Comments on Extended Day-ahead Market (EDAM) Congestion Revenue Allocation Meeting on 7/28

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

 Appian Way appreciates CAISO staff’s continued effort to engage stakeholders and develop market design solutions regarding implementation of the Extended Day-Ahead Market (EDAM) and the ongoing congestion revenue allocation (CRA) dialogue. Appian Way wholeheartedly supports the promise of a broader regional market through EDAM, which, if implemented properly, will bring greater reliability, market efficiency and cost savings for consumers and market participants throughout the west.

CAISO’s analysis demonstrates again that CAISO transmission customers do not appear to be using the transmission facilities of neighboring BAs, but neighboring BAs are using the transmission network of CAISO, particularly with respect to generation and/or transmission service sourcing in the solar-rich desert southwest region. These loop flows require a fair method of CRA, and neither design concept 3 (DS3), nor any current proposal from the CAISO, addresses this adequately. We believe that any reasonable solution to CRA must include the answer to the question:

What is the fair allocation for EDAM (and Markets+) entities’ usage of CAISO transmission (and vice versa)?

            Moreover, we do not believe this question can be answered in a vacuum and that the rights to use CAISO’s network must be apportioned not merely between CAISO and EDAM BAs but also with respect to Markets+ entities and addressed in the context of the broader Western Markets Seams initiative. In this regard, we would point CAISO staff and market stakeholders to the presentation by Richard Doying at the Western Markets Seams workshop on July 31. We wholeheartedly agree with Mr. Doying’s presentation and note that besides being a consultant for Grid Strategies currently, Mr. Doying dealt with these issues extensively as a senior executive at MISO for over 20 years.

            Fundamentally, CAISO’s DS3 continues to treat CAISO firm rights as residual and second-class rights to OATT rights, which we believe have been taking a great and greater share of the CAISO CRA over time on the major internal south to north transmission corridor in CAISO. The approach in DS3 simply avoids the question regarding “what is the fair allocation of CAISO ratepayers’ right to use the grid that they pay for,” which Mr. Doying identified as the key question to fairly managing SEAMs coordination.

            To consider the issue, we would point to CAISO’s analysis of loop flows from the root cause analysis done by CAISO in February 2025 for the CRR Enhancements Policy Initiative, and data from CAISO on loop flows and price differentials. As a general matter, in the months where there were large NP/SP price spreads and large underfunding for firm CAISO transmission from the SP15 to  NP15 nodes, there were associated large loop flows from external BAAs onto the CAISO grid.

For example, April 2024 had a large NP/SP price spread ($33.65/MWh) and large underfunding (52%). During the same month, the estimated S->N loop flow was 1300 MW which caused large underfunding on the 500 kV Gates-Midway constraint. If CAISO LSEs, regulators and policy makers, and their staffs, consider a 50-50 split of CRA on CAISO’s network between CAISO and non-CAISO entities to be a fair division, that is certainly their choice to make, but CAISO is doing these entities a disservice by eliding the key question that matters most.

As another example, in February 2025, the average NP/SP spread was $22.27/MWh and the underfunding was at 26% with an estimated S->N loop flow of 1100 MW. This caused underfunding on 500 kV Gates-Midway and 500 kV Tesla-LosBanos.

            From the CAISO root cause analysis (https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Congestion-Revenue-Rights-Enhancements-Feb-27-2025.pdf), see in particular slides 141 and 142 for the discussion of loop flows impacts on CAISO participants usage of the transmission grid related to 500 kV Tesla-LosBanos, as well as slide 147 related to 500 kV Gates-Midway.

            We believe additional analysis is required from CAISO staff on this issue as described below. 

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

Design concept 1 has been articulated as a temporary interim measure intended to address two problematic market design flaws with the current approach to congestion revenue allocation (CRA):

1) Discriminatory treatment of CAISO firm rights vis-à-vis equivalent firm OATT physical rights (i.e. OATT rights receive CRA for congestion in CAISO, but CAISO firm rights holders (CRRs, etc.) do not receive CRA for congestion in EDAM BAs); and

2) The likelihood of inefficiency due to the “use or lose” nature of OATT rights (i.e., with marginal cost pricing, source generation for OATT rights might not be part of the least cost solution but nevertheless be scheduled to secure an existing valuable physical transmission right).

The July 28^th meeting spent an inordinate amount of time on Design Concept 1. With respect to the discriminatory treatment issue, this does not appear to be particularly material at this time given the grid configuration of EDAM. From the studies by CAISO so far, CAISO transmission usage does not flow significantly on the external EDAM BA networks (CAISO transactions do not cause loop flows on neighboring systems and therefore CRR prices are not impacted by congestion in external EDAM BA networks).

On the second issue, the design concept 1 solution is not particularly helpful, because it still ties the value of OATT transmission to “cleared balanced schedules.” Balanced schedules can occur from self-schedules or from the source unit economically bidding and clearing. But if the value of the OATT transmission is lost when the economic bid does not clear, the source resource could be incented to bid uneconomically. The issue raised about this by the MSC and the Western Market Expert with respect to OATT rights is only partly about “self-schedule” incentives; rather it is just as much, or more, about the “use or lose” nature of physical OATT rights. Allowing OATT transmission customers to economically schedule is not particularly helpful from an economic efficiency standpoint if the economic value of the OATT rights is not decoupled from the bidding and scheduling decision. Giving units the right to economically bid does not eliminate the incentive for NITS customers or point-to-point customers to want to schedule resources to capture the value of congestion over rights associated with resources that might not otherwise be economic. CAISO staff understood this in their discussion and mentioned it subtly during the July 28 meeting, but this take-away was unfortunately not communicated very strongly.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

It is appropriate to treat ETC/TOR rights equivalently to OATT rights in this context, but there seems to be stakeholder and CAISO consensus that Design Concept 1 may not be worth pursuing given the implementation challenges described by CAISO during the meeting as well as the limited benefits described above.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

Supply resources that do not recover their bid cost require make whole payments and this calculation should be independent of revenues that are unrelated to the generation cost of the supply resource. The only rationale we could think of otherwise would be an acknowledgment that resources are running not due to their economics but because of their linkage to the physical OATT right. This is exactly the market design flaw that CAISO should be trying to solve, not a market design flaw to accommodate.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

We do not see a reason to change the status quo allocation of real-time/balancing market-collected congestion revenues.  In a well-functioning market, participants should be incentivized to participate in the day-ahead market with the balancing market serving to address changes in schedules. Real time prices represent the correct and most efficient “penalty” for schedule deviations – i.e. the cost of not meeting one’s day-ahead schedule is merely the real time price. This approach allows the most efficient and least-cost system for participation in the electricity market and is the primary basis for the tremendous value derived from WEIM to consumers and market participants in general.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

The presentation by CAISO staff on congestion analysis was excellent, as usual. It showed that CAISO market transactions don’t flow materially on EDAM BA networks, but that EDAM (and likely Markets+) transactions that source in the desert southwest flow approximately 40% on the CAISO network from south to north. These loop flows impact a number of important constraints in CAISO and impair CAISO’s ability to use its own transmission network, as described above, especially during periods of high solar output in the SP15 region and high price differentials between SP15 and NP15. The loop flows require a fair method of CRA, and neither DS3, nor any current proposal from the CAISO, addresses this.

Under DS3, CAISO firm rights to use CAISO’s system are treated as residual second-class rights to OATT which we believe have been taking a greater and greater share of the CAISO CRA over time. We note:

1. If CAISO participants’ right to use CAISO’s network in 2026 is X, why should it be less than X in 2027 in the event that external EDAM and Markets+ entities schedule additional firm transmission?
2. If system conditions dictate an economic incentive for EDAM entities to schedule additional short term OATT rights on their system, why should that further reduce or compromise CAISO entities’ rights to use their own transmission network when CAISO entities are restricted from using their own transmission network as much as they would like? 
3. When external BAs assess whether there is available transmission for OATT rights, do they now or will they in the future consider CAISO’s transmission network usage in any way when they make the determination whether the OATT rights are feasible?

We believe that fairly addressing the loop flow situation requires additional analysis for CAISO stakeholders to assess how best to proceed. The additional analysis would address:

• How much transfer capacity on internal CAISO congested paths, particularly along the primary south to north internal congested constraints, is being consumed by external entities; and how does this compare with previous historical usage from a different year (say 2019)?
• Moreover, in cases where the south to north transfer capacity is derated due to outages, how does the split change given that loop flows from external OATT rights are fully funded and subsidized by CAISO ratepayers? We note that nothing in DS3, or anything else that CAISO has yet proposed, has identified pro-rating allocation of transmission derates due to outages for external BAs as well as CAISO entities, even though derating of OATT rights when there are outages is common practice on OATT-based BAs.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

The Bay Area Municipal Transmission Group (BAMx^[1]) appreciates the opportunity to comment on the July 28, 2026 Energy Day Ahead Market (EDAM) Congestion Revenue Allocation (CRA) Phase 2 Stakeholder Working Group meeting. BAMx thanks the CAISO and stakeholders for their continued time, effort, and engagement throughout this initiative.

BAMx agrees with PG&E^[2] that continued discussion of Concept 1 is not a productive use of the working group’s effort, and that remaining time should instead be directed toward Concept 3, which has received the broadest and most consistent stakeholder support.^[3]

Regarding the congestion cost analysis for the future EDAM footprint, there is empirical evidence that the January 2024 cold snap represented fundamentally different transmission patterns than typical for January conditions in the Pacific Northwest (PNW) going back to 2017.^[4] BAMx respectfully requests that the ISO account for this difference in their analysis by producing an alternative congestion analysis that excludes the January 2024 event, with a separate analysis for only the seven days of the January 2024 event. These analyses could be compared to the one CAISO already has completed that includes the January 2024 event in the data set so that stakeholders can evaluate the sensitivity of the results to this abnormal event.

[1] BAMx consists of the City of Santa Clara dba Silicon Valley Power and the City of Palo Alto Utilities.

[2] Comments by PG&E at the July 28, 2026 EDAM CRA stakeholder working group meeting.

