Comments on EDAM CRA - May 11, 2026

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

Appian Way appreciates the continued stakeholder engagement and CAISO’s efforts to further refine the EDAM Congestion Revenue Allocation (CRA) framework. CAISO’s presentation was helpful and provided useful detail and discussion regarding the three conceptual approaches under consideration.

We believe Design Concept #3 (DS3) is on the right track but ultimately has critical flaws that need to be addressed; and this is possible by incorporating concepts from Design Concept #2. To be clear, DS3 represents an approach that is fundamentally unfair to CAISO ratepayers/transmission customers because of the inherent incentives for non-CAISO entities to garner transmission rights to flow on CAISO’s system without paying CAISO for those rights, which will exacerbate the already eroding ability of CAISO entities to use their own transmission network that they pay for. A combination of Design Concepts #3 & 2 may be required to efficiently and fairly address congestion revenue allocation in EDAM.

Positive aspects of DS3 include the use of the SFT process to determine rights allocations and the process’ equal/comparable treatment of CRRs and OATT rights with respect to congestion rights allocation (through the SFT) and with respect to allocation of revenue inadequacy. This is tremendous progress!

The problem with DS3 in the EDAM going forward is that entities will have incentive to schedule new OATT firm “physical” rights based on seeing congestion patterns in the expanded EDAM market. These new rights may and often will cause parallel flows which will make existing rights infeasible. Ultimately, the CRA process must have an underlying business solution that answers the question:

What is the fair allocation for EDAM (and Markets+) entities’ usage of CAISO transmission based on historical usage, good utility practice and common sense (and visa versa)?

Under DS3, CAISO regulators/transmission customers have no control over how much of their transmission system (that they pay for) the CAISO customers get to use. This is not how CRA works in Eastern Interconnection markets, such as MISO and PJM or MISO and SPP, and it is plainly not a fair approach for CAISO market participants and ratepayers.

Market-to-market coordination in PJM and MISO, for instance, incorporates concepts from DS2, using historical usage to determine the level of rights that PJM has to flow on MISO’s system and the rights that MISO has to flow on PJM’s system. When MISO’s or PJM’s usage of the others’ system exceeds their entitlement, they pay for the congestion associated with the overage. Neither MISO nor PJM (nor CAISO) have a system where there is incentive for market participants to seek out and acquire purely fictional contract path rights for the sole purpose of garnering an ever-increasing share of the right to flow congestion-free on their neighbors’ system.

While it is feasible to accommodate historical OATT rights in the transition to an LMP market (such as through grandfathering of rights), there is a fundamental contradiction in trying to preserve the OATT rights system going forward with the adoption of a more efficient LMP system. Note that in an LMP system – and this is exactly the critical efficiency-enhancing factor -- load and generation have access to the spot market and transmission network without needing to own OATT transmission rights (firm or non-firm), or being required to have inefficient “balanced schedules.” In EDAM/LMP systems, the ISO provides balancing service through the spot market and any imbalances are settled at the spot market price, creating the necessary conditions for least cost dispatch and efficient usage of transmission, saving $billions for the market.

What purpose, then, do OATT rights serve commercially going forward for market participants? What is the game, so to speak? Market participants will see LMP price spreads and forward price spreads transparently and apply to convert non-firm rights to firm when it is to their advantage, or to sign up for new firm rights when market price signals so dictate. And market participants will have the incentive to release OATT physical rights when the cost of the physical right exceeds the market price spread. That physical hedge, which was needed in the old system for transmission access, can (and will) be increasingly replaced with a financial one at lower cost.  

Let’s look at the example of Path15. We know from CAISO’s analysis that when physical assets are developed in the Desert Southwest and flow to EDAM customers elsewhere in the WSCC, approximately 40% of the output will flow onto the transmission bottlenecks separating prices in the renewable rich areas in SP15 from prices in NP15. When this happens, CAISO may experience underfunding, or CAISO LSEs may be limited in the congestion contracts they can acquire to flow on the CAISO network from South to North. Suppose a month arises where weather and grid patterns change and the price spread expands between SP15 and NP15. What incentives are created? In CAISO, competition will bid up price of CRRs on Path15, but no new rights can be created. In non-CAISO EDAM regions, the incentive will be for OATT non-firm rights to be converted to firm to capture the value associated with the transmission bottleneck and for a NITS customer to designate network resources on the low price side of the constraint to serve their load on the high-priced side. These new incremental OATT rights in the monthly system will necessarily come at the expense of the CAISO CRR market (as well as other existing OATT rights on the path). This circumstance is fundamentally and patently unfair to the CAISO entities and ratepayers.

How could a business solution-based combination of DS2 and DS3 work in practice? Suppose CAISO and EDAM entities agree that CAISO is entitled to 75% of the flow on Path15, with 25% reserved for EDAM and Markets+ entities. This hypothetical percentage could be based on analysis of historical usage when transmission is fully available, very similar to the way PJM and MISO determine flow entitlements on market-to-market flowgates. Once the business solution is fixed, the hypothetical 75/25 share would be used as an input into the DS3 SFT analysis. In this case, the incentive for power marketers to schedule new physical rights on the (fictional) contract path will hold harmless CAISO participant rights.  

We look forward to continuing discussions and participation in this next phase of EDAM CRA allocation.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

While Design Concept #1 solves the current discriminatory treatment favoring OATT rights over CRRs in the current EDAM Tariff, it does not address uneconomic self-schedule incentives and would be complex to implement. We agree with CAISO's commentary on this. 

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

As noted above, we feel that historical usage is an important concept that can inform necessary business decisions for market participants to agree to a fair CRA allocation and process. 

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

See comentary above at 1. 

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

We believe CAISO should be considering the development of CRR options (which are part of the PJM and ERCOT markets) in order to better absorb the OATT physical rights paradigm into the EDAM market 

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

CDWR supports Design Concept #3 since it aligns with the current DAM CRR design while addressing other components of CRR enhancements.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

CDWR appreciates that CAISO has provided supplementary information regarding Design Concept #1 as well as the additional stakeholder feedback on this Design Concept. CDWR still considers this Design Concept to be inferior to Design Concept #3 as the exclusion of the simultaneous feasibility test (SFT) will create further revenue inadequacies resulting in shortfalls that will negatively impact the CAISO CRR Balancing Account.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

CDWR appreciates the additional examples of the possible working approach originally introduced with Design Concept #2. CDWR observes this design concept as not a viable approach in the long-term as the proposed historical baseline will not consider real-time fluctuations, especially during contingency days on the grid caused by the growing solar fleet of resources in addition to the potential of retirement of resources.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

CDWR supports Design Concept #3 with expectation that other CRR enhancement components are developed in unison.

