling within the EDAM. The additional data and experience from actual EDAM operations will help inform stakeholders for future design changes.

Table 1. Comparison of pre-EDAM market, approved EDAM design, and alternative allocation approaches

[1] Extended Day Ahead Market Congestion Revenue Allocation Revised Draft Final Proposal, California ISO, May 19, 2025: https://stakeholdercenter.caiso.com/InitiativeDocuments/Revised%20Draft%20Final%20Proposal%20-%20EDAM%20Congestion%20Revenue%20Allocation%20-%20May%2019%202025.pdf

[2] Comments on Extended Day-Ahead Market Congestion Revenue Allocation Issue Paper, Department of Market Monitoring, April 7, 2025: https://www.caiso.com/documents/dmm-comments-on-edam-congestion-revenue-allocation-mar-17-2025-issue-paper-apr-07-2025.pdf

[3] Ibid.

[4] Revised Draft Final Proposal p 19

[5] Revised Draft Final Proposal p 28

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

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 feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

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 feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

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 any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

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 a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

CDWR continues to believe that the EDAM Revised Congestion Revenue Draft Final Proposal may lead to increased congestion revenues within the EDAM market area.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

No Comment.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

CDWR agrees that continuous stakeholder participation with the CAISO through working groups is key to constant processing and refinement of the EDAM Revenue Allocation design to create satisfactory near-term and long-term enhancements that improve upon EDAM revenue allocation.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

On page #31 of the Revised Final Draft Proposal, CAISO states:

“At that point, transmission constraints in the broader EDAM market footprint can affect congestion prices in the CAISO balancing area and these constraints will also be modeled within the CRR allocation process.”

CDWR appreciates that CAISO has improved upon the original CRR 1B enhancements to provide further potential allocation of congestion revenues through this near-term enhancement. Furthermore, CDWR would like to thank CAISO for including the upcoming EDAM footprint constraints modeling in the CRR allocation process. CDWR believes that maintaining revenue adequacy and fair congestion prices throughout the CAISO BAA with the inclusion of EDAM constraints from other BAA’s is key to incrementally improve the Day Ahead CRR product.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

No further comments. 

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

DC Energy appreciates the CAISO’s recognition of the need to further reform congestion revenue allocation among EDAM BAAs in order to make the current proposal less discriminatory for CAISO CRR holders.  The CAISO can and should rectify the “asymmetry” it now acknowledges between PTP and NITS transmission customers and CRR holders prior to the implementation of EDAM. (See Revised Draft Final Proposal, at 26).  

The CAISO’s proposed near-term enhancements would improve the allocation of congestion revenue among the various classes of transmission customers across the EDAM footprint and, therefore, should be included in the initial implementation EDAM, even if this necessitates a short delay in the market’s go-live date.  The CAISO should use the opportunity afforded by the delay in the approval of the PacifiCorp implementation Tariff to address the infirmities it now recognizes in its currently proposed initial congestion revenue allocation methodology.  This would proactively address near-term issues, allowing the CAISO and stakeholders to focus their efforts on developing a long-term solution to congestion revenue allocation. 

Alternatively, if the CAISO continues with its plan to roll-out EDAM with the current proposed congestion revenue allocation and make near-term enhancements as soon as practicable after implementation, then the CAISO should commit to its proposed timeline and include specific milestones or triggers in its filing to FERC and in its revised Tariff language. 

Modeling Enhancements

DC Energy also appreciates the CAISO’s commitment to pursuing CRR modeling enhancements that account for transmission usage in neighboring EDAM balancing areas.  As the CAISO now recognizes, including reasonable expectations of unscheduled parallel flows on the CAISO transmission system due to flows scheduled in neighboring balancing areas in the model used to allocate and release CRR capacity, would ultimately reduce CRR underfunding. (See Revised Draft Final Proposal, at 16).  The CAISO’s plan to hold a workshop on modeling enhancements associated with EDAM implementation, including CRR modeling enhancements, is a welcome development.  The CAISO should be proactive in pursuing CRR modeling enhancements, so that enhanced models are available when EDAM is first implemented. 

The effort to enhance CRR models should incorporate comments submitted in the CRR Enhancements Working Group initiative.  For instance, the CRR Enhancement Working Group initiative is discussing reforming or expanding the available Times of Use (TOUs) for CRRs beyond the current On-Peak and Off-Peak definitions, in recognition of the fact that solar integration and storage resource development have changed daily congestion patterns.  During peak solar hours, there can be significant unscheduled parallel flows from South to North on constraints within the CAISO BAA that do not occur in all hours in the current On-Peak definition.  The CRR model should account for these parallel flows as accurately as practicable in the hours that they occur and recognize the hours in which they do not occur.  Eventually, it may make sense to combine the EDAM-related CRR modeling enhancements effort with the CRR Enhancements Working Group, but the Working Group is still in the problem statement development phase, and this potentially time consuming process should not slow down the CAISO’s efforts to enhance its models as it works to implement EDAM.  

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

See above

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

See above

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

See above

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

See above

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

Idaho Power appreciates CAISO’s continued efforts on this topic. In the last round of comments, Idaho Power expressed concerns around a market design that seems to incent self-scheduling. Idaho Power appreciates CAISO’s recognition of this and its commitment to looking for a resolution to this in the near-term solution phase. Idaho Power supports this approach given the complexity of the issue and the sensitivity to the EDAM go-live date.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

No additional comments

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

Idaho Power appreciates CAISO’s commitment to continue to review and modify the congestion allocation design and believe the timelines and approach are reasonable given the complexity of the subject.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

No additional comment

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

No additional comment

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

NIPPC supports the Revised Draft Final Proposal to revise congestion revenue allocation in EDAM as a significant improvement to the existing method of congestion revenue allocation. NIPPC also supports further refinement of the mechanism to allocate congestion revenue associated with parallel flows.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

NIPPC agrees that the proposed Revised Draft Final Proposal represents a significant improvement over the current mechanism which allocates all congestion revenue to the BAA where a constraint is located. Rather, the Revised Draft Final Proposal would allocate congestion revenue to the BAAs where the congestion revenue materializes (based on the balanced self-schedules of customers using long-term and monthly transmission rights). While this ensures that customers with transmission rights on parallel paths impacted by a congestion constraint in a different BAA will have an opportunity to share in congestion revenues collected from the market, NIPPC supports the proposal to pursue future enhancements that would provide for allocation of congestion revenue associated with parallel flow commensurate with economically bid cleared balanced market schedules associated with registered eligible firm PTP and NITS OATT transmission rights.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

NIPPC supports the proposed process to further refine congestion revenue allocation based on information and data developed during the early years of market operation.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

NIPPC also supports the proposal to implement near term enhancements to the congestion revenue allocation design that would enable allocation of congestion revenue associated with parallel flow based on cleared balance day-ahead market schedules, whether these were self-scheduled or economically bid associated with eligible firm PTP and NITS transmission rights.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

No additional comments

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

The current EDAM design allocates congestion revenues to the Balancing Authority Area (BAA) in which the internal transmission constraint materialized, including congestion revenues resulting from parallel flow effects collected from an adjacent EDAM BAAs to the extent the use of its transmission system impacts congestion prices at locations in the neighboring area. Narrowly focusing this initiative on potential reforms that could be implemented in support of EDAM launch in 2026, CAISO proposes to allocate congestion revenues associated with parallel flows to the EDAM BAA where the congestion revenues are collected in an amount commensurate to the parallel-flow related congestion costs of balanced self-schedules associated with eligible firm point-to-point and network Integrated transmission service rights. CAISO would continue to allocate any remaining congestion revenues associated with parallel flows to the EDAM BAA where the transmission constraint is located.