[3] EDAM Congestion Revenue Allocation Phase 2 – Stakeholder Working Group Meeting, California ISO, July 28, 2026, Slide 9 (recap of stakeholder feedback on Concepts 1, 2, and 3).

[4] T. Kieper, S. Datta, A. M. Campbell, and A. Somani, “The Contribution of Hydropower and Long-Duration Energy Storage to Grid Resilience During Extreme Weather and Electricity Market Scarcity Events,” 2025 IEEE Power & Energy Society General Meeting (PESGM), Austin, TX, USA, 2025, pp. 1-5, doi: 10.1109/PESGM52009.2025.11225636.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

BAMx appreciates the CAISO’s congestion cost analysis for the prospective EDAM footprint, which relies on a few years of price and flow data, including data from Q1 2024.^[1] This quarter includes the January 2024 Pacific Northwest extreme weather event, which spanned approximately January 11–18, 2024.

This event produced load, generation, and interchange conditions materially different from typical January operations in the PNW. According to an analysis by PNNL^[2], temperatures dropped well below normal and extreme straight-line winds combined with turbine icing led to wind generation falling to zero. Natural gas supply constraints occurred at the Jackson Prairie storage facility and at gas facilities serving Avista gas generators. Prices at the Mid-C bilateral hub peaked at $930/MWh, followed by average prices rising to $2,000/MWh across the PNW’s EIM nodes. The reduction in available local generation led to a regional import record above 7,500 MW[3] even while the Pacific DC Intertie South-to-North line was down for maintenance.

PNNL determined the historical correlation between BPA hydro generation and net interchange to be 0.859 for every January spanning January 2017 - January 2024, excluding the days of the cold snap. During the cold snap, the correlation between hydro and interchange fell to 0.611. The correlation between hydro generation and load is 0.475 for a typical January but rose to 0.924 during the event. Meanwhile, the correlation between load and net interchange increased from 0.120 in typical operations to 0.424 during the weather event. This is evidence of a shift from BPA’s normal hydro operations to event-driven, load-following operations supported by substantially higher-than-normal imports from the East and South.

Because this single extreme weather event materially altered typical operating and price relationships in the PNW, its inclusion in the underlying data set risks skewing the structural congestion and parallel-flow conclusions the analysis is intended to support. Including the January event in the analysis risks alternately masking or exaggerating the actual congestion patterns that the Phase 2 design should address.

BAMx respectfully requests that the CAISO produce the prospective EDAM congestion analysis (a) with the January 2024 event excluded from the data set and compare it to the analysis CAISO already has completed with it included, so that stakeholders can evaluate the sensitivity of the results to this abnormal event. CAISO also could (b) produce an analysis isolating just the January 2024 event to characterize its distinct congestion impacts.

Beyond the treatment of the January 2024 event, BAMx wishes to highlight what it views as the most consequential finding of the CAISO's analysis, i.e., the impact of parallel flows across the prospective EDAM footprint is highly asymmetric. The CAISO's results indicate that approximately 86% of congested constraints are internal to the CAISO balancing area, that roughly 34% of CAISO constraints are affected by parallel flows originating from transactions in other EDAM areas, and conversely, that CAISO transactions have only de minimis impact on constraints in other EDAM areas.[4] BAMx believes this asymmetry must be included in the analytical foundation of the Phase 2 design.

Finally, BAMx notes that the hourly data presented by the CAISO suggest a strong time-of-day and seasonal directional pattern, with prevailing-flow and counterflow conditions reversing between quarters and across the day.[5] BAMx is concerned that averaging prevailing-flow and counterflow impacts together may obscure these directional patterns, which are directly relevant to how rights should be valued and to the time-of-use differentiation of CRRs. BAMx requests that the CAISO present the prevailing-flow and counterflow components separately, and by time-of-use period and season, so that stakeholders can properly assess the directional and temporal character of parallel-flow congestion.

[1] Congestion Cost Analysis for Future EDAM Footprint, California ISO, Guillermo Bautista Alderete, July 28, 2026, Slides 2–3 and 12 (analysis relying on historical WEIM congestion data, including Q1 2024).

[2] T. Kieper, S. Datta, A. M. Campbell, and A. Somani, “The Contribution of Hydropower and Long-Duration Energy Storage to Grid Resilience During Extreme Weather and Electricity Market Scarcity Events,” 2025 IEEE Power & Energy Society General Meeting (PESGM), Austin, TX, USA, 2025, pp. 1-5, doi: 10.1109/PESGM52009.2025.11225636.

[3] A. Somani and T. Kieper, “Hydropower's role during scarcity events - a case study,” 2024 WIRED Grid Resilience Symposium, U.S.-Canada Center on Climate-Resilient Western Interconnected Grid, Salt Lake City, UT, USA, September 13, 2024, online: https://www.youtube.com/watch?v=j2gzivNHeBY.

[4] “Congestion cost analysis for future EDAM footprint,” Guillermo Bautista Alderete, CAISO, July 28, 2026, pp. 3, 21-24.

[5] Ibid. 12-13.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

BAMx agrees with PG&E^[1] that continued discussion of Concept 1 is not a productive use of the working group’s effort, and that remaining time should instead be directed toward Concept 3, which has received the broadest and most consistent stakeholder support.^[2]

Concept 3 represents the more practical path to implementation because it extends the simultaneous feasibility test (SFT) already applied today in the CAISO CRR allocation process to a common evaluation of CRRs and eligible OATT rights across the EDAM footprint. This is consistent with the CAISO’s own initial assessment that Concept 3 may carry a lower implementation burden than Concept 1,^[3] which would require substantial new system development, including expanded identification of transmission-right use across multiple energy-bid segments, reconfiguration of MQS/Settlements/CRR-1B processes on a compressed settlement timeline, and complex sequential allocation rules described as non-transparent and lacking robust design.

BAMx also wishes to underscore a structural reason why a common, footprint-wide simultaneous feasibility test is necessary rather than a design that evaluates rights on a balancing-area-by-balancing-area basis. Within the CAISO balancing area, the CAISO generally has substantial load and resources on both sides of its internal constraints relative to the rights it has issued, so congestion revenues collected tend to support the associated rights payouts. This is much less likely to hold for interface constraints and for constraints affecting multiple balancing areas. In those cases, the congestion revenue collected within an individual balancing area will not necessarily correspond to, or be sufficient to fund, the ETC/TOR/OATT payouts owed to the rights holders that are actually affected by that constraint, which may reside in a different balancing area. A common SFT that evaluates CRRs and eligible OATT rights together across the entire EDAM footprint, as contemplated by Concept #3, is the design best suited to ensure that rights are sized consistently with the congestion revenue that ultimately funds them, and to avoid systematic revenue inadequacy on interface and inter-BAA constraints. BAMx views this as a further reason to concentrate the working group's effort on Concept #3.

In summary, BAMx encourages the CAISO to focus the working group’s time on Concept 3, to resolve outstanding design and policy questions (e.g., nomination processes and timelines, treatment of CRRs’ time-of-use element, and the appropriate annual SFT capacity percentage for a broader footprint) rather than continued evaluation of Concept 1.

[1] Comments by PG&E at the July 28, 2026 EDAM CRA stakeholder working group meeting.

[2] EDAM Congestion Revenue Allocation Phase 2 – Stakeholder Working Group Meeting, California ISO, July 28, 2026, Slide 9 (recap of stakeholder feedback on Concepts 1, 2, and 3).

[3] EDAM Congestion Revenue Allocation Phase 2 – Stakeholder Working Group Meeting, California ISO, July 28, 2026, Slide 17 (“Concept #3 may have a lower implementation effort than Concept #1”).

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

BAMx has no comments at this time on this particular item.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

BAMx again thanks the CAISO and stakeholders for their engagement on this initiative and looks forward to continued discussion at future working group meetings.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

No comments at this time.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

Comments on Extended Day-Ahead Market Congestion Revenue Allocation

Phase 2 Design Working Group Meeting - July 28, 2026

Department of Market Monitoring

August 10, 2026

Summary

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Extended Day-Ahead Market Congestion Revenue Allocation Phase 2 Design Working Group Meeting – July 28, 2026.[1] At the working group meeting, the ISO described stakeholder feedback on the three design concepts:

• Concept 1: Allocating congestion revenue to all balanced schedules clearing the market that have qualifying open access transmission tariff (OATT) rights
• Concept 2: Financial entitlements
• Concept 3: Financial rights, equivalent to congestion revenue rights (CRRs), based on a simultaneous feasibility test with current allocated CRRs

The ISO summarized feedback on Concept 1 as being split but generally supportive for considering as a potential incremental improvement and bridge to a longer-term design. The ISO then described broad opposition to Concept 2 for basing allocations on historical use because flows could change significantly as the western grid changes. The ISO also described broad support for exploring Concept 3 as a long-term solution, though stakeholders and the ISO recognize this to be a substantial effort. During the rest of the meeting, the ISO then discussed Concepts 1 and 3, but not financial entitlements such as Concept 2.

DMM does not see Concept 1 as a potential incremental improvement or bridge to a longer-term solution. The Market Surveillance Committee (MSC), the Western Energy Market (WEM) Expert, and DMM have all pointed out that Concept 1 is a flawed design. Integrating OATT rights and CRRs into a common simultaneous feasibility test will take significant stakeholder effort and time. Therefore, for a near-term interim design, the ISO should consider addressing stakeholder concerns with the financial entitlements approach under Concept 2 rather than continue with allocations based on market schedules as under Concept 1.

Below we outline a relatively simple alternative financial entitlement approach meant to alleviate the concerns raised by stakeholders as an interim approach to bridge to a long-term solution.

Comments

Basing congestion rent allocations on cleared schedules is fundamentally flawed

Basing congestion rent allocations on schedules cleared by the market distorts bidding incentives, undermines locational pricing, and has the potential to adversely affect the ability of the market to properly function. The flawed design of approaches like Concept 1 has been pointed out by DMM, as well as the MSC and the WEM Market Expert.[2]

In their opinion on the current congestion revenue allocation (CRA) design, and referring to what is now called Concept 1, the MSC wrote:

We understand that the nature of these changes would be to extend the rebate of congestion charges on constraints located in other balancing areas to generation that is dispatched in accord with its firm transmission service, rather than self-scheduled.