CDWR considers the Design Concept #3 to be the most optimal solution for congestion revenue entitlements for CRRs and eligible open access transmission tariff (OATT) transmission rights with an application of the SFT. CDWR believes that running the SFT on a monthly and annual basis will help align OATT transmission rights to the CRR products within the CAISO BAA. 

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

No comment.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

Comments on Extended Day-Ahead Market Congestion Revenue Allocation

Phase 2 Design Working Group Meeting - May 11, 2026

Department of Market Monitoring

May 22, 2026

Comments

The Department of Market Monitoring (DMM) appreciates the opportunity to comment on the Extended Day-Ahead Market Congestion Revenue Allocation Phase 2 Design Working Group Meeting – May 11, 2026.[1] At the working group meeting, the ISO and stakeholders discussed the three current alternative design concepts for the Congestion Revenue Allocation (CRA) originally outlined by the ISO as well as additional alternatives raised by stakeholders.

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

However, the details of any approach under Concept #3 will need to be developed and analyzed in order to assess the impacts and appropriateness of any specific proposal. Transmission ratepayers across the extended day-ahead market (EDAM) balancing authority areas will need to come to an agreement on how the allocation of these rights will work. Specific aspects of any approach upon which agreement will be needed include (1) which rights would be eligible for an allocation, (2) in which rounds of the allocation eligible rights could be sourced, and (3) other terms that the parties may agree on.

The ISO could help stakeholders better understand the potential effects of design choices by providing stakeholders with a common data set that includes, for each likely or potential EDAM transmission provider:

• allocated CRRs,
• NITS MWs, POR and POD,
• long term and short term PTP right MWs, POR and POD,
• Available Transmission Capacity, and
• congestion prices broken out by BAA associated with the POR and POD of these rights

Because we do not know how long it will take to develop a new CRA approach, DMM believes that the ISO should continue working on Concept #2 in parallel with Concept #3 to maintain near term options for replacing the current CRA, even if Concept #2 will not be the final CRA design.

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

[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. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

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

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

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

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

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

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

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

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

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

ED staff appreciates the opportunity to submit comments on Phase 2 of the Extended Day-Ahead Market (EDAM) Congestion Revenue Allocation (CRA) Initiative. ED staff is encouraged by CAISO’s progress on designing a new methodology, and appreciates the speed and time that CAISO is dedicating to this initiative. ED staff continues to support further development of concept #3, but also appreciates CAISO’s efforts to address issues with concepts #1 and #2.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

ED staff appreciates CAISO’s recognition that an asymmetry exists in the CRA methodology used at EDAM go-live. This asymmetry arises because the current interim methodology in the EDAM tariff does not allocate the parallel flow congestion revenue that CAISO creates in other BAAs. The allocation of congestion revenue in the interim methodology is tied to the usage of open access transmission tariff (OATT) and network integrated transmission service (NITS) rights, which the CAISO BAA does not have given that all OATT/NITS rights were converted to CRRs in the late 2000s as part of the market redesign and tariff update (MRTU). This asymmetry likely has little effect at EDAM go-live, based on CAISO’s analysis conducted in Stage 2 of Phase 2, which indicates the amount of parallel flow congestion revenue that the CAISO BAA will not receive because of this asymmetry is small. However, this asymmetry is likely to grow as the EDAM footprint expands over the coming years. Therefore, replacement of the current design is critical in the long-term to ensure equitable treatment of the CAISO BAA.  

Concept #1 is an expansion of the interim methodology that is currently in the EDAM tariff. This expansion would allow the CAISO BAA to be allocated the congestion revenue tied to parallel flows that the CAISO BAA causes on other BAAs’ transmission grids. Specifically, the allocation of congestion revenue would be tied to balanced cleared schedules and eligible transmission rights. For the CAISO BAA specifically, this would be tied to the source/sink CRR pairs, since the CAISO BAA does not have OATT/NITS rights.

ED staff appreciates CAISO’s proposed modifications of concept #1 presented during the May 11^th working group meeting. The current EDAM CRA methodology introduces pervasive self-scheduling concerns that could undermine the economic dispatch efficiency of EDAM. Concept #1 remedies the asymmetry between the CAISO BAA and other EDAM BAAs by allowing the CAISO BAA to also be allocated parallel flow congestion revenue. CAISO’s original proposed variation of concept #1 would expand the transitional mechanism to allow for the allocation of congestion revenue tied to balanced schedules, whether self-scheduled or economically bid. The introduction of tying allocation of congestion revenue to economic bidding reduces the incentive to self-schedule, but does not reduce the incentive to bid at or near the floor. An entity could, in theory, bid near the floor below their marginal cost, to ensure that the resource is dispatched, then make up the differential with their congestion revenue allocation.

CAISO proposes to mitigate the ability to undermine the economic dispatch efficiency of EDAM by not allowing entities to bid below that resource’s default energy bid (DEB). ED staff appreciates CAISO’s proposed revision to concept #1 but at this time find this introduces another layer of complexity that would require software and systematic changes in order to implement. This revision mitigates, but does not fix, the flaw that is inherent when congestion revenue allocation is tied to energy schedules, but any long-term durable design should decouple one’s congestion revenue allocation from one’s energy bids.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

Concept #2, which is a firm flow entitlements proposal, builds on the recommendations from WEM Expert Susan Pope and the MSC in 2025. The establishment of firm flow entitlements is a mechanism that has been used in the Eastern RTOs. Firm flow entitlements are established by using a historical baseline of congestion revenue entitlements for CRRs and eligible OATT rights, which would require a stakeholder agreed upon establishment date (e.g., EDAM entry date or EDAM implementation agreement date). 

ED staff appreciates CAISO further developing concept #2 which was recommended by many stakeholders after the completion of phase 1. At a high level, ED staff fundamentally does not believe a long-term congestion revenue allocation design should be based on historical entitlements without some type of automatic updating mechanism. As CAISO and many stakeholders stated, these entitlements become outdated over time. In the context of the Western Interconnection, it is likely these entitlements will become outdated quite quickly with the advent of two different day-ahead markets (DAM) and rapidly changing resource mixes, which will impact the overall Western Interconnection power flow.