In our May 1, 2025, comments, NV Energy supported this approach as “certainly an improvement” to OATT customers who self-schedule and recognized this proposal would facilitate entry of the initial EDAM participants. Accordingly. NV Energy supports the Revised Draft Final Proposal.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

See response to (1).

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

In the May 1, 2025, comments, NV Energy conditioned its support for the initiative on CAISO continuing with a Phase 2 stakeholder process to further enhance the design by providing parallel flow congestion protection for bid in load to remove the incentive to self-schedule. NV Energy appreciates the statement in the Revised Draft Final Proposal that CAISO “is committed to continuing to pursue and evaluate the development and implementation of enhancements to the design proposed in this document which could be implemented in the first year, or soon thereafter, of EDAM operations (2027)” and the need “for an enhancement that would provide additional flexibility and mitigate potential self-scheduling incentives by enabling allocation of congestion revenue associated with parallel flow based on cleared balance day-ahead market schedules, whether these were self-scheduled or economically bid associated with eligible firm PTP and NITS transmission rights.” NV Energy supports CAISO’s proposal to continue to engage stakeholders and re-initiate working groups on this topic prior to EDAM launch in May of 2026.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

See response to (3).

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

Nothing at this time.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

PG&E appreciates the opportunity to comment on CAISO’s EDAM Congestion Revenue Allocation (CRA) Revised Draft Final Proposal, and also appreciates CAISO for listening to stakeholder comments and concerns. Many stakeholders asked for CAISO to begin work on the long-term solution for EDAM CRA and to better define the timeline for the transition period, and CAISO has been responsive.

Most of PG&E’s concerns from the previous round of comments on the Draft Final Proposal (DFP) have been addressed. PG&E’s one lingering concern is that the Revised Draft Final Proposal (RDFP) still has no guardrail to limit what EDAM Balancing Authorities (BAs) can receive under the EDAM CRA.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

The RDFP should include a reasonable guardrail to limit what EDAM BAs can receive under the EDAM CRA. Long-term firm and monthly firm Point-to-Point rights (PTP) as well as Network Integration Transmission Service (NITS) are eligible to receive congestion revenues that result from parallel flows on their PTP/NITS rights. But it is possible for the those rights to be paid more than the total congestion revenue that the EDAM BA collected. In that case, the extra revenues paid to the PTP/NITS rights holders come out of California’s Congestion Revenue Rights (CRR) funding. This is the money that California relies on to fund its transmission system, and should not be touched.

CAISO believes that the volume of consequential MWs will be small, and therefore the volume of dollars should be small.  However, this is an educated guess and does not offer protection should this guess be wrong. Reasonable guardrails won’t bind in the case that CAISO is correct and the volumes are small and will offer protection to all participants if CAISO is incorrect. PG&E appreciates that accommodations in EDAM must be made to try and integrate transmission that exists under the Open Access Transmission Tariff (OATT) framework, but CAISO should draw a line in the sand at sacrificing its own transmission revenues.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

PG&E supports this plan and timeline.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

PG&E supports development of the near-term enhancement to eliminate the incentive to self-schedule.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

None.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

PacifiCorp supports the congestion revenue allocation design as proposed in the Draft Final Proposal. PacifiCorp believes the design is acceptable for EDAM go-live and that the short-term and long-term plans for enhancements provide confidence that stakeholders will have the opportunity to improve the design. PacifiCorp appreciates the CAISO’s willingness to conduct an expedited stakeholder initiative that considered many different stakeholder perspectives. PacifiCorp believes the Revised Draft Final Proposal represents a reasonable compromise between the need for near-term stability in the market design with stakeholders’ requests to develop a permanent solution that may require substantial changes to the EDAM design

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

PacifiCorp supports the proposed design for congestion revenue allocations due to parallel flows. The design allows EDAM Entities to offer their transmission customers who submit balanced self-schedules a reasonable hedge against congestion price impacts.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

PacifiCorp supports the plan and timeline for continued design evolution while committing to the proposed design for EDAM go-live. PacifiCorp agrees with the CAISO that the proposed near-term enhancement needs additional vetting among stakeholders through a stakeholder process. For the long-term plan, PacifiCorp believes the CAISO’s recent decision to postpone or slow down some initiatives will give stakeholders bandwidth for developing a long-term enhancement to the congestion revenue allocation design. As such, PacifiCorp believes the timeline proposed by the CAISO in the Revised Draft Final Proposal is reasonable.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

The proposed near-term enhancement should be further discussed in a stakeholder initiative before the CAISO commits to implementing the design because the near-term design may have implications for EDAM Entities’ tariffs.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

 No comment.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

Powerex appreciates the opportunity to submit comments on the CAISO’s May 19, 2025 EDAM Congestion Revenue Allocation Revised Draft Final Proposal (“Proposal”), and the related stakeholder discussion on May 27.

As noted in Powerex’s previous comments, the Proposal is a significant improvement over the current EDAM tariff, as it appears to provide a sufficient congestion revenue allocation to EDAM Entities to enable them to provide a proper source-to-sink congestion hedge for registered monthly or longer firm OATT transmission rights that are self-scheduled in the day-ahead market. This approach appears to be generally consistent with the policy design in the EDAM Final Proposal that was approved by the California ISO’s Board of Governors and the WEIM Governing Body in February 2023.

The Proposal is only a short-term fix, however, and CAISO expects to make changes to it as early as the first year of EDAM operations.  It is clear that the value at stake is potentially very large[1]; it is equally clear that there is a wide range of strongly held opinions about which customers should receive EDAM congestion revenues, and on what basis. Powerex is concerned that there is tremendous uncertainty about how the CAISO will seek to allocate EDAM congestion revenues in the future.  This uncertainty poses a barrier to developing or forward contracting for new resources, and to contracting for the supply of entities that have seasonal or annual surplus.  Powerex therefore urges the CAISO to support EDAM entities providing transmission customers a limited opt-out that enables the use of eligible firm OATT transmission rights without requiring participation in EDAM to do so.  Powerex also urges the CAISO to expressly recognize in its Final Proposal that firm OATT transmission service—including both existing rights and firm service that is arranged in the future—provides the rightsholder protection against congestion, which in the context of an LMP-based day-ahead market means the holder must receive a workable source-to-sink hedge against congestion charges.

[1] See PacifiCorp’s Recent FERC Filing Reveals a Major EDAM Market Design Flaw (February 11, 2025).

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

With regard to the congestion revenue allocation that will be in place for EDAM launch, the Proposal is unchanged from the previous iteration.  The Proposal addresses congestion revenue allocation with regard to one specific use case: self-schedules associated with eligible and registered firm OATT transmission rights.  However, as noted by other stakeholders, the Proposal does not address other scenarios, including:

• Cleared economic bids associated with firm OATT transmission rights would not receive an allocation of congestion revenue due to constraints on other systems, leaving customers that use their OATT transmission rights to serve load but also wish for EDAM to economically dispatch their supply without a meaningful congestion hedge; and
• Resources and load in the CAISO BAA would not receive a hedge for congestion on other transmission systems, even though external transmission constraints will impact LMPs within the CAISO BAA upon EDAM implementation.

While these scenarios do not apply directly to Powerex, it is clear that the CAISO will face ongoing pressure to change the way EDAM congestion revenues are allocated.  The Proposal is therefore likely to be short-lived, leaving considerable uncertainty regarding the future allocation of EDAM congestion revenues beyond EDAM launch.