We believe that this is a bad design and a bad use of CAISO resources.  We recommend that there should be a goal of eliminating the FP design [the current CRA design] and replacing it with a financial flow entitlement design prior to the time when BAAs in addition to PacifiCorp and Portland General join EDAM.[3]

Similarly, the WEM Market Expert wrote:

While extending the congestion revenue allocation to market scheduled resources might at times reduce the self-scheduling incentive of the proposed rules for EDAM start-up, it would not remove it during times of significant congestion.  And it is at times of significant congestion when self-scheduling would lead to the greatest losses in EDAM efficiency.

Further, such a change could become embedded in the WEM with the unintended result of impeding desirable market enhancements in the future.  For instance, it could be more difficult to convert existing OATT service to CRRs…[4] 

DMM agrees with these views expressed by the MSC and WEM Market Expert, and DMM does not view Concept 1 as an incremental improvement to the current design or as a bridge to a long-term design. Concept 1 would result in inefficient scheduling of a wide range of resources submitting price-based bids. Even if resources do not self-schedule, the fact that resources receive a full or partial rebate of congestion costs if scheduled will distort bidding incentives.

The ISO should consider changes to financial entitlements that address stakeholder concerns

Financial entitlements that allocate congestion rent regardless of market clearing outcomes do not create the poor incentives that the current allocation creates, and that an allocation under Concept 1 would create. The ISO says the main concern with Concept 2 was basing financial entitlements on historical use because flows could change significantly as the western grid changes. Rather than using this as a reason to pivot to the flawed design under Concept 1, the ISO should work to address these concerns if it wants to create an interim allocation to bridge to a long-term design.

Possible ways to address concerns with financial entitlements

The ISO should continue to explore financial entitlement options and consider ways to address the concerns raised by stakeholders. For example, rather than basing financial entitlements on a single historical point, the ISO could update the entitlements on a regular basis. Regular updating could address concerns that the entitlements would become increasingly out of date as the western grid changes. 

Another possible, relatively simple approach to addressing these stakeholder concerns would be creating financial entitlements defined not as rights to specific flowgates, but as sourcing at generation aggregations and sinking at load aggregations—like a CRR held by the balancing area. These would settle on the congestion price difference between the generation and load aggregations multiplied by megawatt quantities equal to a percentage of recent historic load or of forecasted load.[5]

These entitlements would update over time as conditions on the western grid change, because:

• The generation aggregations (DGAPs and Trade Hubs) use actual historic generation to weight prices, and these weights are updated annually. These weights will change as generation patterns change. The same is also true for weights in the load aggregations (ELAPs and DLAPs).
• The congestion prices will reflect the current transmission system, any changes to the transmission system would be accounted for.

While the cleared market schedules would affect the future weights, they would not affect the current rent allocation. Further, the effect on future weights from any hour or day would be relatively small. Therefore, we would not expect this to create meaningful incentives to alter bids submitted to the market. Stakeholders may also want to consider using aggregations created specifically for congestion rent allocation that are different than the current aggregations used in the market. For example, using aggregations that update weights at different times or that do not apply shift factor truncation to the weighted average shift factors used to calculate the congestion prices for the rent allocation.

The ISO and stakeholders would have to work out the specifics of such approaches. But DMM thinks this, or other financial entitlement approaches, would be a better path forward for creating an interim rent allocation to bridge to a long-term solution.

[1]  Extended Day-Ahead Market Congestion Revenue Allocation Phase 2 Design Working Group, California ISO, May 11, 2026: https://stakeholdercenter.caiso.com/InitiativeDocuments/Presentation-Extended-Day-Ahead-Market-EDAM-Congestion-Revenue-Allocation-Phase-2-May-11-2026.pdf

[2]  Memorandum to ISO Board of Governors and Western Energy Markets Governing Body, Department of Market Monitoring, June 12, 2025: https://www.caiso.com/documents/decision-on-edam-congestion-revenue-allocation-dmm-comments-june-2025.pdf

[3]  Opinion on Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation, James Bushnell, Scott M. Harvey, and Benjamin F. Hobbs, Market Surveillance Committee for the California ISO, June 16, 2025, p 18: https://www.caiso.com/documents/market-surveillance-committee-opinion-extended-day-ahead-market-congestion-revenue-allocation-jun-13-2025.pdf

[4]  Opinion on California ISO Final Proposal for EDAM Congestion Revenue Allocation, Pope, Susan L., Western Energy Market Governing Body Market Expert, June 16, 2025, p 20: https://www.caiso.com/documents/wem-governing-body-market-expert-opinon-on-extended-day-ahead-market-congestion-revenue-allocation-jun-18-2025.pdf

[5]  More specifically for the congestion revenue allocation, it would settle on the portion of the congestion price difference from constraints in other balancing areas.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

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. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

Please see the PDF attached below the final question for DMM's fully formatted complete set of comments. For the reader's convenience, the complete text of the comments is pasted in response to #1, but there may be some formatting errors.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

Energy Division staff (ED staff or staff) of the California Public Utilities Commission (CPUC) develops and administers energy policy and programs to serve the public interest, advises the CPUC, and ensures compliance with CPUC decisions and statutory mandates. ED staff provides objective and expert analyses that promote reliable, safe, and environmentally sound energy services at just and reasonable rates for the people of California.?????

ED staff appreciates the opportunity to submit comments on Phase 2 of the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation (CRA) Initiative. ED staff has previously encouraged CAISO to continue to develop Concept #3, which would determine congestion revenue allocation by applying a simultaneous feasibility test (SFT) to the entire EDAM footprint. In essence, this is an expansion of the current model used for CAISO’s Congestion Revenue Rights (CRRs). ED staff has also previously encouraged CAISO to continue to develop Concept #1, which is an expansion of the EDAM Tariff’s interim methodology that would allow the CAISO BAA to be allocated the congestion revenue tied to parallel flows that the CAISO BAA causes on other BAAs’ transmission grids. ED staff supports Concept #1 as a bridge solution while the fairer Concept #3 is developed, but will detail our extensive concerns with Concept #1 in question #3.

ED staff supported Concept #1 as a bridge solution in order to allow CAISO more time to develop the ideal solution – Concept #3. However, CAISO’s further analysis of Concept #1 indicates Concept #1 may be more difficult and riskier to implement than Concept #3. ED staff does not believe that designing a bridge solution that is ultimately more complex than the ideal solution is a worthwhile use of CAISO’s or stakeholders’ limited time and resources. Should some unforeseen roadblock or large opposition emerge that prevents the adoption of Concept #3, then ED staff would reluctantly support Concept #1. Concept #1 is potentially slightly better than the current transitional mechanism, so it could potentially be a slight improvement.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

ED staff appreciates the extensive discussion on July 28^th of Concept #1. However, it is becoming increasingly clear that Concept #1 is more difficult to implement than expected, and thus likely not worth pursuing further, unless it is the only workable concept. Concept # 1 attempts to provide symmetry to the CAISO BAA, but does not create complete symmetry as conceded by CAISO staff during the call.[1] An additional benefit of Concept #1 is that it would allow the CAISO BAA to allocate congestion revenue tied to qualifying  EDAM constraints to be allocated to the CRR balancing account. This is a welcome source of additional revenue, but is likely to be an insignificant amount of new revenue.

There are significant flaws with Concept #1. For instance, allowing economic bidding presents an opportunity for bid price manipulation. As extensively discussed last year during EDAM CRA Phase 1, allowing economic bidding could incentivize an entity to manipulate their market bids to ensure their resources get dispatched and to then make up the difference via the allocation of congestion revenues. Self-scheduling also reduces economic efficiency because self-scheduling does not allow for the market to economically dispatch resources in the system. The expansion of congestion revenue allocation to economically bid schedules could allow entities to potentially manipulate the marginal clearing price of the entire EDAM. The potential impact on the marginal clearing price has extensive downstream consequences not limited to the following: power-purchase agreements, forward price curves, revenue forecasts for LSEs, etc.

Also, from an implementation perspective, CAISO itself identified an array of implementation questions and changes that would be required. Ultimately, CAISO staff concluded that implementation would be possible, but conceded that it would be complex and carry a high implementation risk.

[1] Around,1:08:41, Jul 28, 2026 - Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

ED staff is skeptical of allowing holders of Existing Transmission Contract (ETC) or Transmission Owner Rights (TORs), which are transmission rights that pre-date CAISO, to economically bid their schedule and receive a full congestion revenue allocation at this time. ED staff would be interested in understanding the relative size of ETC/TORs that are able to receive a full congestion hedge when self-scheduled, because ETC/TORs receive the first allocation of congestion revenue. ED staff would welcome more analysis on this question to understand if there are any significant market manipulation concerns with extending economic bidding to ETC/TORs and guaranteeing full funding. However, as detailed above, ED staff generally does not support tying allocation of congestion revenue to any type of market schedules, as any ideal congestion revenue allocation methodology would decouple the transmission right from the market schedule.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

ED staff continues to be concerned about Concept #1, however ED staff supports CAISO including congestion revenues derived based on economic bids as part of derived market revenues within the bid cost recovery (BCR) process. As stated above, the expansion of the EDAM CRA to allow for allocation of congestion revenues tied to economic bidding introduces economic efficiency and market manipulation concerns. This outcome can also extend to the BCR process. As long as congestion revenue allocation is tied to economic bidding behavior, market participants have an incentive to underbid, collect the congestion revenue, and receive a BCR payment due to the need to be made whole for the potentially uneconomic dispatch they caused. The BCR process is intended to make resources whole when they are uneconomically dispatched, due to no fault of their own, not due to their own actions. If Concept #1 is the only concept that proves workable, then this issue should be explored further.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

ED staff cautions against modifying the congestion revenue allocation methodology used in the real-time market at this time. ED staff currently does not have an opinion regarding what modifications would or would not be beneficial. With the many active and competing initiatives that stakeholders and CAISO are focusing on, it will be unrealistic to expand the initiative’s scope at this time. ED staff looks forward to the forthcoming workshop dedicated solely to Concept #3.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

ED staff appreciates CAISO continuing to conduct congestion cost analysis for this stakeholder initiative and other relevant forums. ED staff notes that the current congestion cost analysis for May 2026 was $1.3 million.[1] This is the same amount presented in a different forum for June 2026.  These figures continue to track with CAISO’s pre-EDAM go-live analysis. However, the size of this congestion cost will increase as the size of EDAM increases, which was illustrated in the recent analysis presented on July 28^th examining an EDAM footprint composed of the following BAAs: BANC, CAISO, IPCO, LADWP, NEVP, PACE, PACW, PGE, PNM, and TID. California’s backbone transmission system is affected by usage throughout the Western Interconnect:

On average, 137 congested constraints are in the California ISO area; this represents about 86 percent of all constraints. About 34 percent of all constraints located in the ISO area are affected by parallel flows generated by transactions in EDAM areas.[2]

By contrast, transactions in CAISO area have a “de minimis parallel-flow impacts on EDAM areas constraints.”[3] As a result, congestion constraints most acutely impact California's ratepayers; therefore, a solution that takes into consideration California's stakeholders’ interests is necessary to ensure an equitable outcome.