In addition, in order to accommodate network integrated transmission service rights, CAISO proposes to tie congestion revenue allocation entitlements for these specific class of rights to annual peak load. ED staff notes that there is large variability month to month for peak loads, so using a simple annual peak value could in theory lead to congestion revenue allocations that are too large. ED staff suggests if this concept is further pursued, it should use a more granular peak load for congestion revenue allocations (e.g., monthly or daily peak). If a more granular peak load metric is used for congestion revenue allocation, ED staff also requests that CAISO explore the additional implementation complexities of such an approach. If this approach is adopted for a long-term design, then exploring these implementation complexities is warranted.  On the other hand, if this concept is adopted for a short-term interim design, ED staff questions whether the additional implementation complexities are warranted for a short-term design.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

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

ED staff appreciates CAISO continuing to develop concept #3, and taking the time during the last workgroup to further stakeholders’ understanding and knowledge of the simultaneous feasibility test (SFT) that forms the bedrock of CAISO’s congestion revenue rights (CRR). Concept #3 in theory is a straightforward expansion of the current CRR model, but in reality is quite complex. However, while concept #3 is technically complex, it is more straightforward than the different modifications that would be needed for concepts #1 and #2 to be viable.  In addition, concept #3 would establish a long-term durable EDAM CRA design that is adaptive to changing power flows, grid conditions, or EDAM BAA footprints. ED staff encourages CAISO to continue to develop concept #3 in further working group sessions, as CAISO and stakeholders work out different implementation questions/challenges.

ED staff believes a pro-rata payout reduction mechanism, similar to what is already in place in the CAISO CRR market is required for a just and equitable outcome for all EDAM ratepayers. The payout reduction mechanism that was adopted in 2019 for CRRs, would ensure that when the CRR model is expanded to the entire EDAM footprint ratepayers are not responsible for any additional uplift related cost exposure. Ultimately, there will always be a differential between congestion revenue allocations and actual payouts due to modeling differences, outages, non-EDAM flows, and other factors.

Finally, many stakeholders have raised the question of direct settlement versus BAA-level congestion revenue settlement. ED staff is cognizant that adopting direct settlement for the EDAM CRA model likely would further prolong the length of this initiative as the different CAISO BAAs would need to standardize all their settlement charge codes. This is something that could be explored further, but should not hold up the development and implementation of concept #3, which from ED staff’s understanding is compatible with BAA-level or direct settlement mechanisms.

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

ED staff does not support consideration of an EDAM CRA – CRR type auction mechanism at this time. The CRR auction has not functioned well for years within the CAISO BAA and ED staff is skeptical that any expansion of the CRR auction is wise.  ED staff welcomes socialization of any proposed modifications to the global derate factor (GDF) to stakeholders in EDAM CRA and CRR initiatives. While many of the stakeholders are the same in both initiatives, ED staff encourages CAISO to keep this stakeholder process as focused as possible. Finally, ED staff encourages CAISO to maintain a clear as possible line between the two initiatives EDAM CRA and CRR – while modifications to the SFT model used for CRRs will impact both initiatives, neither initiative should delay the other. While there are some overlapping issues especially regarding  concept #3, both initiatives have important and differing priorities that should not delay the other.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

See responses below.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

DC Energy only supports Design Concept 1 to the extent it can be implemented while stakeholders continue to discuss further congestion revenue allocation reforms because it would provide greater parity between CAISO CRRs and OATT rights in other EDAM BAAs and would help address CRR underfunding in the CAISO.  If it cannot be implemented on an expedited basis while the CAISO and stakeholders develop a longer-term solution to EDAM congestion revenue allocation issues, then Design Concept 1 should be shelved for the time being.  If it later becomes apparent that a longer-term solution will be difficult to achieve in a reasonable timeframe, then Design Concept 1 should be revisited in order to address the inequitable treatment of CAISO CRRs.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

The CAISO should stop considering Design Concept 2.  No EDAM transmission customer has insisted on an allocation of historical entitlements, and no stakeholder has otherwise put forth compelling reasons for further considering historical entitlements.  Instead, stakeholders and the CAISO have identified a number of drawbacks and unresolved challenges associated with historical entitlements.  For instance, whether based on MW volume or a monetary value, historical entitlements risk enshrining rather than eliminating the ability of certain transmission customers to avoid paying the full costs associated with their unscheduled parallel flows in other EDAM BAAs.  The CAISO and stakeholders should not waste time and effort on these issues when an allocation based on historical entitlements would, at best, be a suboptimal result.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

The CAISO and stakeholders should focus their limited time and resources on Design Concept 3.  It would remove the self-scheduling incentive for OATT transmission rights holders, because it would allocate congestion revenue to them in the same manner regardless of whether they bid economically or self-schedule.  It would also allocate congestion revenue equitably among CRR holders and OATT transmission rights holders and account for congestion associated with parallel flows. 

As the CAISO explained at the May 11^th meeting, the CRR allocation process can be expanded to accommodate the needs of OATT transmission rights holders, including NITS customers.  This process is more responsive to transmission customer’s needs than one based on historical entitlements, and the simultaneous feasibility tests at each round in the allocation process would help address the inequitable treatment of CAISO CRR holders under the current congestion revenue allocation process.  

An allocation process alone, however, is insufficient to ensure the maximum feasible use of EDAM’s full networked capacity and ensure that OATT transmission customers receive the full value and benefit of the rights allocated to them.  There should be open auctions for residual capacity in each EDAM BAA based on the simultaneous feasibility test.  

The allocation process allows transmission customers to nominate paths that source from a supply location and sink into their load aggregation point or other point of offloading from the system.  Transmission customers can be awarded a total volume up to approximately their peak load for each season and month and time-of-use period.  There is no price associated with the nominations in the allocation process.  At the end of the allocation process, no more rights can be awarded because none of the remaining unawarded nominations can identify sufficient free transmission capacity, leaving unallocated or “residual” transmission capacity.  Because the allocation process does not comprise the entirety of networked transmission capacity, it inherently leaves excess congestion revenue undistributed.

At this point, in the CAISO BAA, the CAISO auctions the residual capacity along with any capacity that CRR allocation recipients offer into the auction at reservation prices of their choosing.   CRR auctions solve for the combination of paths that maximizes auction revenue while satisfying simultaneous feasibility, reconfiguring the network to its maximum use.  In the process, the auction sets a price and provides value for the networked transmission capacity, which is otherwise an underutilized asset with no valuation. Thus, CRR auctions maximize the efficient, non-discriminatory use of the transmission system.