Uncertainty regarding the charges that will be incurred when using OATT transmission rights of an EDAM entity is a significant deterrent to investing in the development of new resources and contracting for the output of new resources or for surplus supply from other entities in the region.  Such uncertainty is also a significant deterrent to investments in firm OATT transmission service, which many western transmission providers rely on to reduce transmission rates to their native load customers.

Powerex believes the CAISO can and should take immediate steps to remedy the excessive uncertainty this issue has created in the region, by revising the Proposal to include:

• Enabling a limited opt-out for customers to use firm OATT transmission rights without requiring participation in EDAM.  Assuring that OATT transmission rights provided by EDAM entities will, at the very least, be no less useful than they are today will restore confidence to invest in firm transmission service, and to rely on firm rights to support investment and forward contracting decision.
• Clear recognition of the congestion protections inherent in firm OATT transmission service, and a commitment to upholding this principle by providing a workable source-to-sink hedge as part of any long-term design for allocating congestion rent in EDAM.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

The Proposal anticipates initiating stakeholder workgroups prior to EDAM launch to consider a spectrum of potential market design options.  The breadth of this mandate effectively invites a “blank slate” approach to allocating EDAM congestion revenues, without any commitment to preserving any elements of the initial approach or articulating any principles beyond “existing EDAM principles on the topic.”  Powerex is particularly troubled by the views expressed by some stakeholders, and by CAISO itself, that indicate it may not recognize as a fundamental and permanent principle that firm OATT transmission confers protection against congestion (or that it may choose to confer such protection only to existing firm rights).  This is entirely at odds with FERC precedent, and with the priority framework of the OATT, and creates heightened risk that the congestion hedge initially provided at the outset of EDAM under the Proposal will be materially diminished or eliminated under the CAISO’s long-term design.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

The near-term enhancements will develop mechanisms to return congestion revenue associated with (1) parallel flows arising from cleared economic bids associated with eligible firm OATT rights; and (2) source/sink CAISO CRRs from the annual or monthly allocation or auction processes.  These near-term enhancements appear intended to provide for comparable treatment of transmission-related rights.  Powerex supports the underlying intention, but is concerned that developing workable solutions will require addressing challenging issues, including:

• Similar to concerns raised about self-scheduling incentives, allocating congestion revenue as a function of cleared economic bids can be expected to impact bidding behavior; and
• Allocating congestion revenue on the basis of CAISO CRRs (i.e., based on “rights”) appears to be inconsistent with the treatment of firm OATT transmission, where an allocation is only provided for cleared market schedules.

Powerex expects that the near-term challenges may prove more challenging than anticipated, creating uncertainty about the effectiveness and timing of these enhancements.  These near-term enhancements may even prove to be sufficiently challenging that they are abandoned in favor of pursuing a more comprehensive long-term solution. 

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

The allocation of EDAM congestion revenue has significant consequences for all potential EDAM entities and their customers, since it will largely determine who will pay EDAM congestion charges, and who will receive a hedge against those charges.  This stakeholder process has revealed an array of viewpoints about what a long-term solution should look like, and the Proposal expressly anticipates that work will soon begin on replacing the Proposal’s transitional design.

Customers across the West will continue to rely on OATT transmission service—including both existing and new service—to support the power supply arrangements needed to serve load, including to build or contract for new resources.  Uncertainty regarding the future charges that will apply to using OATT transmission rights is a significant impediment to these activities.  Such uncertainty is also a significant disincentive to investing in firm OATT transmission service, which many western transmission providers rely on to reduce transmission rates to their native load customers.  Uncertainty that deters investment or forward contracting is at odds with providing customers with reliable and affordable electricity, and must be avoided.

Powerex believes the CAISO can and should take immediate steps to remedy the excessive uncertainty this issue has created in the region, by revising the Proposal to include:

• Enabling a limited opt-out for customers to use firm OATT transmission rights without requiring participation in EDAM.  Assuring that OATT transmission rights provided by EDAM entities will, at the very least, be no less useful than they are today will restore confidence to invest in firm transmission service, and to rely on firm rights to support investment and forward contracting decision.
• Clear recognition of the congestion protections inherent in firm OATT transmission service, and a commitment to upholding this principle by providing a workable source-to-sink hedge as part of any long-term design for allocating congestion rent in EDAM.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

Below are San Diego Gas & Electric’s (SDG&E) comments on the EDAM Congestion Revenue Allocation (CRA) initiative. The Revised Draft Final Proposal is intended to tailor the allocation of parallel flow congestion revenues based on the exercise of eligible transmission rights, outline the plan for continued policy development, and identify the measures CAISO will use to track market impacts from implementation of this transitional methodology. SDG&E supports many elements of the EDAM CRA design and acknowledges CAISO’s efforts to address and resolve stakeholder concerns expressed in comments on earlier versions of the proposal. While SDG&E does not oppose these components, SDG&E continues to have several questions regarding discrete issues, including how CAISO will assess the impacts of the transitional methodology and the interactions with Congestion Revenue Rights (CRRs).

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

The current proposal limits the allocation associated with parallel flows to a subset of transmission holders (who submit balanced self-schedules) and allocates the remaining revenues based on where the transmission constraint is located. CAISO has pointed out that it is a challenge to estimate what parallel flow congestion revenue would remain after allocation to eligible transmission rights holders due to variable parameters such as the expanding footprint, constraints being modeled, and impacts of those constraints in the day-ahead timeframe. However, without additional analysis, it is challenging for SDG&E and other stakeholders to evaluate with any level of certainty whether this design supports market efficiency or minimizes cost shifts between the EDAM Balancing Authority Areas (BAAs). Although the flow patterns and market results from market simulation and parallel operations are likely to evolve significantly following go-live and as participants gain actual market experience, any reporting regarding the potential impact of the transitional methodology that CAISO can provide to participants (starting as early as market simulation) would ground the working group efforts planned in 2026. SDG&E recommends CAISO prioritize providing this information to the extent it is possible.

SDG&E also remains skeptical that the Revised Draft Final Proposal will mitigate most impacts to ISO BAA CRRs from implementation of this new methodology.  Principally, the implementation of EDAM should not undermine any existing market instruments, including CRRs.  And while the proposal to consider additional modeling enhancements is a positive step, CAISO should endeavor to address the added complexity and long-term implications of how the different frameworks interact with one another in a subsequent phase of the initiative.

Notwithstanding these questions and concerns, SDG&E supports implementing the proposed design described in the Revised Draft Final Proposal as a short-term, interim methodology. SDG&E thanks CAISO for its work on this issue and looks forward to continued engagement on the congestion revenue allocation methodology in the future.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

SDG&E appreciates CAISO’s consideration of stakeholders’ concerns regarding the need for a realistic and well-defined timeline to ensure that the transitional methodology will not remain the permanent CRA methodology in the market. By launching working groups in 2026, prior to EDAM go-live, stakeholders can begin realistic discussions on near-term enhancements that could result in meaningful improvements to the proposed approach to CRA. In particular, SDG&E is appreciative of CAISO’s intent to implement year-one design enhancements, which should allow for more equitable treatment of CRA between the ISO BAA and EDAM BAAs. SDG&E therefore supports the proposal for data monitoring and transparency described in section VII.B, as well as the adjusted timeline for enhancements to the EDAM CRA design.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

SDG&E generally supports the near-term enhancements described in section VII.C of the Revised Draft Final Proposal. As identified in our earlier comments (see SDG&E Comments on 4/23 SH Call, Q3), SDG&E is conceptually in agreement with the inclusion of economically bid balanced schedules in the EDAM CRA, subject to questions and comments regarding discrete issues. If these changes are approved and implemented, SDG&E believes elements of this enhancement will better incentivize economic bidding and more efficient dispatch in the market.