[1] July 15^th, 2026 Briefing to Joint ISO Board of Governors and WEM Governing Body General Session Meeting, briefing-on-extended-day-ahead-market-congestion-revenue-allocation-phase-2-analysis-jul-2026.pdf

[2] July 28^th, 2026 Congestion Cost Analysis, Slide 3, Presentation-Congestion-cost-analysis-Jul-28-2026.pdf

[3] Ibid.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

DC Energy appreciates the CAISO’s continued engagement on issues of equity and economic efficiency as they relate to congestion revenue allocation in the Extended Day-Ahead Market (EDAM).  The current congestion revenue allocation is unduly discriminatory to CAISO transmission customers and Congestion Revenue Rights (CRR) holders while giving unscheduled parallel flows from other Balancing Area Authorities (BAAs) potentially unlimited free access to the CAISO’s transmission system.  Improvements must be made to congestion revenue allocation, perhaps starting with temporary, interim enhancements, if more fundamental changes cannot be implemented for a number of years.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

Design Concept 1 is not as complete of a solution for congestion revenue allocation issues in EDAM as Design Concept 3.  It is DC Energy’s understanding, however, that the CAISO intends to delay the implementation of Design Concept 3 until after NV Energy begins EDAM market operations, which is projected to occur in October 2028, because BAAs joining EDAM do not want the added complication of adjusting to a fundamentally different congestion revenue allocation methodology while preparing to integrate with EDAM.  Design Concept 3 would allocate rights to collect congestion revenue among transmission customers in all EDAM BAAs based on simultaneous feasibility in a similar manner to the CAISO’s allocation of CRRs, which begins prior to October each year.  Therefore, it appears that Design Concept 3 would apply to the rights allocation process in 2029 for congestion that occurs in 2030, at the earliest. 

If this is the case, then the CAISO must pursue Design Concept 1 as a near-term interim enhancement to provide greater parity between CAISO CRRs and OATT rights in other EDAM BAAs, as the CAISO indicated it would when seeking WEM Governing Body, CAISO Board, and FERC approval for the current congestion revenue allocation in EDAM.  The status quo is unduly discriminatory to CAISO transmission customers and CRR holders. It perpetuates  potentially unlimited free access to the CAISO’s transmission system for unscheduled parallel flows from other EDAM BAAs, a known root cause of CRR underfunding in the CAISO.  

It may be suggested that reforming the status quo EDAM congestion revenue allocation should be a lower priority issue, because congestion related transfers between BAAs have been relatively modest since EDAM went live on May 1, 2026.  This is, however, a very small sample from which to draw conclusions, both in duration and the scope of the market.  As new BAAs join EDAM and the expanded market operates through varied conditions, the congestion revenue allocation will grow and fluctuate.  The Congestion Cost Analysis that the CAISO presented at the July 28^th Meeting regarding unscheduled parallel flows associated with additional BAAs that plan to join EDAM indicates that the inequities in the current congestion allocation will become more impactful as the market footprint expands.  The CAISO and stakeholders must continue to work diligently to mitigate the known flaws in the current EDAM congestion revenue allocation while continuing to work to resolve this matter with a longer-term solution.  DC Energy supports the adoption of Design Concept 1 while stakeholders continue to discuss further congestion revenue allocation reforms under Design Concept 3, assuming Design Concept 3 will not be implemented for a number of years.

The CAISO should outline its expected timeline for developing and implementing Design Concept 3 and its expected timeline for developing and implementing Design Concept 1. If Design Concept 1 can be implemented significantly sooner than Design Concept 3, either due to practical implementation considerations or efforts to accommodate the market integration plans of new BAAs, then Design Concept 1 should be implemented as an interim solution.  If it appears that Design Concept 1 could not be implemented on a meaningfully faster timeline, however, then perhaps it should not be pursued, and more immediate effort should be put into developing Design Concept 3.  It should be possible, however, for the CAISO to undertake the practical steps to implement Design Concept 1 while continuing to flesh out the Design Concept 3 proposal. 

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

Changes to ETC/TOR treatment appear to be unnecessary for the implementation of Design Concept 1. The goal of Design Concept 1 is to provide more equitable treatment between certain eligible OATT rights and CRRs, thereby mitigating the self-scheduling incentive for these OATT rights.  It is not necessary to expand Design Concept 1 to ETC/TORs in order to achieve this goal.  The CAISO should endeavor to implement Design Concept 1 expeditiously as a short-term, interim enhancement, as it indicated when seeking approval for the current congestion revenue allocation design.

If the CAISO continues to consider changes to ETC/TOR treatment, then DC Energy agrees with WPTF that the CAISO should quantify the amount of ETC/TOR capacity and associated schedules by BAA, how often those rights are currently self-scheduled, the congestion revenues or hedges involved, the number and identity of affected scheduling coordinators, and the operational and settlement changes that would be required. The CAISO should also assess whether the proposed treatment would alter existing scheduling priority or complete-hedge treatment, create the potential for double recovery, or produce a material improvement in market efficiency. Unless the ISO can demonstrate meaningful benefits with modest incremental implementation effort, then the CAISO should not delay and complicate Design Concept 1 implementation due to ETC/TOR considerations. 

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

In the context of Design Concept 1, congestion revenues derived based on economic bids associated with OATT rights and ETC/TORs should not be considered derived market revenues for BCR purposes.  DC Energy agrees with WPTF that BCR should remain tied to the resource bid costs submitted to and used by the market optimization and to the market revenues earned by the resource through the relevant awards. The cost of acquiring transmission rights is not submitted as a resource bid cost and does not inform the market’s commitment or dispatch decisions or the resulting energy, ancillary service, or imbalance reserve prices. Congestion hedge proceeds compensate the holder of a separate transmission or financial right; they do not compensate the resource for a cost that the market relied on in scheduling the resource.

Including congestion allocations as bid cost recovery revenue without including a corresponding eligible cost would inflate the revenue side of the calculation and could reduce bid cost recovery for reasons unrelated to the resource’s market economics. Attribution would be especially problematic for OATT rights because the congestion revenue would be allocated to the EDAM entity and then potentially suballocated, while the transmission customer may not be the same entity as the scheduling coordinator or resource owner. CRR revenues are appropriately excluded today as separate financial hedges, and comparable treatment supports excluding congestion-hedge proceeds associated with OATT rights and ETCs/TORs.

DC Energy further agrees with WPTF that transmission-right or CRR acquisition costs should not be added to bid cost recovery. Those transactions occur outside the day-ahead market optimization and should remain outside a calculation intended to ensure that market revenues cover the resource costs submitted to the market.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

The CAISO should not complicate the implementation of Design Concept 1 with changes to congestion revenue allocation in the real-time market.  The ability to hedge congestion costs is essential for encouraging robust participation in the day-ahead market.  Design Concept 1 would be an interim enhancement to provide more equitable treatment between certain eligible OATT transmission rights and CAISO CRR holders.  This consideration is not present in the real-time market, so pursuing this interim measure in the WEIM, which includes many BAAs that are not currently participating in EDAM, would introduce unwarranted additional complexity.   

Furthermore, expanding Design Concept #1 to the real-time market would provide OATT and ETC/TOR rights with a reallocation of certain real-time congestion revenues, which would introduce a new disparity between CRRs and other transmission rights.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

DC Energy appreciates the CAISO’s expanded analysis, which included all BAAs that have expressed an interest in joining EDAM.  These BAAs are, of course, an important subset that should be analyzed as group.  The CAISO should expand its analysis further, however, and provide analysis of unscheduled parallel flows from all BAAs in the WECC.  It appears that a substantial portion of unscheduled parallel flows are associated with BAAs in the Southwest and Northwest that are not currently planning to join EDAM.  The CAISO and stakeholders must better understand these flows in order to more fully consider EDAM congestion revenue allocation issues, as well as CRR modeling and wider seams issues. 

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

PG&E thanks CAISO for its continued attention to this important topic and for accepting stakeholder feedback. Following the workshop on 7/28, PG&E has the following overall comments:

PG&E believes that EDAM CRA Phase II should be durable, fair, align with market design principles, and provide a clear transition timeline.  Design Concept 1 is not able to achieve any of these goals.

PG&E believes that Design Concept 1 (“DC1”) is structurally flawed and that the CAISO and stakeholders should stop working on it.

• Difficult to achieve equitable eligible rights with DC1.  DC1 requires equity in the eligible rights between participants.  Given the vast difference between CAISO CRRs and others’ OATT rights, it appears there may be not equitable sets of rights.

• The topology makes DC1 inherently inequitable. Even if we could find equitable sets of eligible rights between participants, the CAISO’s analysis in this initiative has shown that the topology would still render such a solution inequitable.  The topology of the WECC means that EDAM entities have a greater impact the CAISO’s constraints than vice versa.

• DC1 does not align with sound market principles.  If we think of EDAM as a seams agreement, it does not make sense that those who cause loop flow (through self-scheduling on their rights) be paid for causing it.  All other seams agreements pay the transmission provider for the transmission service and/or the redispatch cost when loop flow goes through their system.  DC1 would encourage the continued sale of rights that create loop flow, rather than a progression towards a market-based solution.