The auction process meets the needs of load to reconfigure their allocated rights by selling unwanted capacity, something that is routinely done by load in CAISO’s CRR auctions. The auction awards rights to those that value them the most, and ultimately allocates congestion revenue to transmission customers as they experience congestion based on a reconfigured CRR portfolio. 

The auction also provides open access to the financial equivalent of firm transmission rights to other classes of market participant that otherwise do not receive an allocation including, generators, storage operators, power marketers, project developers, and new market entrants.   The ability of these market participants to obtain rights via an open, liquid auction that provides price discovery for all potential paths on the network allows them to manage their congestion risk, reducing transaction costs and risk premiums, which ultimately lowers costs for load.

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

Prior to implementing Design Concept 3 (with or without auctions in EDAM BAAs outside of the CAISO), the CAISO should address the root causes of congestion revenue inadequacy currently affecting CRRs.  Namely, the CAISO should address unscheduled parallel flows associated with all neighboring BAAs, not just those that join EDAM.  Addressing unscheduled parallel flows includes not only better modeling but also limiting unscheduled parallel flows and/or obtaining revenue to offset the otherwise free use of transmission capacity.  Other modeling improvements, particularly modeling of outages, as well as efforts to ensure more accurate scheduled outage reporting, would also improve congestion revenue adequacy. 

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

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

Idaho Power appreciates CAISO’s continued engagement in Phase 2. Idaho Power agrees with CAISO that some suggestions by other stakeholders are beyond the scope of this initiative. Idaho Power would not be in favor of scope creep in this initiative to address market design elements that are more seams related or more appropriately addressed in an EDAM year 1 enhancement initiative. Idaho Power recognizes the importance of this issue but would request that CAISO slow down the stakeholder pace to ensure that the long-term solution is viable. Idaho Power is not interested in going through multiple interim solutions due to a rushed process. A long-term solution is important as Idaho Power and others continue to evaluate EDAM as a day-ahead market option to help reduce uncertainty in the future state. 

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

Idaho Power believes this design concept should continue to be reviewed. The congestion revenues being allocated based on “planned usage” of rights rather than simply ownership of rights holds merit. This option helps to eliminate the self-schedule incentive Idaho Power expressed concern about in the current interim design but agrees that it is not removed. However, if this concept remains in consideration, Idaho Power is not in favor of a requirement CAISO suggests that restricts the economic bid from being below the DEB as this may limit the operational flexibility and economics of units. There are times where a utility may need to economically bid the resource below the DEB due to operations and this lower price actually just provides potentially lower priced power for customers overall.  

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

Idaho Power is not in favor of Concept #2. The system continues to evolve and using a historical method of allocation will not produce fair nor equitable results. As new transmission comes on line, as multiple day-ahead and real time markets evolve in the west, the historical baseline approach is not feasible. Idaho Power suggests that no additional time be spent on a concept that looks to establish a baseline based on historical data.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

Idaho Power would like further education and conversation around Concept #3. Today’s transmission is not sold by providers under the OATT based a simultaneous feasibility test of every other system in the west. Idaho Power would like some education around CAISO’s proposal on this and how it would impact all systems including the current CAISO CRR process. For example, does CAISO consider other provider’s system when issuing its CRRs on its system? Does it consider and limit the CRR’s available from N-S based on flow impacts to Idaho Power’s system? What would the study horizon and subsequent CCR allocation look like year, season, month or even multiple? Idaho Power is open to additional education and discussion around this concept.  

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

Idaho Power recognizes that some stakeholders feel a sense of urgency to get the long-term solution in place. The recently released Department of Market Monitor’s Analysis of interim EDAM congestion revenue allocation using 15-minute market data report notes that the current interim solution could likely create incentives to self-schedule and urges CAISO to find a replacement as soon as possible. However, Idaho Power does not believe this means immediately. As noted in the report, the risk identified may grow significantly as the market footprint expands. The analysis identified Nevada Power and Idaho Power as balancing authorities with relatively high potential benefits from self-scheduling under the current EDAM design. However, neither entity has formally committed to joining EDAM, and no implementation timelines have been established to create a sense of urgency. As a result, there appears to be an opportunity to take additional time to ensure the long-term solution is viable. Idaho Power encourages CAISO to use this time to continue working collaboratively and educate stakeholders. While this allocation methodology is very important to Idaho Power and we support its continued advancement, we believe it should proceed at a deliberate and thoughtful pace.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

PacifiCorp appreciates CAISO's continued work on the congestion revenue allocation (CRA) Phase 2 design concepts, including the additional detail CAISO provided on each concept and the summary of stakeholder feedback from the April 17 working group. PacifiCorp also found the background on the simultaneous feasibility test (SFT) process informative and encourages CAISO to continue providing educational content as the initiative progresses.

PacifiCorp continues to encourage a measured pace for this initiative, particularly given the wider-reaching implications that any CRA design changes will have as additional entities join the Extended Day-Ahead Market (EDAM). Many of the constructs under discussion, including congestion revenue rights (CRRs), the SFT, and CRR underfunding, are familiar to entities within the CAISO balancing area but may be relatively novel to entities operating under the Open Access Transmission Tariff (OATT). PacifiCorp believes that CAISO should continue to prioritize education and information sharing to ensure that OATT entities have a sufficient understanding of these constructs and their full implications before asking stakeholders to agree on a design direction. Moving to a design outcome without that shared foundation risks producing a result that does not adequately account for the perspectives and operational realities of OATT transmission service providers and their customers.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

PacifiCorp is open to continued evaluation of Concept #1. However, the self-scheduling incentive remains a core concern, and the proposed default energy bid mitigation measure adds implementation complexity without sufficiently resolving that incentive. PacifiCorp would be interested in exploring whether there are alternative modifications to this design that could more effectively reduce or remove the self-scheduling incentive.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

Concept #2 is PacifiCorp's least favored design option. The historical baseline approach creates two classes of transmission rights holders, raising equity concerns, and presents practical challenges for entities already participating in the EDAM. Given limited stakeholder support, PacifiCorp suggests that CAISO consider prioritizing its resources toward design concepts with broader support.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

PacifiCorp is open to Concept #3 and recognizes that a common SFT framework has the potential to equitably establish congestion revenue entitlements for both OATT transmission rights and CRRs. PacifiCorp appreciates that this concept respects OATT transmission rights and found the background on the SFT process helpful.