SDG&E also agrees that it is appropriate to set aside time for a dedicated discussion of modeling enhancements and settlements of CRRs in EDAM. However, in order to maintain the high levels of engagement on this important issue, it may be appropriate to have this workshop take place jointly between the EDAM CRA and CRR Enhancements initiatives, rather than separately in either one. This approach may help with alignment between the two efforts and ensure full visibility with subset of stakeholders on this topic. 

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

No comment.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

The Six Cities do not oppose implementation of the approach for allocating Extended Day-Ahead Market (“EDAM”) congestion revenues as described in the Revised Draft Final Proposal on a basis that (i) is expressly transitional and (2) is limited in application to eligible OATT rights existing as of the go-live date for the EDAM.  The Six Cities continue to oppose application of the revised method for allocating congestion revenues as described in the Revised Draft Final Proposal to support congestion hedges for OATT transmission rights secured after the EDAM go-live date (including any renewal rights under initially eligible agreements).  The Revised Draft Proposal acknowledges that because the CAISO does not have contracts that will qualify for the proposed treatment, any benefits of the transitional methodology will be exclusively available to external BAs and their transmission service customers.  Particularly in view of that asymmetry of treatment, it would be unjust, unreasonable, and unduly discriminatory to apply the proposed allocation methodology for the benefit of OATT contracts entered into after the EDAM go-live date.

The Six Cities continue to support inclusion of a sunset date for the transitional method.  The Six Cities generally support the overall timeline for development of a long-term solution to parallel flow impacts as described in the Revised Draft Final Proposal and the indicated metrics for monitoring.  The Six Cities urge the CAISO to adopt a more expedited process for modifying the CAISO’s Congestion Revenue Rights (“CRR”) functionality to enable allocating to the CAISO BAA congestion revenues associated with parallel flow impacts of constraints in other EDAM BAAs.  The Six Cities also recommend the use of monitoring efforts relating to the impacts of parallel flows prior to the implementation of the EDAM so as to establish a baseline against which to evaluate the effects of the proposed method for allocating congestion revenues when the EDAM commences operation.

The Six Cities support prompt development of potential near-term enhancements suggested by the CAISO to include two elements: (i) expanding the transfers eligible for allocation of congestion revenues related to parallel flow impacts to include cleared balanced day-ahead market schedules economically bid by long-term firm OATT transmission rights holders as well as self-schedules utilizing such rights, and (ii) modifying the CAISO’s CRR functionality to enable allocating to the CAISO BAA congestion revenues associated with parallel flow impacts of constraints in other EDAM BAAs.  In view of the asymmetric treatment of the CAISO BAA reflected in the transitional proposal, modification of the CAISO’s CRR functionality to enable allocation of congestion revenues arising from parallel flow impacts of constraints in other EDAM BAAs to the CAISO BAA should proceed independently and on an accelerated time frame.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

As described in their previous comments submitted on May 5, 2025 in this initiative, the Six Cities do not oppose implementation of the approach for allocating EDAM congestion revenues as described in the Revised Draft Final Proposal on a basis that (i) is expressly transitional and (2) is limited in application to eligible OATT rights existing as of the go-live date for the EDAM.  The Six Cities continue to oppose application of the revised method for allocating congestion revenues as described in the Revised Draft Final Proposal to support congestion hedges for OATT transmission rights secured after the EDAM go-live date (including any renewal rights under initially eligible agreements).

The Revised Draft Final Proposal addresses allocation of congestion revenues associated with the impact of so-called parallel or unscheduled flows on an integrated transmission network.  As described in the Revised Draft Final Proposal at page 7 and discussed during meetings of the CAISO’s Market Surveillance Committee (“MSC”) and the Western Energy Markets (“WEM”) Governing Body, parallel flows can arise as a result of any injection of power into an integrated transmission network or any withdrawal of power from the network.  Stated differently, parallel flows can occur as a result of power dispatched in accordance with market optimization or injections or withdrawals associated with OATT transmission service.  One difference, however, is that market optimization includes consideration of the impacts of parallel flows in selection of resources for dispatch, but implementation of OATT transmission service historically has not considered parallel flow impacts.  See Revised Draft Final Proposal at page 27.

The EDAM market optimization will both seek to minimize the impacts of parallel flows that are uneconomic and expose the price impacts of parallel flows that are economic through congestion charges.  The Revised Draft Final Proposal recommends a transitional methodology for allocating revenues recovered through the congestion charges to BAAs with transmission customers exercising certain OATT rights in order to provide such customers an improved hedge against such charges arising from parallel flows.  Under the proposal, the only eligible contracts that are proposed to qualify for this treatment are specified long-term OATT service agreements.  Revised Draft Final Proposal at page 24.  As acknowledged at page 26 of the Revised Draft Final Proposal, the CAISO does not have contracts that will qualify for the proposed treatment, because the CAISO and its Participating Transmission Owners do not engage in sales of transmission rights under an OATT.[1]  As a result, any benefits of the transitional methodology will be exclusively available to external BAs and their transmission service customers.  Nevertheless, the Six Cities do not oppose implementation of the revised congestion revenue allocation methodology on a transitional basis to enhance congestion hedges for OATT arrangements in place at the EDAM go-live date.  It would be unjust, unreasonable, and unduly discriminatory, however, to apply the proposed allocation methodology for the benefit of OATT contracts entered into after the EDAM go-live date.

Applying the proposed allocation methodology to new OATT contracts entered into after the EDAM go-live date would create an unwarranted preference for OATT transactions over market transactions.  Dr. Susan Pope, the WEM Governing Body Market Expert, noted in an April 8, 2025 presentation to that Body that the OATT paradigm of firm transmission rights without regard to the potential impacts of parallel flows does not fit well with how power flows over a system.  She expressed the view that charging OATT customers for congestion (consistent with the congestion revenue allocation method included in the existing EDAM design as submitted to and approved by FERC) aligns with appropriate economic principles, because it even-handedly charges both market transactions and bilateral scheduled transactions for parallel flow impacts and avoids disincentives for flexible bidding.  See Pope 4/8/25 presentation at Slide 9.  Dr. Pope identified concerns that shielding OATT schedules from any responsibility for impacts of parallel flows could encourage inefficient dispatch of resources and increase reliability challenges during stressed conditions (id. at Slide 18), and she recommended consideration of establishing fixed “flow entitlements” for parallel flows (id. at Slide 18).  Similarly, MSC Member Dr. Scott Harvey indicated at the March 28, 2025 MSC meeting that it would be unreasonable to keep selling OATT service without limits on loop flow.  In addition, at the MSC meeting on May 2, 2025, Dr. Harvey presented an extensive analysis demonstrating that the proposed approach will increase incentives for self-scheduling to increase collection of congestion revenues, thereby reducing efficiency and undermining the benefits of the EDAM.  Dr. Harvey also noted a potential for self-scheduling of phantom generation, which could have an adverse impact on reliability.