Excellent Modeling from Guillermo and team.  PG&E is grateful for the hard work by the CAISO analytics team to help provide further context to this initiative with their modeling.  It has been extremely helpful.  Further, PG&E appreciates Guillermo’s time spent patiently explaining the analysis to us all.  It is an excellent example of how targeted analysis can meaningfully move an initiative forward.

The CAISO (as a Reliability Coordinator) should provide historic loop flow data for major interties in likely EDAM footprint.  In addition to the analytics that has been provided, it would be useful for the Reliability Coordinator (CAISO) to provide historic loop flow data for major interties in the likely EDAM footprint.  These data must exist somewhere or could be created based on historical intertie flow and tagging data.  For the CAISO BAA, its OASIS site has a table where loop flow should be reported; the value is always reported as zero.  While EDAM is likely to change the flows in the West significantly, those historic data would be helpful to understand the potential magnitude of the issues we’re discussing.

The CAISO should report on CRA 1 data now that EDAM is live.  PG&E thinks it would be helpful if the CAISO could report on the current (CRA 1) design in EDAM to date within this initiative.  While the data will be preliminary, it could help ensure all stakeholders are aware of the current performance.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

Excellent Modeling from Guillermo and team.  PG&E is grateful for the hard work by the CAISO analytics team to help provide further context to this initiative with their modeling.  It has been extremely helpful.  Further, PG&E appreciates Guillermo’s time spent patiently explaining the analysis to us all.  It is an excellent example of how targeted analysis can meaningfully move an initiative forward.

The RC West (CAISO as a Reliability Coordinator) should provide historic loop flow data for major interties in likely EDAM footprint. In addition to the analytics that has been provided, it would be useful for the Reliability Coordinator (CAISO) to provide historic loop flow data for major interties in the likely EDAM footprint. These data must exist somewhere or could be created based on historical intertie flow and tagging data. For the CAISO BAA, it’s OASIS site has a table where loop flow should be reported; the value is always reported as zero. While EDAM is likely to change the flows in the West significantly, those historic data would be helpful to understand the potential magnitude of the issues we’re discussing.

The CAISO should report on CRA 1 data now that EDAM is live. PG&E thinks it would be helpful if the CAISO could report on the current (CRA 1) design in EDAM to date. While the data will be preliminary, it could help to highlight flaws in the current design.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

PG&E believes that Design Concept 1 (“DC1”) is structurally flawed and that the CAISO and stakeholders should stop working on it.

• Difficult to achieve equitable eligible rights with DC1. DC1 requires equity in the eligible rights between participants.  Given the vast difference between CAISO CRRs and others’ OATT rights, it appears there may be not equitable sets of rights. For example, CAISO’s ETC/TORs might seem to be similar to EDAM Participants’ point-to-point OATT rights, but the CAISO has not sold a new ETC or TOR in over twenty years and we don’t believe it should start back up.  EDAM Participants are still actively selling new point-to-point rights and there is no guarantee that these two sets of rights will start out or remain equitable in size.

• The topology makes DC1 inherently inequitable.  Even if we could find equitable sets of eligible rights between participants, the CAISO’s analysis in this initiative has shown that the topology would still render such a solution inequitable.  The topology of the WECC means that EDAM entities have a greater impact on CAISO’s constraints than vice versa.

• DC1 does not align with sound market principles.  If we think of EDAM as a seams agreement, it does not make sense that those who cause loop flow (through self-scheduling on their rights) be paid for causing it.  All other seams agreements pay the transmission provider for the transmission service and/or the redispatch cost when loop flow goes through their system.  DC1 would encourage the continued sale of rights that create loop flow, rather than a progression towards a market-based solution.

• Its accuracy degrades over time. PG&E believes DC1’s accuracy will degrade over time as new EDAM BAs join because it is based on the type of eligible rights and not based on any metric of equity.  As such, there is no incentive to reduce the amount of rights that cause loop flow on other participants’ systems.  In fact, there may be an incentive to create more rights that create loop flow.

The EDAM CRA Phase II solution should provide a glidepath towards an efficient market-based solution for hedging congestion risk.  DC1 does not do this.  Most (if not all) markets provide some form of CRR or FTR to allow for hedging congestion risks in a way that decouples the eligibility to receive congestion revenues from the owner’s bidding or schedules.  CRA Phase 1 links the eligibility to receive congestion revenues to the owner’s schedule and DC1 would link it to their bidding.  This creates an incentive for participants to bid away from their marginal costs, harming market efficiency.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

PG&E understands that CAISO is suggesting an improvement on DC1 by including the CRA 1 revenues received by a participant (bidding on its OATT/ETC/TORs rights) into the bid-cost recovery formulas. 

While this is an interesting idea, PG&E believes that DC1 is structurally flawed even with this improvement.  Therefore, it is not productive to continue to spend time and attention designing incremental improvements to DC1. The CAISO and stakeholders should stop spending time on DC1.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

No additional comments.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

Excellent Modeling from Guillermo and team.  PG&E is grateful for the hard work by the CAISO analytics team to help provide further context to this initiative with their modeling.  It has been extremely helpful.  Further, PG&E appreciates Guillermo’s time spent patiently explaining the analysis to us all.  It is an excellent example of how targeted analysis can meaningfully move an initiative forward.

The RC West (CAISO as a Reliability Coordinator) should provide historic loop flow data for major interties in likely EDAM footprint. In addition to the analytics that has been provided, it would be useful for the Reliability Coordinator (CAISO) to provide historic loop flow data for major interties in the likely EDAM footprint. These data must exist somewhere or could be created based on historical intertie flow and tagging data. For the CAISO BAA, it’s OASIS site has a table where loop flow should be reported; the value is always reported as zero. While EDAM is likely to change the flows in the West significantly, those historic data would be helpful to understand the potential magnitude of the issues we’re discussing.

The CAISO should report on CRA 1 data now that EDAM is live. PG&E thinks it would be helpful if the CAISO could report on the current (CRA 1) design in EDAM to date. While the data will be preliminary, it could help to highlight flaws in the current design.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

PacifiCorp appreciates CAISO's continued efforts to evaluate both the policy and implementation considerations associated with potential long-term congestion revenue allocation designs. In particular, PacifiCorp found the implementation assessment of Design Concept #1 valuable, as it provided additional insight into the practical challenges associated with extending congestion revenue eligibility beyond self-schedules.

PacifiCorp also appreciates CAISO's acknowledgement that Design Concept #1 may involve significant implementation complexity. Given time constraints during the workshop, stakeholders had limited opportunity to discuss implementation considerations associated with Design Concept #3. While it was noted that Design Concept #1 may ultimately require greater implementation effort than Design Concept #3, PacifiCorp believes additional discussion is needed before stakeholders can fully assess the relative complexity and feasibility of the two approaches.

PacifiCorp’s initial assessment of Design Concept #1 came to similar conclusions as the CAISO; it would be difficult for PacifiCorp to implement and potentially complex for PacifiCorp’s transmission customers to use. In particular, it may be challenging for PacifiCorp to verify the schedules that are eligible for congestion revenue allocation. Since Design Concept #1 is considered an interim enhancement while a long-term design is developed by stakeholders, the implementation effort and complexity of Design Concept #1 lead PacifiCorp to believe that it may be better for stakeholders to instead focus efforts on a long-term design. If the CAISO believes Design Concept #1 could be simplified to reduce implementation and design effort, PacifiCorp is open to further evaluating whether there is merit in pursuing an interim congestion revenue allocation design and delaying development of a long-term design.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

PacifiCorp appreciates CAISO's detailed implementation assessment and believes that evaluation of the implementation feasibility of Design Concept #3 is warranted before pursuing Design Concept #1. While Design Concept #1 may provide benefits relative to the current design by allowing economically bid schedules associated with firm transmission rights to receive congestion revenue allocations, the workshop highlighted significant implementation, settlement, and customer validation challenges.

PacifiCorp agrees that extending congestion revenue eligibility to economically bid schedules may make it substantially more difficult to establish and maintain a clear relationship between transmission rights, CRNs, economically bid schedules, and resulting congestion revenue allocations. These considerations appear particularly important given the significant implementation effort identified by CAISO and the potential for reduced transparency and explainability from a customer perspective.

PacifiCorp has superficially assessed the potential impact Design Concept #1 would have on its scheduling practices and its transmission customers. The Company has also attempted to assess the implementation lift Design Concept #1 would require. PacifiCorp’s understanding of the current proposed design leads the Company to believe that Design Concept #1 will require a large implementation effort and will be complex for its transmission customers to use. Fundamentally, Design Concept #1 would change how transmission customers schedule and tag the use of their long-term, firm OATT rights. Furthermore, it is already complex to validate balanced self-schedules for the purposes of receiving congestion revenue allocation. This complexity is significantly increased if all balanced schedules are eligible for congestion revenue allocation. If Design Concept #1 is meant to be an interim solution, then PacifiCorp believes that stakeholders’ time may be better spent developing a long-term congestion revenue allocation design. It is difficult to justify the implementation costs and effort to develop a congestion revenue allocation design that is temporary and does not meet many of stakeholders’ requirements for a long-term design.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

If stakeholders and the CAISO decide to pursue Design Concept #1, PacifiCorp believes it is reasonable to provide ETC/TORs with the same eligibility afforded to long-term, firm OATT rights. This creates a level playing field for ETC/TORs and long-term, firm OATT rights holders.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

Tying Design Concept #1 to the Bid Cost Recovery (BCR) process would add complexity to the design, implementation and function of Design Concept #1. In PacifiCorp’s opinion, the potential benefits are outweighed by the increased complexity.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

PacifiCorp’s preference is to focus on improvements to the day-ahead congestion revenue allocation design. While there are likely improvements to the real-time design, PacifiCorp is not aware of any significant, adverse impacts that warrant potentially slowing down development of a long-term day-ahead congestion revenue allocation design.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

PacifiCorp appreciates CAISO's efforts to better understand congestion and parallel flow impacts across a broader prospective EDAM footprint. PacifiCorp would appreciate additional discussion regarding the policy implications of the analysis and how stakeholders should interpret the results in the context of the congestion revenue allocation initiative. While the analysis demonstrated that certain CAISO constraints can experience material parallel flow impacts from transactions in EDAM areas, it was less clear how these findings should inform evaluation of the remaining design alternatives.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

Puget Sound Energy (PSE) appreciates CAISO's continued stakeholder engagement on EDAM Congestion Revenue Allocation Initiative and the thoughtful discussion regarding potential long-term design alternatives. PSE supports continued evaluation of Concept #3 as the preferred long-term congestion revenue allocation framework.