However, PacifiCorp needs additional information before forming a more definitive position. While PacifiCorp understands that the EDAM entity has discretion in nominating rights for inclusion in the SFT, many of the underlying constructs (CRRs, the SFT process, and how OATT rights interact with them) may be relatively new to entities operating under the OATT framework. PacifiCorp appreciates the initial detail on how CAISO could model network integration transmission service (NITS) rights within the SFT and would benefit from continued discussion on how the nomination process would work in practice, as well as CAISO's perspective on the broader implications of incorporating NITS rights into this framework. PacifiCorp is also interested in understanding the implications for the SFT as additional entities join the EDAM, including potential underfunding, dilution of entitlements, and administrative complexity.

Finally, PacifiCorp has reviewed the DMM's Analysis of Interim EDAM Congestion Revenue Allocation Using 15-Minute Market Data published on May 11, 2026, and would appreciate CAISO addressing those findings, particularly as they relate to a growing EDAM footprint and the implications for long-term CRA design.

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

PacifiCorp recognizes that congestion underfunding is a relevant consideration under Concept #3 but notes that OATT entities have limited familiarity with CRR underfunding dynamics and may not fully grasp the magnitude of this risk. PacifiCorp would appreciate CAISO providing analysis or additional context to help entities outside the CAISO balancing area better understand how significant this risk may be and how it could affect congestion revenue entitlements in practice within an expanded SFT footprint that includes OATT transmission rights.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

Parallel Flows Represent a Major Seams Issue Within EDAM That Requires Policy Resolution Prior to Developing Detailed Technical Solutions

Introduction

Much of the public narrative around Western seams has focused on the seams that will exist between EDAM and Markets+.  In Powerex’s view, this focus is largely misplaced, as the dominant seams in the West have always been – and will continue to be – the seams that exist between the dozens of transmission service providers (TSPs) and the dozens of balancing authorities (BAs) in the West.  Both the launch of EDAM and the launch of Markets+ change how these seams are managed, and who gets to determine the outcomes at the seams, including the allocation of trade benefits and costs.  This current EDAM stakeholder process illustrates this point in practice. It has also revealed that one of the most significant and consequential seams issues in the West lies entirely inside the EDAM footprint, at the boundaries between the different TSPs participating in that market. 

Comments

It has long been recognized that parallel flows on neighboring transmission systems are an inevitable consequence of an interconnected AC grid with multiple TSPs.  This parallel flow seams issue has existed for decades, and has been addressed by a longstanding, reliable and equitable approach to this seams issue.  Specifically, when a TSP builds new transmission facilities or upgrades existing facilities, its impact on neighboring transmission systems is evaluated, and the TSP may be required to take steps to mitigate these impacts.  At the conclusion of this process, WECC—an independent and impartial entity—approves a path rating (for the major transmission paths in the West). While operational procedures such as unscheduled flow mitigation may apply from time to time, the TSP does not face any further financial liability to neighboring TSPs for parallel flows that inevitably arise from the use of its approved path. This has been the longstanding process for managing parallel flows across TSP-to-TSP seams in the West, and has generally been accepted throughout the industry.

In practice, the largest and most impactful occurrences of parallel flow across TSPs’ service territories in the West are the parallel flows in the North-to-South and South-to-North directions occurring between the California ISO, PacifiCorp, NV Energy, and Idaho Power transmission systems.  Like other instances of parallel flow impacting neighboring TSPs’ systems in the West, ensuring equitable outcomes of this seams issue has been accomplished proactively via the WECC path rating process, which is completed prior to transmission upgrades and new lines coming into service. EDAM does not “eliminate” this seams issue: PacifiCorp, NV Energy, and the California ISO (and potentially Idaho Power if it elects to join EDAM) will continue to be separate and distinct TSPs, recovering their specific costs from their particular customers and ratepayers.  But EDAM rules are currently being considered that would fundamentally alter the longstanding impartial and equitable approach to managing this seams issue, and replace it with a new framework.  Critically, this new framework would not be the result of peer discussions and negotiations between affected TSPs (where the California ISO would be only one TSP among several), but instead would be the result of the California ISO’s stakeholder process.

The stakes for affected TSPs, and the reason that the California ISO's process is problematic, are grounded in a structural asymmetry: neighboring systems, including the PacifiCorp and NV Energy transmission systems, have been built out to accommodate their own use and the parallel flows caused by their neighbors with limited resulting congestion (and with further upgrades and new lines in development). In contrast, the California ISO has not yet upgraded its transmission system to accommodate the California ISO's own use of its system together with the parallel flows caused by its neighbors. The result is that North-to-South and South-to-North congestion, and the costs associated with it, occur predominantly on the California ISO system.  The California ISO’s recent 2025-26 Draft Transmission Plan highlights that there has been more than a ten-fold increase in the number of projected congested hours for the most limiting element of Path 15 on its transmission system, and also estimates that aggregate congestion costs for Path 15 will reach $1.8 billion per year by 2040.[1]  This means that it is predominantly customers of California’s transmission system that would financially benefit from changing the longstanding approach of not requiring compensation for parallel flows across the TSP-to-TSP seams; the transmission customers and retail ratepayers of PacifiCorp, NV Energy, and Idaho Power would all be harmed by such a change.  

The dollars at stake in how this issue is resolved—and the importance of ensuring it is resolved equitably—cannot be overstated. The California ISO’s Stage 2 analysis put the potential value of parallel flow congestion from PacifiCorp day-ahead schedules at $49-$103 million per year.[2]  The Department of Market Monitoring recently published its own analysis, and estimated that the payments for parallel flow congestion for NV Energy would be two to three times as large as those for PacifiCorp.[3]

But the full impact of any EDAM policy to charge for parallel flow congestion would extend beyond the charges applied to spot market transactions; it also has the potential to shift the costs and benefits of investments in major transmission projects, including projects specifically undertaken to increase connectivity in the critical North-to-South and South-to-North directions.  For example, NV Energy received regulatory approval for—and committed its transmission customers and retail ratepayers to fund—the Greenlink project, under the longstanding expectation that NV Energy would be able to provide transmission service to affiliated and unaffiliated customers, without requiring compensation to neighboring TSPs for parallel flow when customers use the Greenlink facilities.  Similarly, the Boardman-to-Hemingway project being developed by Idaho Power and PacifiCorp (with the Bonneville Power Administration as a significant network service customer) was founded on that same expectation: that once the facilities are approved and placed in service, use of those facilities up to the approved WECC path rating would not incur a liability to make large net payments to neighboring TSPs for parallel flow. 