Limiting the application of the Revised Draft Final Proposal congestion revenue allocation methodology to OATT contracts entered into prior to the EDAM go-live date would parallel the treatment approved by FERC for ETCs existing on the CAISO system at the inception of the CAISO’s markets.  ETCs in place at the time of the CAISO’s formation were granted a “perfect hedge” against congestion charges for the original duration of such contracts, but not for any extensions of such ETCs.  Applying the congestion revenue allocation method in the Revised Draft Final Proposal to contracts existing as of EDAM go-live likewise would provide reasonable accommodation for the expectations of OATT customers under contracts existing as of that date.  But there is no reason why customers purchasing OATT service under contracts executed after that date—including with respect to the exercise of any renewal rights—should expect to receive greater protection from the impacts of parallel flow than customers receiving supply from the EDAM, and there is no legitimate basis for an assumption on the part of such customers that the attributes of OATT service will remain unchanged in perpetuity.

The Revised Draft Final Proposal includes at pages 19-21 data regarding the nature of existing OATT services provided by PacifiCorp and opines at page 28 that the current state of the Western transmission grid cannot likely support significant volumes of new long-term OATT commitments.  The Six Cities appreciate the CAISO’s presentation of the data regarding transmission usage on the PacifiCorp system, and it provides some comfort that levels of self-scheduling at the inception of the EDAM are likely to be modest.  With regard to the CAISO’s assertion that new long-term firm transmission contracts are likely to be limited, the observation cuts both ways.  If opportunities for new eligible OATT contracts are limited as a result of limitations on system capabilities, then excluding any such contracts from the congestion revenue allocation proposal will have little or no practical effect on external transmission customers.  Particularly in view of the asymmetric treatment of parallel flow impacts on CAISO BAA customers, it is more reasonable to exclude eligibility of new OATT contracts than to leave open the possibility for any expansion of the preference afforded to OATT customers under the Revised Draft Final Proposal.  Moreover, such a limitation will provide a greater incentive for expeditious development of an equitable long-term solution to parallel flow issues.

[1] The Six Cities do not consider the treatment of Existing Transmission Contracts (“ETCs”) and Transmission Ownership Rights within the CAISO to provide comparability, because the CAISO through a separate process provides the perfect hedge to these arrangements under rules that are a longstanding element of the CAISO markets and proposes to simply retain that structure under the Revised Draft Final Proposal. 

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

Although the Revised Draft Final Proposal continues to describe the recommended congestion revenue allocation method as transitional, it does not include a sunset date after which congestion revenues would be allocated as prescribed in the EDAM design approved by FERC nor establish any definitive bookends for the transition period.  So long as OATT customers are relieved to a significant degree from the consequences of parallel flow, and especially if (contrary to the Six Cities’ recommendation above) the same congestion revenue allocation is available for new OATT contracts, they have limited incentive to participate constructively in efforts to develop a more efficient and equitable approach for addressing parallel flow impacts.  The Six Cities, therefore, strongly prefer inclusion of a sunset date for the transitional method.

The Six Cities appreciate the CAISO’s further discussion of target dates for exploration of a more durable mechanism to address parallel flow impacts at pages 29-30 of the Revised Draft Final Proposal.  The general timeline for development of a long-term solution seems acceptable.  However, as described below, the Six Cities urge the CAISO to adopt a more expedited process for modifying the CAISO’s CRR functionality to enable allocating to the CAISO BAA congestion revenues associated with parallel flow impacts of constraints in other EDAM BAAs. 

The Six Cities support the description of metrics for monitoring at pages 28-29 of the Revised Draft Final Proposal.  However, as indicated in their May 5^th comments in this initiative, the Six Cities also recommend the use of monitoring efforts relating to the impacts of parallel flows prior to the implementation of the EDAM so as to establish a baseline against which to evaluate the effects of the proposed method for allocating congestion revenues when the EDAM commences operation.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

As described at pages 30-31 of the Revised Draft Final Proposal, the potential near-term enhancements suggested by the CAISO include two elements: (i) expanding the transfers eligible for allocation of congestion revenues related to parallel flow impacts to include cleared balanced day-ahead market schedules economically bid by long-term firm OATT transmission rights holders as well as self-schedules utilizing such rights, and (ii) modifying the CAISO’s CRR functionality to enable allocating to the CAISO BAA congestion revenues associated with parallel flow impacts of constraints in other EDAM BAAs.  The Six Cities support prompt efforts to develop both of the suggested near-term enhancements.  However, the modification of the CAISO’s CRR functionality to enable allocation of congestion revenues arising from parallel flow impacts of constraints in other EDAM BAAs to the CAISO BAA should proceed independently and on an accelerated time frame, commencing as early as possible in the third quarter of 2025.

The Revised Draft Final Proposal acknowledges (e.g., at page 26) the asymmetry in the effect of the revised congestion revenue allocation approach due to the nature of the transmission services offered by the CAISO.  The CAISO should eliminate that asymmetry as promptly as possible, so that the CAISO BAA has the same opportunity to recover the congestion revenues arising from parallel flows as other EDAM BAAs.  The Six Cities see no obvious connection to the other suggested near-term enhancement (enabling allocation of congestion revenues related to cleared economically bid day-ahead schedules using OATT rights) and no reason why the development of the two enhancements need to move forward in lockstep fashion.  The CAISO should focus immediately on modifying the CRR function to enable recovery of parallel flow congestion revenues on the same basis as other EDAM BAAs and, if at all possible, implement such modifications at the commencement of EDAM operations.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

The Six Cities have no additional comments at this time.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

SCE supports the Revised Draft Final Proposal as an interim design but emphasizes the need to follow through with both the near-term enhancements and finding a permanent solution in the 12-24 month period following implementation.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

SCE believes the proposed design represents an appropriate interim design to facilitate the rapid start of the EDAM market, a goal that SCE believes is paramount for market efficiency in the West.

SCE expects that the parallel flow issues will generally not manifest during the initial implementation of EDAM.  In SCE’s opinion, the proposed design correctly seeks to limit the re-allocation of congestion revenue from the balancing authority where the congested line is located to the balancing authority causing the congestion. SCE understands the need to ensure that OATT transmission purchasers initially receive the deal they contracted for but believes that the improvements in Western markets from the expansion of EDAM must be factored into those contracts in the future. As the presentation from Scott Harvey during the March 28 MSC meeting “paying congestion rents for the full amount of OATT transmission entitlements may result in much better than OATT service.”[1] OATT transmission purchasers should not expect that “better than OATT service” will continue. In developing the long-term solution, the CAISO and stakeholders must consider options that remove or modify the existing OATT contracts as other things have also changed.

The information provided in the Revised Draft Final Proposal about the quantity of OATT transmission in the PacifiCorp balancing areas was helpful in corroborating that the problem for third party transmission sales is not substantial and, as stated above, SCE’s opinion is that in the initial implementation phases the parallel flow congestion is not likely to be an issue. However, that conclusion will not necessarily persist once additional non-California entities join EDAM and the EDAM footprint covers more of the West, or if a large amount of NITS service is self-scheduled. SCE doesn’t believe that self-scheduling will be widely employed as it would run contrary to the purpose of joining EDAM, but this should be closely monitored as part of the data collection and distribution contemplated in the Revised Draft Straw Proposal. Further, as noted by NV Energy in its previous comments, “[t]here will be profound differences in market flows between the initial EDAM footprint with PacifiCorp and PGE with limited interconnectivity with Southern California versus the extensive north-to-south parallel flows that could result from participation by NV Energy and Idaho Power.”[2] This clearly emphasizes the importance of quickly determining a long-term solution to the problem.