Concept #3 offers the most durable and scalable long-term solution. Concept #3 proposes to establish congestion revenue entitlements for eligible firm OATT transmission rights and CRRs through a common Simultaneous Feasibility Test (SFT). Evaluating these rights under a common framework better aligns congestion revenue allocation with actual transmission system capability, improves comparability between OATT rights and CRRs, allows for a regular updating of congestion entitlements, and supports economically efficient outcomes across the EDAM footprint.

Concept #3 also best addresses the stated Phase 2 objective of reducing incentives associated with self-scheduling behavior and creates a framework that can evolve with changing transmission utilization patterns and market participation across the West. While implementation details require further development and discussion, PSE encourages CAISO to prioritize continued refinement and evaluation of Concept #3 as the leading long-term design option.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

PSE is concerned that Concept #1 may not meaningfully reduce incentives for market participants to structure bids or self-schedules to maximize congestion revenue allocations from their firm transmission rights in the Day-Ahead market. As the presentation notes, market participants may have an incentive to submit bids at the economic floor to clear the market and receive a congestion revenue allocation.

Additionally, the implementation complexity CAISO described during the workshop, characterized in the presentation with extremely high risk, appears significant and may outweigh the long-term value of pursuing this approach. This high risk is especially impactful if Concept #1 does have a higher implementation effort than Concept #3.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

N/A

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

PSE believes additional stakeholder discussion is warranted before determining whether congestion revenues allocated under Concept #1 should be included as market-derived revenues for Bid Cost Recovery (BCR) purposes.

Particularly for OATT rights, the entity receiving congestion revenue allocations may not be the same entity submitting bids into the market. In these cases, including such revenues within BCR calculations could create unintended consequences and potentially distort cost recovery outcomes.

PSE recommends further analysis of participant impacts and potential mitigations of unintended outcomes before adopting any changes to BCR treatment.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

PSE supports maintaining the current real-time congestion revenue allocation framework at this time as CAISO prioritizes a more durable-longer term solution for congestion revenue allocation.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

PSE appreciates CAISO's analysis demonstrating the increasing impact that transmission constraints can have across a broader EDAM footprint. The analysis highlights the importance of designing a congestion revenue allocation framework that recognizes the effects of constraints beyond the balancing area in which they originate.

As additional analysis is performed, CAISO should provide evaluations of Concept #1 and Concept #3 side-by-side under multiple future EDAM footprint configurations. The analysis should investigate whether Concept #3 better aligns congestion revenue entitlements with actual constraint impacts identified through the SFT when compared to Concept #1 using cleared balanced schedules. It should also factor in the implementation complexity and long-term scalability of the competing concepts.

These analyses would provide stakeholders with a more complete understanding of the relative benefits and tradeoffs associated with the competing long-term congestion revenue allocation frameworks.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

SDG&E supports CAISO’S ongoing efforts to advance a long-term design that reduces self-schedule incentives, improves allocation symmetry, and supports efficient market outcomes as the EDAM footprint expands. The Phase 1 congestion revenue allocation framework is transitional, and SDG&E continues to see the development of a longer-term solution as a high-priority item that should not be delayed.

CAISO’s analysis provides preliminary data and insights into congestion patterns and prices across the current and prospective EDAM footprint. The transitional CRA framework reallocates congestion revenues across BAAs to support congestion hedges for holders of firm transmission rights whose balanced self-schedules are subject to congestion charges arising from constraints outside their balancing area. CAISO’s congestion cost analysis illustrated that some constraints have disproportionately larger congestion price impacts across balancing areas, while constraints located in non-CAISO EDAM areas generally had relatively small impacts (“de minimis”) on prices throughout the footprint. 

The workshop discussion reinforced that the existing transitional framework has key policy objectives that remain unresolved. As additional balancing areas join EDAM, SDG&E is concerned that the magnitude of revenue transfers from cross-BAA congestion could grow if a durable long-term solution is not developed. California customers should not provide uncompensated support for congestion management that benefits the broader footprint. The results so far support the need for a long-term congestion revenue allocation framework that appropriately reflects the underlying transmission facilities and congestion patterns driving market outcomes and avoids transfers that are disconnected from cost causation principles.

CAISO's presentation also highlighted that Design Concept #1 does not meaningfully reduce self-schedule incentives and presents significant implementation challenges. SDG&E believes the initiative should remain focused on development of a proposal that better aligns congestion revenue allocation with underlying transmission system feasibility and market outcomes. This can be achieved through continued work toward a comprehensive and durable market change, such as Design Concept #3.

Additionally, SDG&E supports more clarity around the language being used in this initiative going forward. Consistent use of defined terms will help ground discussions and ensure that there are no misunderstandings between parties regarding what is being referenced.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

SDG&E appreciates CAISO's efforts to resolve the issues inherent to the transitional EDAM CRA framework adopted in 2025. In earlier comments, SDG&E expressed interest in near-term enhancements to address the inequitable treatment of CRRs in how congestion revenues are allocated between EDAM BAAs.

Based on data presented since then, we do not believe Design Concept #1 meaningfully addresses the equity issues with the current transitional CRA framework, and considering the implementation complexity of this effort, do not support this as an incremental near-term change. While Design Concept #1 would allow allocation of some congestion revenue to the CISO BAA via source/sink CRR pairs, it retains the schedule-based construct at the core of the current framework and preserves incentives that distort efficient market outcomes. SDG&E recommends the CAISO not pursue Design Concept #1 and instead pursue Design Concept #3.

Reporting and analysis on the congestion-related metrics from the first months of EDAM operation have highlighted the importance and urgency of a long-term resolution to revenue allocation, especially as the EDAM footprint expands and the network topology evolves with the imminent addition of Portland General Electric in October 2026 and other participants planning to join the market. CAISO's July 28 analysis found that roughly 86% of binding constraints occur in CAISO, and that there can be material parallel flow impacts from transactions in EDAM areas on constraints in the ISO BAA. CAISO then presented in the July 30 Market Planning and Performance Forum that congestion revenue allocation related to parallel flows from the PAC areas on CAISO congestion totaled $2.67 million across the first two months of EDAM operation. While this is a relatively small percentage of overall congestion revenue associated with constraints in the ISO BAA, SDG&E expects these volumes to increase with additional BA participation contributing to transmission bottlenecks. Given these findings, Design Concept #1 would continue a structural transfer of congestion revenues away from CAISO load and CRR holders, as it does not fully consider the nature of congestion across the market footprint. SDG&E believes it is critical to work on an efficient and equitable long-term solution, rather than a stop-gap solution.

In addition to these concerns, CAISO has identified that this solution requires significant system changes and may involve greater implementation complexity and risk than a long-term alternative such as Design Concept #3. For example, CAISO will need to implement additional functionality to associate transmission rights with economically bid transactions and accurately determine the balanced cleared quantity that is attributed to that right. How this is calculated and accomplished is a critical detail to the proposal and would require meaningful development effort. For these reasons, SDG&E would like this initiative to focus on a solution that moves congestion hedging and transmission compensation toward a more efficient and financially based transmission rights market model. 

In addition, SDG&E agrees with CAISO's view that congestion revenue allocations should be excluded from BCR calculations, as these payments serve as congestion hedges rather than compensation for energy market performance. Congestion revenues are intended to compensate transmission rights holders for congestion exposure and including these revenues in BCR calculations would create a further discrepancy between treatment of OATT rights and CRRs. The EDAM CRA enhancements should avoid creating additional asymmetries or complexity while the stakeholder process develops a long-term solution.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

See question 2.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

See question 2.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

See question 2.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

SDG&E recognizes that there are separate stakeholder initiatives addressing CRR underfunding and Seams issues and strongly supports maintaining clear scope boundaries within this initiative. However, the work being done in those parallel initiatives will materially affect congestion revenue allocation and the benefits of the CRA design alternatives under consideration. To that end, we encourage CASIO to include some consideration for the policy impact of these changes so that stakeholders can better understand the combined effects of these initiatives and evaluate if the proposed design concept remains effective in the face of the other efforts taking place.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

The July 28^th workshop reinforced that Design Concept #1 has a high potential for the introduction of undesired consequences and would be complex to implement.  Given the implementation complexity and the perception that this Design Concept may introduce undesirable bidding behavior, Design Concept #1 does not appear to provide the basis for a durable, long term congestion revenue allocation design.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

Within this initiative, the Six Cities encourage the CAISO and stakeholders to place a high priority on design concepts that will accomplish the following:

• Address and resolve the current inequities between the CAISO and other Extended Day Ahead Market (“EDAM”) balancing authorities (“BAs”) in terms of eligibility to receive congestion revenues associated with parallel flows.
• Establish a durable design that can provide a strong framework for fair and equitable allocation of congestion revenues throughout the EDAM area (including the CAISO BA) in the long term.
• Require EDAM participating BAs (including the CAISO BA and other EDAM BAs) to employ the same financial hedging instruments throughout the markets.
• Mitigate, to the extent possible, opportunities for neighboring transmission providers to contribute to loop flow on the CAISO system. 

The Six Cities remain concerned that the impacts of the current asymmetrical design, which provides expanded congestion hedges to certain Open Access Transmission Tariff (“OATT”) customers in non-CAISO EDAM BAs, will increase as EDAM expands.  The Six Cities therefore support the CAISO’s timely development and implementation of a durable approach to equitable allocation of congestion revenues consistent with the principles listed above.  