EDAM rules that create a financial liability for unavoidable parallel flows can be expected to create new costs and risks for transmission customers and retail ratepayers outside California. Such EDAM rules would disturb the settled expectations underlying several multi-billion dollar transmission projects currently being developed in the region, while also creating challenges for the development of new transmission facilities outside California, and consequently for the ability to accelerate generation and load interconnections outside California.  If the ultimate policy pursued by EDAM is that building new transmission facilities outside California—or interconnecting new generation or new load that rely on transmission facilities outside California—exposes entities to making new, volatile, and unhedgeable parallel flow payments to California, this will create impediments for the very investment urgently needed in the West.

Such a policy decision could also create impediments for the success of EDAM itself, as entities will recognize that they will not be required to make these potentially large net parallel flow payments to California ratepayers if they join Markets+, SPP's RTO Expansion, or remain outside any organized day-ahead market.

To be clear, Powerex does not claim that the status quo must be maintained, or that it is the only or even the best approach for allocating parallel flow congestion costs across the seams within EDAM.  But Powerex believes that this stakeholder process must first present, discuss, and address a threshold policy question: should TSPs and their firm customers now be required to compensate neighboring TSPs for inevitable parallel flows arising simply from using their own facilities within the approved WECC path rating? This threshold policy question has not been put squarely before stakeholders, or put forward to the California ISO Board of Governors or the WEM Governing Body for approval.  Powerex believes it is inappropriate for the California ISO to be driving discussions toward specific technical solutions that presume this foundational policy question has already been answered, when in fact it has not yet been asked. 

The California ISO’s lead role in defining proposed technical solutions and deciding which proposals have merit, before ever getting to a discussion in front of the WEM Governing Body, is also problematic. The California ISO is the TSP most impacted by parallel flows at the seams within EDAM, and its own customers stand to financially benefit from EDAM rules that depart from the longstanding practices in the West.  Notably, the technical solutions suggested by California ISO staff have omitted any technical solution that would result in the longstanding “status quo” outcome (that existed prior to EDAM implementation), which would be to ensure that all congestion revenue collected from the use of transmission that falls within the path’s approved WECC rating would be allocated back to the applicable EDAM Entity.  This is the foundation of a solution that would “hold harmless” TSPs that elect to participate in EDAM.  It is also the only approach that is consistent with the parallel flow seams resolution assumed by Brattle in the various EDAM benefits studies prepared for EDAM Entities, including the one submitted to the Public Utilities Commission of Nevada in support of NV Energy’s application to join EDAM.[4] 

Powerex supports NV Energy’s recommendation that the California ISO “slow down and allow sufficient time during this process to allow participants who value this effort the opportunity to effectively participate in a meaningful way.”  The issues underlying this stakeholder process are highly consequential, and require an appropriate amount of time for a deliberative process in order to develop an informed and equitable approach.  To that end, Powerex believes that, before further discussion of specific technical solutions, there should be a transparent and inclusive policy discussion addressing whether the longstanding regional approach to parallel flows across TSP-to-TSP seams will continue to apply for entities that choose to participate in EDAM. That discussion must include all affected TSPs, with the California ISO representing its unique circumstances as a peer to other TSPs in EDAM.  The discussion must also include the respective state regulators, transmission customers, and retail customer representatives of those TSPs, given the significant cost-shifting implications for ratepayers and for the benefits from multi-billion dollar infrastructure decisions.

[1] California ISO 2025-2026 Draft Transmission Plan, at 7 and 119, Tbl. 4-1.

[2] California ISO Stage 2 Analysis, at 2 (finding $2.47 million per month (increasing to $6.96 million per month under a sensitivity case with higher transfers) of congestion rent from historical transfers between PacifiCorp East and West and a further $1.65 million per month of congestion rent from self-scheduled generation).

[3] California ISO Department of Market Monitoring, at Tbl. 2 (calculating average quarterly payments associated with parallel flow congestion from NV Energy and PacifiCorp participating resources of $7.6 million and $4.1 million per quarter, respectively, increasing to average quarterly payments associated with parallel flow congestion from all NV Energy and PacifiCorp resources of $13.4 million and $5.3 million per quarter, respectively).

[4] Cross-examination testimony of John Tsoukalis before the Public Utilities Commission of Nevada, Docket No. 25-10025 (March 10, 2026) hearing transcript at Page 212, Lines 24-25, stating that his study “assumes that 100% of congestion inside the NV Energy BA is returned to NV Energy”.  Available at: https://puc-onbase.nv.gov/api/Document/AftG7v13zuxg0lLAR2zjSsRs1rs5CiyqqGdsjLD8iMZlIeGnnoiR5yms9mDWR8b2qw9wyhIdsv3S2PBml7X2dGU%3D/?OverlayMode=View

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

See above and comments attached. 

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

See above and comments attached. 

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

See above and comments attached. 

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

See above and comments attached. 

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

San Diego Gas & Electric (SDG&E) appreciates CAISO’s efforts to introduce several potential design concepts aimed at refining the congestion revenue allocation framework in EDAM and offers the following comments on the May 11, 2026 working group meeting.

At a high level:

• SDG&E does not support delaying progression of this initiative to further evaluate the practical effects of the interim congestion allocation design. The Department of Market Monitoring (DMM) published an analysis of the interim allocation mechanism, which found that the EDAM CRA as implemented would likely create incentives to self-schedule, and that this incentive is likely to grow significantly as the market footprint expands.[1] Considering the expected time needed for policy development and implementation by the EDAM BAAs and CAISO for an improved congestion allocation design (likely 1+ year) and the expected go-live dates of entities that have signed implementation agreements, SDG&E sees no reason for any additional delay.
• SDG&E does not support a tiered transmission concept as discussed by TEA. This would lead to a system that is less efficient and fair and would likely need to be re-evaluated when new BAAs join EDAM.
• SDG&E supports pursuing the most durable solution, which SDG&E believes is Design Option #3 rather than an interim fix.

[1] Analysis of interim EDAM congestion revenue allocation using 15-minute market data at https://www.caiso.com/documents/dmm-analysis-of-interim-edam-congestion-revenue-allocation-may-11-2026.pdf

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

Design Concept #1 could be a bridge to a longer-term solution, but it would require significant vetting to avoid negative market impacts if the changes are to include economically bid schedules associated with firm rights. Further, SDG&E’s support of this framework as a near-term solution is highly dependent on ease and timing of implementation, which appears to be a major undertaking based on the discussion during the 5/11working group meeting.