[1] Scott Harvey, EDAM Congestion Revenue Allocation, presentation at the March 28, 2025 MSC meeting, p. 12.

[2] COMMENTS OF NV ENERGY ON THE DRAFT FINAL PROPOSAL - EDAM CONGESTION REVENUE ALLOCATION, May 1, 2025, p. 1-2.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

As discussed above, the initial implementation of EDAM should not see large amounts of self-scheduling or parallel flow congestion, but that situation may change as new entities join EDAM and the footprint expands across the West. This makes it vital that the timelines discussed in the Revised Draft Final Proposal are adhered to, and that the CAISO collect and publish the data necessary to evaluate how the Revised Draft Final Proposal is functioning. As part of the data collection on the magnitude and frequency of self-schedules across EDAM balancing areas, the CAISO should further parse the self-schedule data to identify the quantities of point to point and NITS, as well as third-party self-scheduling as opposed to self-scheduling from entities related to the EDAM balancing authority.

SCE is encouraged with the CAISO’s commitment to bring the long-term solution to the governing body in the 12-24 month timeframe but is worried that without an incentive to develop a solution many stakeholders may not focus on developing the long-term solution. Putting a clear end date to the interim mechanism of the Revised Draft Final Straw Proposal would provide such an incentive to stakeholders and encourage stakeholders to compromise and to develop a fair, long-term solution.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

SCE agrees that the two specific items included in the near-term enhancements should be pursued for implementation as soon as possible. Allowing balanced cleared bids, in addition to self-schedules, will reduce the inefficiencies associated with self-schedules and improve the returns to all EDAM participants. Allowing the CAISO to recover parallel congestion associated with CRRs will put the CAISO in a similar position with other BAAs, thus improving the fairness of the EDAM markets.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

SCE believes that testing the mechanism in the Revised Draft Final Proposal during the market simulation efforts and parallel operations testing will be critical, both for ensuring that the mechanism will function properly when EDAM goes live, but also for providing additional information that could prove useful during the development of both the near-term enhancements and the long-term solution.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

The Energy Authority (TEA) and its Regional Partners^[1] (TEA-RPs) continue to see the CAISO’s EDAM Congestion Revenue Allocation Revised Draft Final Proposal (EDAM Congestion R-DFP) as insufficient to deliver the equitable, efficient outcomes and benefits market participants expect from EDAM. TEA-RPs therefore continue to oppose the CAISO taking its EDAM Congestion R-DFP to the CAISO Board of Governors and the WEM Governing Body for approval. TEA-RPs want to see EDAM be successful and have worked at length in this and other initiatives to that end. TEA-RPs expect that a stable and efficient implementation of the EDAM model will provide broad production-cost savings at the EDAM BAA level; however, the group is concerned that too little attention was paid in the initial EDAM design and in the subsequent EDAM BA-proposed Tariff revisions to the impact EDAM will have on smaller entities[2], especially regarding exposure to inefficient, inequitable congestion revenue allocation. Until the CAISO has worked with EDAM BAs to develop an appropriate, holistic approach to collecting and allocating congestion revenues associated with both internal and external BAA constraints back to long-term funders of the transmission system, EDAM implementation risks significant unintended consequences for load serving entities, wheeling customers, and CRR market participants. To that end, the CAISO should expand the scope of the initiative to work with the EDAM BAs to develop coordinated enhancements to their Tariffs and Business Practices around known congestion revenue accrual and allocation issues, including for the CAISO BAA. TEA-RPs believe strongly that it is in market participants’ interest for this work to be completed and the changes implemented prior to market go-live.

TEA-RPs are not alone in voicing these concerns. While there are a variety of stakeholder views regarding whether to move forward with an “interim” proposal, few stakeholders support the CAISO EDAM Congestion R-DFP strictly on the merits of the changes proposed for immediate implementation. CAISO’s DMM and MSC, as well as the WEM Governing Body Market Expert, have expressed strong reservations regarding the design choices made in this initiative and more generally with the CAISO’s congestion revenue rights and congestion allocation framework. Over a dozen market participants and independent entities have protested both Portland General’s and PacifiCorp’s EDAM BA Tariff filings at FERC, after attempting in both entities’ stakeholder processes to steer the congestion design choices toward more efficient outcomes[3]. Stakeholders internal to the CAISO, including the CPUC Energy Division, representatives of the large CAISO PTOs/LSEs, the IPP and Marketer sector, and CAISO CRR market participants have expressed strong concerns as well. Moreover, multiple committed or expected future EDAM Entities, including BANC, LDWP, NVE, and Idaho Power, expressed concerns with the CAISO proposal and sought assurance that these issues would be fixed by the time these entities joined EDAM.

The many entities referenced above represent diverse interests and therefore may have varying levels of exposure in the market to inefficient market outcomes. It is not unexpected that certain of them may be willing to varying extents to accept an interim approach, especially where they may have time to wait for long-term solutions to be developed before they are materially impacted by EDAM. The largely unsupportive feedback the CAISO received throughout this initiative, including at the May 27 meeting, however, should not be overlooked just because some entities are more willing to live with inefficient, potentially ineffective solutions in the short run on the promise of appropriate, equitable solutions being developed two, three, or more years down the road.  

Specific to the May 27 meeting and EDAM Congestion R-DFP, TEA-RPs are unconvinced by the “mitigating factors” the CAISO presented. First, the CAISO stated during the May 27 meeting and in the EDAM Congestion R-DFP that it expects the parallel flows on CAISO constraints from schedules ineligible for cost-allocation in non-CAISO EDAM BAAs (i.e., not part of a balanced self-schedule) to be “sizable” while at the same time opining throughout the meeting that it was unable to estimate the settlements impacts of the proposal and EDAM congestion in general. Second, the CAISO made statements that landed as contradictory and confusing around ETC/TOR considerations and the settlements impact of counterflow self-schedules on these rights in the CAISO BAA, as well as for LT-F and NT self-schedules in the EDAM BAAs. And last, the CAISO’s referencing of the split between incumbent and third-party NT rights on the PacifiCorp system was inaccurate and irrelevant[4], and its relaying of statements attributed to PacifiCorp’s Merchant entity reflect a position inconsistent with observed market outcomes[5].

[1] TEA has coordinated with Utah Associated Municipal Power Systems (UAMPS), Cowlitz PUD, Klickitat PUD, Lewis PUD, and Franklin PUD, in its assessment of the CAISO EDAM Congestion R-DFP and development of the positions expressed in these comments, each of whom will have load, generation, and/or transmission affected by this proposal, as will TEA itself.

[2] TEA-RPs serving load on the PacifiCorp system or potentially being forced to be exposed to congestion settlements to use their LT-F PTP wheeling rights across the Portland General system have the potential to be harmed by the inefficient outcomes the EDAM Congestion R-DFP would bring. The fact that these entities are smaller in size than the incumbent utility users of each EDAM BA makes their concerns no less worthy of consideration.

[3] Contrary to CAISO’s, PacifiCorp’s, and Portland General’s assertions in the FERC process, these entities largely oppose both the primary and sub-allocation designs included in the CAISO Tariff and proposed to be included in the EDAM BA Tariffs.

[4] PacifiCorp’s legacy customers, including Deseret Power, Utah Municipal Power Agency, and UAMPS, each take NT service under individual Transmission Service Operating Agreements rather than PacifiCorp’s pro-forma OATT. Together, this NT demand represents nearly 2,500 MW of peak network load service that appears to not have been included in CAISO’s figures. TEA-RPs strongly question the relevance of static NT peak demand figures though, as hourly variations will heavily affect the actual ratio, and an assessment of the marginality and location of these resources relative to other offered resources and NT loads, along with the level of flexible ramping needed in the market, is a far better marker of the consequences of advanced levels of self-scheduling in an organized market.