As an initial matter, the Six Cities are unpersuaded that expansion of the current revenue allocation mechanism to additional transactions is the right approach to accomplishing a durable design that affords comparable treatment to the CAISO and EDAM BAs.  If the goal of this initiative is a long-term design that is compatible with sound design principles and provides equitable treatment to all BAs in the EDAM, Design Concept #1 does not appear to meet these objectives, because it is simply a perpetuation of the current interim design.  The Six Cities anticipate that Design Concept #1 would still need to evolve in the future.  This evolution may become more challenging if the current congestion revenue allocation approach is expanded, and it may remove incentives for non-CAISO BAs to participate in future revenue allocation reform efforts. 

Based on discussion during the July 29^th workshop, it is not clear that Design Concept #1 will actually address the current asymmetry in the congestion revenue between the CAISO and EDAM BAs.  Under this proposal, the CAISO will enhance its modeling and fund Congestion Revenue Rights (“CRRs”) with the revenues from congestion due to transmission constraints across the EDAM footprint, instead of just constraints inside the CAISO.  According to the CAISO, this will provide more revenues into the CRR balancing account and ostensibly will provide a broader hedge, because there will be additional CRR revenues to allocate.  If the CAISO is inclined to consider Design Concept #1, the Six Cities would like more information from the CAISO demonstrating that this approach is advancing the goal of achieving comparability in congestion revenue allocation. 

The Six Cities are also concerned that Design Concept #1 may be incompatible with the structure and design of elements of a potential seams management framework.  The Six Cities understand that, as discussed during the CAISO’s seams workshop on July 31^st, other markets have assumed that parallel flows on neighboring transmission systems are generally undesirable, at least above certain levels, and have agreed to impose charges when flows exceed acceptable minimums.  The current allocation methodology, in contrast, compensates (through an augmented congestion hedge) OATT customers who contribute to such parallel flows and permits neighboring EDAM entities to continue to engage in OATT sales that may likewise result in transactions that contribute to parallel flow and receive the broader congestion hedge.  Design Concept #1 will expand this structure and perpetuate incentives for undesirable outcomes.   

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

The Six Cities do not have a position at this point on whether Existing Transmission Contracts (“ETCs”) and Transmission Ownership Rights (“TORs”) rightsholders should have the ability to bid and receive a congestion hedge based on cleared balanced self-schedules.  While the Six Cities support ensuring that ETCs and TORs retain the ability to use their rights and receive appropriate hedging consistent with the CAISO’s longstanding policy, which requires these rights to be exercised through self-scheduling, it is not at all clear that making these contracts eligible to economically bid to receive the same congestion hedge that they currently receive will have a material impact or will substantially contribute to mitigating the current asymmetry in eligibility for congestion revenues between the CAISO and EDAM BAs.  While the Six Cities do not have concerns with affording this treatment to what the Cities assume may be a limited number of legacy rights in the CAISO, ETCs and TORs are not an appropriate proxy for eligible OATT rights in EDAM BAs. 

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

The Six Cities do not have a position on this issue at this time, particularly given the overall concerns with Design Concept #1.    

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

It is the Six Cities’ position that no change to the allocation of congestion revenues generated in the real-time market is appropriate at this time.  These revenues should remain allocable to the balancing area where the applicable transmission constraint is located.  The Six Cities do not support expanding the scope of this initiative to include consideration of changes to the congestion revenue allocation in the real-time market within the context of Design Concept #1. 

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

The information provided by the CAISO during the workshop supports the need to develop a durable congestion allocation framework.  Based on the analysis presented, the CAISO is expected to be impacted by parallel flows to a greater degree than in other prospective EDAM areas. 

It would be helpful to understand what the congestion revenue allocation for the initial months of EDAM would have been if Design Concept #1 was in place.  The Six Cities assume that it would be difficult to ascertain outcomes with respect to revenues received in the CAISO CRR balancing account, but is there a way to determine if the revenue allocation to PacifiCorp would have been different had Design Concept #1 been applicable?

Finally, the Six Cities observe that for the first two months of EDAM, congestion revenues allocated to the PacifiCorp entities from transmission constraints in the CAISO amounted to $2.67 million in May and June.  See Extended Day-Ahead Market Performance June Report (Jul. 28, 2026) at 125.  It is noteworthy that EDAM benefits to the CAISO during these months totaled only $6 million over two months.  See CAISO News Release (Jul. 30, 2026), available at  Western Energy Markets Quarterly Benefits Report debuts with first Extended Day-Ahead Market results | California ISO.  The ratio of the shift in congestion revenue relative to overall EDAM benefits is concerning and shows that there is a cost to the CAISO BA of adopting changes to the congestion revenue allocation design that was originally developed through the EDAM stakeholder process and approved by FERC.  While the results of the first two months of EDAM may not be determinative of eventual outcomes, they raise a question as to whether stakeholders and the CAISO should consider reverting to the original EDAM congestion revenue allocation if an alternative design that meets the goals of this initiative and is supported by stakeholders cannot be developed.  See Six Cities Comments on Congestion Revenue Allocation Phase 2 Working Group (12/11), Extended Day Ahead Market initiative (submitted Jan. 16, 2026) (reiterating “request to sunset the 2025 policy changes and/or limit their applicability to exclude from eligibility for a congestion rebate . . . new OATT services that are contracted after a date certain”). 

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

SCE appreciates the time and effort that the CAISO and stakeholders have put into this process. SCE continues to believe that Design Concept #3 provides the only potential long-term solution and urges the CAISO not to waste time developing implementation details for what would only be another interim mechanism. The analysis results show that loop flow revenues are not evenly distributed which further supports the need to establish a long-term solution that treats all BAAs, and transmission rights holders (both OATT transmission rights and CRRs) fairly.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

Before being able to assess whether Concept #1 should be considered further, SCE believes that the CAISO and stakeholders need to understand how the equal treatment for CAISO CRRs would be accomplished. It seems relatively straight-forward (although not necessarily simple) to understand how congestion revenue can be assigned to self-schedules or balanced bid schedules, which reference a CRN. However, when considering the potential congestion revenue to assign to CAISO use of CRRs, SCE requests the CAISO explain how this will be done, as with CAISO CRRs there is no direct line from the CRR holder to balanced self-schedules or bids. It is important to understand this to be able to estimate the implementation efforts that will be required for Design Concept #1 and the potential congestion revenue transfers.

Design Concept #1 is at best an interim mechanism because it doesn’t address the loop flow issue. SCE questions the advisability of replacing one interim mechanism with another. CAISO and stakeholders should be looking for a permanent solution, one that addresses the loop flow issue. Only Design Concept #3 seems to do that, which is why SCE supports beginning work on Design Concept #3. SCE is concerned that the effort spent working on the implementation details for Concept #1 might be better spent on a more permanent solution.  

The current CRA mechanism was designed to be an interim mechanism which would provide an adjustment period for EDAM entities to see how the market actually functions and to allow them to adjust their OATT transmission rights sales policies, and for the purchasers of those rights to also understand the implications of the new EDAM market and adjust their procurement of OATT transmission rights to reflect the new market. It was not intended to continue indefinitely. Discussions about the interim methodology included discussions of potential sunset dates because it was realized that the methodology was not a permanent solution. Expanding the interim rules to include bid-in schedules and CAISO CRRs may seem attractive but is not solving the problem; rather, it may be expanding the problem by increasing the congestion revenue transfers. SCE continues to support Design Concept #3 as the best way to ensure that both CAISO and its CRR holders and other EDAM BAAs and their OATT transmission rights holders are treated fairly and the market functions efficiently.  SCE also requests that the discussions of a permanent solution include returning to the mechanism originally proposed for EDAM, where loop flow congestion revenues remain with the BAA where the constraint exists. This makes each BAA responsible to determine how much transmission it can sell without receiving loop flow congestion revenue from other BAAs it has impacted with loop flows. If it is not possible to implement a solution that limits loop flow through the use of a simultaneous feasibility test as proposed in Design Concept #3, it might be easier and more equitable to have each BAA deal with the financial consequences of their transmission rights sale on their own.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

If the ability to economically bid and receive a congestion hedge based on cleared balanced schedules is granted to OATT transmission customers in EDAM BAAs, it only makes sense that ETC/TORs in the CAISO should have the same ability as other transmission rights holders to receive this revenue. Further, since Concept #1 contemplates the CAISO CRRs also receiving loop flow congestion revenue, the CAISO should receive loop flow congestion revenues for ETC/TOR rights, and given how these are treated within the CAISO, those revenues should flow to ETC/TOR rights holders.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

Congestion Revenues are related to transmission rights and thus are not part of the market revenues for resources. They are derived from ownership of transmission rights (either OATT or Financial) and are not related to the market revenues earned by a resource. To include them for the purpose of Bid Cost Recovery would mean that resources would be treated differently with respect to their generation revenue depending on whether they held transmission rights or not. Such different treatments for similar resources should not occur. 

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

SCE believes that the existing status quo should be continued. The status quo has functioned since the beginning of the EIM and has been generally accepted. There doesn’t seem to be any reason to change this at this point. 

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

SCE is still digesting the data provided and what it means for CRA. Our initial takeaways are that the results show loop flow congestion is generally not large, but that it may have significant impacts in specific areas and is not evenly distributed between the CAISO and the other BAAs. This means that it would not be fair to simply assume that Congestion Revenue from loop flows will work out on average across the various EDAM BAAs. The impacts are not of the “average” type. Specific transmission use in certain BAAs causes impacts on specific paths in other BAAs. Averaging the impacts across BAAs will lead to market inefficiencies because induvial actors will not see the consequences of their actions. The use of a simultaneous feasibility test to ensure that transmission rights, both CRRs and OATT transmission rights, don’t exceed the capacity of the system seems the best way to deal with this. The current methodology, and that in Design Concept #1 which simply awards the loop flow congestion revenue without considering whether the rights were feasible does not provide a durable solution but simply continues the existing problems.  

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

The Energy Authority (TEA) appreciates the time CAISO is devoting to this effort and its willingness to extend the meeting to a second day to allow for deeper discussion on each Concept CAISO presented as options it is considering for enhancing the current EDAM Congestion Revenue Allocation (CRA) framework.