A framework that enables California load to receive symmetric allocation of EDAM parallel flow congestion revenue is an improvement from the current CRA Phase 1 approach, but SDG&E does not consider this concept to be a durable or efficient long-term solution. SDG&E also has concerns over the short-term incentives that may arise from entities bidding at the economic floor to maximize their congestion rent allocation. Therefore, because SDG&E understands Design Concept #1 to have a long and complex implementation timeline and given the potential for negative impacts of this rule change, it would not make sense to continue exploring this concept, as it would further delay implementation of a long-term durable solution. SDG&E is supportive of moving directly to development and allocation of financial flow entitlements as contemplated in Concept #3, which has garnered significant support from stakeholders.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

SDG&E does not support considering Concept #2 and recommends CAISO and stakeholders focus their efforts on Concept #3. Concept #2 will create a complicated tiered structure and SDG&E believes a durable and fair future framework should not be hierarchical.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

SDG&E supports pursuing Concept #3 as a long-term solution and offers the following questions and feedback on this design:

• What is CAISO’s overall estimate or expectation for the timeline and implementation effort for Option #3? Could a financial flow entitlement structure be implemented in EDAM by 2028, and how long will the Phase 1 interim congestion rent allocation structure stay in place?
• Recognizing that there are limitations to the analysis that can be performed at this very early stage, are there any examples or initial estimates of how this framework would apply to existing and incoming BAAs that can be shared in an upcoming working group meeting?
• The background CAISO provided on the SFT in the CRR process was helpful for a shared understanding of the current process. Does CAISO have additional details on what methodological updates to the SFT may be needed to incorporate additional Balancing Authority Areas, and what resulting changes to CRR allocations could occur when incorporating the larger footprint into this evaluation?
• SDG&E supports the initial design proposal to manage congestion underfunding (consistent with the CRR 1B initiative policy).
• SDG&E requests that CASIO include discussion on the expected impacts of incorporating eligible OATT rights across the EDAM footprint in the SFT, and whether this affects current challenges with CRR underfunding in the ISO. SDG&E also asks whether CAISO will coordinate with the CRR enhancements initiative.
• SDG&E supports the proposal to perform the SFT on an annual and monthly basis for eligible OATT rights (long-term firm and monthly firm PTP and NITS), as this aligns with the current CRR framework.
• In the next working group presentation, SDG&E is interested in seeing an illustrative Option #3 example.

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

No further comment.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

As stated in their earlier comments, the Six Cities place a high priority within this initiative on revising the EDAM congestion revenue allocation rules to address current inequities between the CAISO and other EDAM balancing authorities (”BAs”) in terms of eligibility to receive congestion revenues associated with parallel flows, and the Six Cities do not support deferral or slowing the pace of this initiative to the extent that it will delay resolution of this current asymmetry.  While current impacts to the CAISO BA under the current policy may be limited due to the narrow initial EDAM footprint, the Six Cities are concerned that the impacts of this asymmetry may increase as EDAM expands.  The Six Cities therefore support the CAISO’s timely advancement of this initiative.  

At the same time, the Six Cities also support development of 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.  Based on the options presented, it appears that Design Concept #3 provides the most viable path forward.  Ultimately, the Six Cities support an end-state within EDAM where participating BAs (including the CAISO BA and other EDAM BAs) employ the same financial hedging instruments throughout the markets. 

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

Design Concept #1 does appear to have the benefit of resolving the current asymmetry in the current congestion revenue allocation policy, but the concerns discussed during the two working group meetings (on April 17 and May 11) and in subsequent stakeholder comments on the April 17 workshop demonstrates that this concept has a high potential for the introduction of undesired consequences and would not necessarily be simple to implement.  Given the implementation lift and the perception that this Design Concept may introduce bidding behavior such as bidding at the economic floor (which would then need to be managed through means such as requiring bids be no lower than default energy bids), Design Concept #1 may not provide the basis for a long term, durable design. 

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

The discussion during the May 11 stakeholder workshop confirmed that this Design Concept would likewise entail implementation complexity.  As the CAISO and stakeholders have pointed out, this approach would create different treatment for rights within and outside of historical baselines, and it would not easily accommodate changing conditions and use of the transmission system under an expanded market.  Unless this Design Concept can be adapted to address these concerns, it appears preferable to focus on Design Concept #3. 

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

At this time, there appears to be relatively broad support among stakeholders for further consideration of Design Concept #3, which provides a framework for a long term, design that would provide comparable treatment among BAs in the EDAM, including the CAISO.  This Design Concept would include use of a simultaneous feasibility test to assess flows across the EDAM footprint and establish the level of congestion revenue entitlements for eligible OATT rights and Congestion Revenue Rights (“CRRs”), and it would therefore ensure that rights to receive congestion revenues are aligned with transmission system capabilities.  It would also appear to mitigate a concern with the Design Concept #2, to the extent that the simultaneous feasibility test (conducted annually and monthly) could reasonably accommodate changes in usage patterns of the transmission system over time. 

One consideration with this approach is its potential linkage to CRR underfunding, which is a topic that is under review in the CRR Enhancements initiative.  It is critical that Design Concept #3, if the CAISO and stakeholders move forward with this option, be structured in a way so that it helps ameliorate underfunding issues and provides for equitable treatment among BAs.

At this time, the Six Cities take no position on whether the CAISO should implement direct settlements of congestion revenues with sub-EDAM BA entities.  However, if developing the mechanisms to engage in direct settlement would extend the timeline for implementation of this Design Concept or introduce excessive complexity, then the CAISO could move forward with development of Design Concept #3 and consider direct settlement issues as a later modification if and when appropriate. 

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

The Six Cities do not support any proposed carveout from the EDAM congestion revenue allocation framework for point to point transmission service as suggested by The Energy Authority.  As explained by Southern California Edison Company in its comments on the April 17 workshop, such a carveout would be incompatible with cost causation principles, because it would permit unpriced loop flows to use capacity on other BAs’ systems, while insulating point to point rights holders from the financial effects of these flows (and shifting the cost of managing the congestion to other parties).  The CAISO staff also raised concerns during the May 11 workshop about the potential for this carveout proposal to exacerbate congestion issues and increase congestion costs.  