[5] Large separation in generation LMPs due to congestion in the PACE BAA, at times +/- $300/MWh for the operating hour, with price-spikes to the scarcity ceiling/floor in some intervals, were observed during early afternoon hours from May 28-30, 2025. This occurred at a time when the system marginal energy component was between $35-60/MWh within the operating hour, the PACE E-LAP was around $50/MWh and there did not appear to be any energy emergency. It appears this occurred due to a binding constraint on a 345kV element on the PACE system that strongly separated prices between the northern and southern parts of the PACE BAA, and that likely impacted prices in the CAISO and WEIM areas as well.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

The EDAM Congestion R-DFP is substantively unchanged from the prior proposal and TEA-RPs’ prior comments, linked below, apply equally to the EDAM Congestion R-DFP as to that prior proposal.

EDAM success requires efficient economic participation from loads and generation, and transmission resources. TEA-RPs maintain that without proper bidding and scheduling incentives, granular and direct settlements, and equitable congestion revenue allocation pathways, it is unlikely EDAM will achieve its expected benefits. Further, the group is concerned that even if production-cost benefits accrue at the system level, they will come at the expense of smaller LSEs and transmission rights-holders, while also having numerous unintended consequences for associated activity (e.g., RA and RPS-resource contracting, and transmission development).

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

TEA-RPs find the potential economic risks associated with the existing EDAM congestion revenue allocation framework to be too great to accept it as an appropriate starting point for the market.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

For TEA-RPs, the near-term enhancements proposed remain inadequate relative to the significant issues surfacing regarding EDAM congestion allocation in both the CAISO’s base design and the implementation of such through EDAM BA Tariffs and Business Practices. It is unjust and unreasonable for the market to go-live with such known design flaws, regardless any plans to fix those flaws a year or more down the road.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

TEA-RPs reiterate their requests made in prior comments for the CAISO to provide additional information and further assess the practical application of these and other EDAM congestion design and implementation aspects.[1]

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/e5b46c3b-afc9-47f9-a651-e732eba8c190#org-876fa833-dd51-4e7a-ac3a-209339c78230 and https://stakeholdercenter.caiso.com/Comments/AllComments/ff5b4101-8bf9-4eb8-a150-2b0f48497c23#org-788d8ff1-1d3d-42f4-8fa1-14f78e120a2d

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

TransAlta Energy Marketing U.S. (TEMUS) appreciates the efforts of the CAISO to prioritize and advance the Congestion Revenue Allocation initiative. The inclusion of economic bidding at the suggestion of stakeholders is encouraging, and the CAISO’s commitment to data transparency will help to create future design improvements.

However, TEMUS continues to urge the CAISO to embed in the EDAM tariff the ability to opt-out transmission from day-ahead optimization and direct settlement with the Market Operator, as other stakeholders have suggested. The ability to manage congestion price risk was a core principle in the development of the EDAM design, and the need for this initiative highlights that the only way to manage this risk is to allow transmission to be opted out directly in the EDAM tariff with direct settlement by the Market Operator. This change would then align the EDAM and WEIM tariffs regarding congestion revenue allocation.

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

TEMUS recognizes that the proposed design is a significant improvement over the current design regarding the allocation of congestion revenue resulting from parallel flows and the inclusion of economic bidding. However, the proposal only provides the potential for congestion risk mitigation for firm transmission customers because the EDAM tariff allows each EDAM Entity to create its own methodology to sub-allocate congestion revenue.  

One of the principles relied upon in the creation of the EDAM market design was to provide participants with the ability to manage congestion price risk. TEMUS urges the CAISO to uphold this principle by enabling the ability for all firm transmission customers to opt-out of the EDAM optimization and to enable direct settlement with the EDAM Market Operator, as legacy customers (i.e. ETC/TOR) are allowed under the current EDAM tariff. This would also resolve the inconsistency between congestion revenue allocation methodologies in WEIM and EDAM, as well as more closely aligning with the methodology for allocation of transfer revenues.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

While TEMUS supports the development of future refinements to the EDAM market design, there needs to be a degree of predictability and certainty to facilitate new generation development and contracting. TEMUS supports the removal of the Sunset Date in the revised proposal and opposes the introduction of grandfathering of existing rights ownership and prohibition on future sales of transmission rights. The latter suggestion, posed during the May 27 stakeholder session, would violate the principle that the design must accommodate the ability of EDAM entities to continue to administer their OATTs and to sell transmission service as they do in the WEIM. These suggestions also raise the concern that the CAISO might revert to the original allocation methodology.

During the May 27 stakeholder session, the CAISO estimated that they would not be able to provide results from initial market simulation until September. This raises the concern, given the expedited schedule, that the revisions are being developed without a full understanding of the impact. Given that the impact of parallel flows on congestion allocation was a surprise to stakeholders, it would be prudent to adjust the approval schedule to allow for more time to uncover additional possible issues.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

TEMUS supports the proposed near-term enhancement to expand the allocation methodology to include economic bidding on firm transmission rights. This enhancement would reduce the potential incentive to self-schedule and increase market efficiency.

TEMUS also supports the close monitoring of the proposal and of EDAM overall, and of the sharing of granular information with all EDAM stakeholders. The sharing of granular data can spur creativity, stakeholder engagement, and possible solutions that CAISO staff might not have explored.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

Under the current governance structure, the WEIM Governing Body would jointly approve the changes to the EDAM market design. However, neither the Governing Body nor the CAISO Board of Directors is representative of the EDAM stakeholder body as a whole – for example, there is no seat representing the concerns of transmission customers, especially outside of the CAISO.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

The Utah Municipal Power Agency (“UMPA”) and Deseret Generation & Transmission Co-operative, Inc. d/b/a Deseret Power (“Deseret”) appreciate the opportunity to comment on the EDAM Congestion Revenue Allocation Issue Paper.  UMPA/Deseret continue to stress that the discussion surrounding congestion revenue allocation should focus on returning congestion revenue to the correct transmission customer, not the correct balancing authority area.  UMPA/Deseret have long advocated for transmission customers having a direct settlement relationship with the market operator (CAISO) and that a common congestion revenue allocation be developed across the EDAM footprint. 

The Market Surveillance Committee and WEM Governing Body market expert, Dr. Susan Pope, have highlighted that a “use-it-or-lose-it” congestion revenue allocation design will undermine market efficiency and the potential EDAM benefits.  CAISO’s revised draft final proposal does not address self-scheduling concerns as no modification to the proposal was introduced.  As highlighted in prior comments from UMPA/Deseret, even if CAISO addressed the concerns with its congestion allocation, the “use-it-or-lose-it” issue exists in PacifiCorp’s sub-allocation methodology proposed under its OATT.  Lastly, the potential near-time enhancement introduced in the revised draft final proposal continues to suffer from the “use-it-or-lose-it” issue because it requires balanced source-sink schedules to clear the market in order to receive congestion revenue based upon where the congestion is collected.  If a market participant seeks to ensure its source-sink schedule will clear the market, it will submit a self-schedule or submit economic bids below the generator’s marginal cost at or near the bid floor.

The CAISO, as the market operator, must take the lead in addressing congestion revenue allocation across the EDAM footprint.  A common approach must be developed that decouples the congestion revenue allocation from scheduling energy in the EDAM.  CAISO and stakeholder efforts are better served by developing a durable solution that meets the hedging needs or transmission customers versus developing congestion revenue allocation approaches to balancing authorities for sub-allocation.    