TEA maintains that EDAM congestion revenue accrual and allocation could be improved with simple structural changes to the existing EDAM CRA and related EDAM policies. These changes would retain and clarify separation between CAISO’s CRR market and EDAM’s operations in the non-CAISO areas. They leverage pre-EDAM scheduling conventions and OATT-based allocations grounded in cost-causation principles. And they also sync well with CAISO’s needs as an importer of Resource Adequacy and Renewable Portfolio Standard qualifying capacity from generation sited in both EDAM and non-EDAM parts of the Western Interconnect. Further, their practical impact on resource dispatch and in-market congestion would be negligible.

TEA’s May 1, 2026, comments[1] provide more details but the high-level vision we have for immediate structural enhancements that would be implemented as a package are:

• Support EDAM BAA Long-Term Firm (LT-F) Point-to-Point Transmission Service Rights carve-outs for export and wheelthrough schedules not serving demand on the system where the rights are held;
• Revert EDAM BAA CRA to measured demand pro-rata allocation based on standard coincident peak markers used to bill Network Transmission customers; and
• Remove parallel-flow reversal for balanced OATT self-schedules (i.e., remove CRA Phase 1 functionality).

Taking this approach would allow CAISO and stakeholders to concentrate on Concept #3 solutions without risking undue near-term harm accruing to market participants in the 2026-28 window from its existing framework. It also would open opportunities for CAISO to address transactional seams at its market borders, which would enhance reliability and market competitiveness during the transitionary phase of day-ahead markets in the Western Interconnect.

When TEA presented[2] its ideas for further consideration at an early CRA workshop, multiple stakeholders responded positively and expressed interest in exploring them in future workshops. It is unclear why they were dismissed entirely when CAISO created its current Concept #1-3 proposals.

[1] https://stakeholdercenter.caiso.com/Comments/AllComments/876c75d5-5d38-4589-a1d4-c7837bcfb6a4#org-de5a473f-6260-443b-87e9-f6dc4d97c877

[2] https://stakeholdercenter.caiso.com/InitiativeDocuments/The-Energy-Authority-Presentation-Extended-Day-Ahead-Market-EDAM-Congestion-Revenue-Allocation-Design-Alternatives-Apr-17-2026.pdf

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

TEA is concerned Concept #1 would introduce more issues than it would solve, especially when considering how EDAM’s footprint is expected to grow over the 2026-28 horizon. While somewhat simple from a very high level, there are significant details to navigate that may increase the timeline to get to a comprehensive market-based solution like what is being considered in Concept #3.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

ETC/TORs are the closest analogue to Firm rights and the use of Firm rights to “deliver” generation to load in the non-CAISO EDAM BAAs (or to deliver generation to load as a wheelthrough schedule).  

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

Congestion “revenues” from this policy could be positive or negative and in this context are about a contractual gen-to-load nexus not traditional SCED operations – they should be kept separate from Bid Cost Recovery accounting.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

Shifting the paradigm for real-time congestion revenue allocation would be a significant undertaking. CAISO should continue to gather data to inform offset accounting fairness but should deal with that as a transitionary issue for WEIM, not for EDAM CRA.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

We are still in the very early days of EDAM operations. While the market overall is producing stable results, the West is only now beginning to experience high-demand conditions for the summer operations season and will be operating this Winter with increased transfer capacity on the COI following PGE’s go-live. CAISO should continue its data gathering and analytical efforts but should not lean too heavily on its observations at this point to guide policy decisions or proposals.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market Workshop held on July 28, 2026.

WPTF appreciates the ISO’s continued use of the working-group process and the additional implementation and congestion-cost analysis presented on July 28. The discussion helped clarify that Design Concept #1 could generally improve symmetry between eligible firm OATT rights and CAISO CRRs and provide greater flexibility to submit economic bids. It is a step in the right direction and improvement over what is in place today, but the main question will be how much of an improvement and how much sooner can it be implemented relative to Concept #3. WPTF therefore supports continuing to develop Design Concept #3 as the durable solution and evaluating Concept #1 only as a potential interim bridge.

Before selecting an interim design, the ISO should provide a side-by-side implementation roadmap for Concepts #1 and #3. That roadmap should identify the earliest feasible implementation date for each concept, the principal market system and settlement changes, key risks, and the period Concept #1 would reasonably be expected to remain in effect. In order to fully assess these roadmaps, we urge CAISO to consider and compare not only the changes that would be necessary to implement Concept #1 and #3 on the CAISO side, but also at the EDAM Entity level. CAISO should work with the EDAM Entities to assess the changes that would be required, including changes to approved tariffs, changes to the way transmission rights are sold/characterized, and settlement practice adjustments that would be required for each option. This information – both for the implementation expectations at the CAISO level and at the EDAM Entity level – is necessary to determine whether the incremental benefits of Concept #1 justify the implementation effort or whether those resources would be better directed to the timely delivery of Concept #3.

Finally, as CAISO further evaluates implementation of Concept #1 and Concept #3, WPTF reiterates its past support for implementation of a congestion revenue allocation approach that can permit CAISO to directly allocate congestion revenues to the appropriate party and eliminate the need for EDAM Entity sub-allocation.

2. Please provide your organization’s overall feedback regarding the discussion on Design Concept #1, including the merits of continuing to evaluate the concepts, whether it improves the design compared to the status quo considering the tradeoffs discussed, and identify any additional information that should be considered when considering the concept.

WPTF agrees that Design Concept #1 is a step in the right direction. By extending the congestion hedge to cleared balanced economic schedules associated with eligible firm OATT rights, the concept would provide more flexibility than the status quo and improve reciprocal treatment between OATT rights and CAISO CRRs. Those changes could reduce, although likely not eliminate, the need to self-schedule solely to preserve a congestion hedge.

Concept #1, however, is not the long-term durable solution. Its value as an interim measure depends on when it can be implemented relative to Concept #3, how much it will cost, and how long it would remain in place. If Concept #1 can be placed into production materially before Concept #3 and can operate long enough to deliver meaningful benefits, it may be worthwhile. At the same time, the CAISO would need to commit to ensuring Concept #1 will not be in place as an interim solution for an unknown period of time. If it preceded Concept #3 by only a short period, the duplicative implementation and transition costs may outweigh those benefits.

Most importantly, work on Concept #1 should not delay or divert critical resources from Concept #3. Any decision to proceed with Concept #1 should include clear Concept #3 milestones and a transition plan to move this more durable solution into operation.

3. In the context of Design Concept #1, please provide your organization’s feedback whether ETC/TORs should also have the ability to economically bid and receive a congestion hedge based on cleared balanced schedules as discussed in the presentation.

WPTF is not yet persuaded that ETC/TOR treatment should be expanded within Design Concept #1. Concept #1 is an interim measure originally focused on reducing self-scheduling incentives for eligible OATT rights and improving symmetry with CRRs. Expanding the scope to ETCs/TORs could add market-system, settlement, and policy complexity without being necessary to achieve that limited objective, particularly given the implementation risk already identified for Concept #1.

Before considering such an expansion, the ISO should quantify the amount of ETC/TOR capacity and associated schedules by BAA, how often those rights are currently self-scheduled, the congestion revenues or hedges involved, and the operational and settlement changes that would be required. The ISO should also assess whether the proposed treatment would alter existing scheduling priority or complete-hedge treatment, create the potential for double recovery, or produce a material improvement in market efficiency. Unless the ISO can demonstrate meaningful benefits with modest incremental implementation effort, WPTF recommends retaining the current ETC/TOR treatment for the interim Concept #1 design.

4. In the context of Design Concept #1, please provide your organization’s feedback on whether congestion revenues derived should be considered as market derived revenues for purposes of Bid Cost Recovery as discussed in the presentation.

WPTF does not believe congestion revenues derived should be considered as revenue within Bid Cost Recovery (BCR). BCR should remain tied to the resource bid costs submitted to and used by the market optimization and to the market revenues earned by the resource through the relevant awards. The cost of acquiring long-term transmission rights is not submitted as a resource bid cost and does not inform the market’s commitment or dispatch decisions or the resulting energy, ancillary service, or imbalance reserve prices. Congestion hedge proceeds compensate the holder of a separate transmission or financial right; they do not compensate the resource for a cost that the market relied on in scheduling the resource.

Including congestion allocations as bid cost recovery revenue without including a corresponding eligible cost would inflate the revenue side of the calculation and could reduce bid cost recovery for reasons unrelated to the resource’s market economics. Attribution would be especially problematic for OATT rights because the congestion revenue would be allocated to the EDAM entity and then potentially suballocated, while the transmission customer may not be the same entity as the scheduling coordinator or resource owner. CRR revenues are appropriately excluded today as separate financial hedges, and comparable treatment supports excluding congestion-hedge proceeds associated with OATT rights and ETCs/TORs.

WPTF likewise does not support adding transmission-right or CRR acquisition costs to bid cost recovery. Those transactions occur outside the day-ahead market optimization and should remain outside a calculation intended to ensure that market revenues cover the resource costs submitted to the market.

5. In the context of Design Concept#1, please provide your organization’s feedback on allocation of congestion revenues generated in the real-time market: whether those should continue to be allocated as status quo (allocated to the EDAM/WEIM balancing area where the constraint is located).

WPTF supports retaining the status quo for real-time congestion revenue allocation at this time, under which the revenues are allocated to the BAA where the constraint is located. Concept #1 is an interim day-ahead congestion-hedge framework. Extending it into real time would broaden an interim design to include WEIM-only BAAs and introduce additional questions regarding rights eligibility, schedule matching, settlement, and congestion revenue sufficiency.

Keeping Concept #1 focused on the day-ahead market is also consistent with the treatment of CRRs, which hedge day-ahead congestion. Providing OATT or ETC/TOR rights with an additional real-time entitlement that is not available to CRRs would create a new asymmetry and would be inconsistent with the equitable-treatment objective of this initiative. It would also compound the implementation risk of an interim solution. For purposes of Concept #1 as the interim solution, the ISO should retain the existing real-time allocation methodology.

6. Please provide your organization’s overall feedback regarding the presentation on Congestion Cost Analysis basd on a broader EDAM footprint that identifies the effects of constraints across the participating balancing areas. Please include suggestion of any potential additional analysis that could support consideration of Design Concept #1.

No comment at this time.