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

The proposed design in the revised draft final proposal was not materially modified from the draft final proposal.  Thus, the issues identified by the Market Surveillance Committee or WEM market expert were not addressed or mitigated.  The revised draft final proposal does provide clarifications that may result in additional inefficiencies.  First, CAISO confirmed that in addition to Firm Point-to-Point and Firm Network Integration Service (NITS), Conditional Firm is also eligible for congestion revenue to be allocated to the balancing authority based upon where the congestion is collected for balanced self-schedules.  The sum of all three transmission products may in certain instances exceed what would be eligible under a simultaneous feasibility test which creates additional self-scheduling incentives.  Second, in order for a balanced self-schedule to be allocated congestion revenue based upon where the congestion is collected, the scheduling coordinator must include a contract reference number (CRN) in its bid submission.  However, the scheduling coordinator is not required to include a CRN in its bid submission.  In the event a scheduling coordinator expected to be charged for congestion, the scheduling coordinator simply would not include the CRN with its balanced self-schedule.

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

The long-term solution must address the “use-it-or-lose-it” issue.  This requires decoupling the congestion revenue allocation to transmission customers from scheduling in EDAM.  Discussions must begin immediately as the market inefficiencies included in both the CAISO’s proposal to allocate congestion between balancing authority areas and PacifiCorp’s sub-allocation within its balancing authority area will undermine the potential benefits of EDAM.

The CAISO, as the market operator, must take the lead in addressing congestion revenue allocation to transmission customers across the EDAM footprint.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

The near-term enhancement provides minimal value since it suffers from the same “use-it-or-lose-it” issues of the current CAISO proposal and PacifiCorp’s sub-allocation of congestion revenue.  Basing the congestion revenue allocation on whether a schedule clears or does not clear the market, is what creates the incentive to submit self-schedules versus bidding generation at marginal cost.  Continued effort on this near-term enhancement will prevent near-term stakeholder discussions on a durable design and waste CAISO implementation resources.  

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

No additional comments.

1. Please provide a summary of your organization’s overall feedback on the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation Revised Draft Final Proposal.

WPTF appreciates the CAISO’s effort in addressing the congestion revenue allocation issue in an expedited manner. We are pleased to hear the CAISO has committed to being involved in the forthcoming EDAM OATT filings to help guide consistency among the various Tariffs. As currently described, the proposal strikes an appropriate balance as an interim step and we are encouraged to see the CAISO already having a plan to continue discussions towards long-term durable solutions with the addition of near-term enhancements to more immediately address the self-scheduling incentive concern. We respectfully request that the CAISO ensure any CRR related discussions are brought forward into the on-going CRR enhancements policy conversations to ensure alignment.   

2. Please provide your organization’s feedback regarding the proposed design to congestion revenue allocation associated with parallel flows (described in section VII.A of the Revised Draft Final Proposal).

WPTF remains supportive of this proposal as an interim step as we believe it strikes an appropriate balance between the original EDAM policy and a long-term durable solution. Furthermore, we appreciate the CAISO (1) committing to engaging in the various forthcoming EDAM OATT filing processes, (2) providing the additional information regarding the impact this proposal has on CAISO CRRs, and (3) laying out a plan for addressing immediate concerns regarding self-scheduling incentives as well as a pathway towards continued evolution of the design.  We would like to take this opportunity to continue encouraging the CAISO to encourage the EDAM entities to consider allowing their long-term firm point-to-point transmission customers to avail themselves of an option to opt-out certain transmission. Even with the implementation of the Revised Draft Final Proposal, it is likely firm transmission customers scheduling in the day-ahead timeframe will continue to be exposed to congestion/transfer risk despite not serving demand in their host BA or otherwise engaging with EDAM to dispatch their resources or schedules economically. 

3. Please provide your organization’s feedback regarding the proposed plan and milestones for continued design evolution on congestion revenue allocation (described in section VII.B of the Revised Draft Final Proposal).

WPTF supports the monitoring and reporting plan. Transparency is essential and will help facilitate effective and efficient discussions about the potential need for further enhancements. We urge the CAISO provide data analysis based on testing and market simulation prior to go live, to the extent possible, so that market participants can have an idea of the potential impacts they may experience.

Regarding the schedule for near term enhancements to address self-scheduling incentives; WPTF seeks confirmation from the CAISO that policy discussions to consider such changes will begin before 2026. This would allow for the implementation of any design changes to be in place by year one in 2027. While we understand that the CAISO plans to re-engage stakeholders in 2026 to discuss a long term durable solution with implementation targeted around 2029, we believe it may be beneficial to begin the near-term enhancement discussions earlier in order to address the self-scheduling incentives by 2027.

4. Please provide your organization’s feedback regarding the identified near-term enhancement consideration for implementation within the first year or soon thereafter of EDAM operations (described in section VII.C of the Revised Draft Final Proposal).

In general, we support near term enhancements that reduce the incentive to self schedule, while also ensuring comparable treatment between non CAISO EDAM BAAs with firm transmission rights and the CAISO BAA, which operates with CRRs. While linking congestion revenue allocation to balanced cleared market schedules may help address the self scheduling incentive, it could simply replace that incentive with one to bid at the bid floor. This issue warrants further discussion.

We also appreciate that the CAISO has raised the potential connection between this policy and CAISO CRRs, and initiated a discussion around ensuring appropriate and symmetrical treatment with the exercise of OATT firm transmission rights and CRRs. The presence of OATT frameworks in some BAAs adds complexity to transmission and congestion revenue policies. We look forward to continued discussions on how best to allocate congestion revenue in a way that supports hedging for both firm transmission rights, whether self scheduled or economically offered, and CRRs within the CAISO BAA, while maintaining an appropriate and fair balance between the two. For example, how transmission derates on CAISO’s system will impact the revenue allocation among all BAAs may warrant further discussion.

Finally, during the stakeholder meeting, there was some discussion about how ETCs and TORs will be treated on day one of EDAM under the current proposal, and after the near term enhancement is implemented to allow for economic bidding. Based on the stakeholder discussion, it is our understanding that ETCs and TORs at go live will continue to receive a perfect hedge, and that the congestion revenue remaining after those hedges are accounted for will be allocated to EDAM BAAs in line with the proposed design. It also appears that this treatment will remain unchanged even after the near term enhancement is adopted. WPTF seeks confirmation from the CAISO that this understanding is correct.

5. Please provide any additional feedback regarding the Revised Draft Final Proposal and stakeholder workshop discussion and materials (May 27th).

WPTF strongly urges CAISO to ensure that any discussions related to CRRs are coordinated with the current on-going discussions under the CRR Enhancements policy effort. The CRR Enhancements policy has already tee-ed up the idea of improving the CRR model to better reflect expected loop/parallel flow impacts on CAISO’s transmission system. Furthermore, to the extent this policy discussion touches on the congestion revenue that would be allocated to the CAISO BAA for funding of CRRs, it’s imperative that this conversation also take place in the CRR Enhancements meetings. CRR underfunding is a critical topic that the CRR enhancements working group is focused on addressing, thus to the extent policy discussions here will either impact the amount of funding and/or consider how the revenues will be allocated to CRR holders, the two policy efforts must be aligned. To reiterate, it’s imperative that the CAISO ensure any CRR related discussions that take place within this effort are also included in the CRR Enhancements effort.