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

SCE continues to believe that the best solution would be for all EDAM entities to adopt financial transmission rights and for EDAM to use a simultaneous feasibility test to allow stakeholders to have an equal and fair chance to receive FTRs or CRRs across the entire EDAM grid. If EDAM BAAs wish to allow their customers to receive hedging for congestion caused in other BAAs then those EDAM BAAs should be expected to pay for that, with the congestion revenue continuing to flow to the area where the constraint is located. The purpose of the interim mechanism was to allow EDAM entities to adapt to the new EDAM structure. It was not meant as a permanent pass to create congestion in other BAAs and receive the congestion revenue. Stakeholder efforts should be focused on durable, permanent solutions and not on prolonging existing methodologies that incent market participants to avoid participating in the market to the detriment of other market participants.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

SCE does not support Design Concept #1, even as a temporary bridge solution. Previous comments from SCE, other stakeholders, the MSC and the WEM Market Expert make clear that this will not resolve self-scheduling incentives and may create incorrect economic bidding incentives. When CAISO implemented the Phase 1 transitional method, it indicated that the method would only be transitional and would be quickly replaced with a permanent solution. Making minor modifications to a transitional measure doesn’t solve the problem; it simply further postpones the implementation of a durable, long-term solution. Instead of considering such a temporary “bridge,” CAISO should focus its efforts on finding a long-term solution.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

Design Concept #2 is not a solution but instead creates incentives for market participants to capture potential rights before entities join EDAM. The benefits of EDAM are the joint solutions of the market and not locking in specific benefits for certain entities outside of the market. Additionally, the transmission grid in the West is undergoing significant change as new transmission comes online and existing power flows change with new generation and loads. Locking in a historical situation will not allow the needed changes that will be required to achieve the most efficient solutions. All of this assumes that the implementation problems can be resolved, which doesn’t seem likely. Again, CAISO and stakeholder efforts should not be spent on temporary solutions that will likely be already outdated by the time they can be implemented.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

SCE continues to believe that the permanent solution is for all EDAM entities to adopt financial transmission rights. Design Concept #3 is the only proposed concept that moves in that direction. CAISO and stakeholders should begin trying to resolve the issues necessary to implement Design Concept #3. There are a number of issues that will need to be resolved:

• How will Network Integration Transmission Services (NITs) be treated? LSEs’ NITs requests will obviously be limited by their load, but what if several LSEs all seek transmission over similar paths? The situation seems similar to the rights to CRRs that the various LSEs in the CAISO have and which have been the subject of the allocation of CRRs.
• Will the process be two step, with the CAISO and the EDAM BAAs determining amounts of CRRs and transmission rights that will then be combined and tested in the EDAM Simultaneous Feasibility Test, or will the existing processes for CRR allocation and auction in the CAISO and OATT transmission right sales in the EDAM BAAs be decided in one process? Whichever method is adopted, there will be details that will need to be worked out.
• It will still be necessary to determine the details of how the rights allocated under the SFT, including the loop flow congestion revenue, will be used and how the revenue to be flowed will be distributed. The easiest would be to treat all rights like FTRs and flow the revenue to the holder regardless of whether the rights are used, but this may require changes to the OATT rights in question.  
• One potential benefit to Design Concept #3 is that it may be possible for the market operator to directly settle congestion revenues with rights holders. Whether this will be possible, or desirable, is something that must be determined.

Working on resolving these issues and questions is important because the complexity of allocating transmission rights will increase as more BAAs join EDAM and the potential congestion revenues and loop flows grow dramatically.

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

SCE agrees with TEA on the long-term solution being a CRR-like product for EDAM BAAs but is opposed to any specific carve-outs for Point-to-Point (PTP) transmission or providing complete hedges for 6NN OATT rights. Forcing all rights to be settled through the market allows the market to be the most efficient and is beneficial to all entities, so carve-outs should generally be avoided. Non-firm transmission should not get special rights – under the market they will be able to make use of the transmission system when capacity is available but their non-firm status should have them treated like any other market participant. Non-firm basically means market participant.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

While TEA does not agree with CAISO's assessment of the two separate sets of concepts TEA put forward as near-term, incremental solutions, we still appreciate the consideration CAISO gave them and CAISO's review of the supportive comments that came in from other stakeholders. We are hopeful that these concepts can be revisited as market results come in and the full impact of the existing CRA paradigm is seen.   

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

No additional comments at this time.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

No additional comments at this time.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

This concept obviously has received the most support from stakeholders and most vetting and consideration by CAISO staff. TEA would like to better understand the implementation timeline CAISO believes is workable and looks forward to exploring the overall concept further in future working group meetings.

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

TEA requests CAISO and other stakeholders give additional consideration to the idea of allowing 6-NN rights used by EDAM LSEs specifically to import the energy they need to meet the Resource Sufficiency Evaluation. Early market experience is demonstrating that there is not sufficient depth or liquidity of supply within the EDAM footprint for these entities to cure forecasted RSE shortfalls. These entities instead must look to bilateral, pre-EDAM markets to find supply available from sellers and resources outside the EDAM footprint. The existing policy when combined with the reality of NT transmission availability is unduly discriminatory against EDAM LSEs and is forcing them to be unhedged price-takers in EDAM. Something needs to be done about this and the easiest, cleanest option is what TEA proposed.

CAISO's response to this proposal is perplexing. It would simply not be possible for extending the Phase 1 policy of reversing parallel flow congestion for a specific subset of 6-NN rights under the same restrictions as are applied for other Tier One eligible schedules to “exacerbate” self-schedule incentives. Entities using 6-NN rights to import the energy schedules they need to ensure RSE compliance within their host EDAM BAA have no choice but to self-schedule these imports under the existing EDAM design. A policy change cannot exacerbate something that is either already at its maximum or cannot be reduced due to other policy factors. Both of those are true here.

By default, 6-NN rights are only used in instances where an entity is relying on a resource other than a Designated Network Resource (DNR) to meet their load-service or other demand-based needs. In order to economically-import energy into an EDAM Entity BAA, the entity must have an external DNR backing that import. If that entity has the DNR, they would also have 7-FN transmission and would already have the option to receive Tier One allocation. Clearly, 6-NN users are not in that camp or there would be no reason to request this policy change.

TEA in past comments explained at length all the valid, immediate reasons CAISO should be working with EDAM Entities to to open economic intertie bidding in EDAM to all resource types and schedules and will not repeat them here.

It is important to recognize though that the 6-NN request primarily exists because economic intertie bidding is not an option today for the import schedules that need the 6-NN treatment and seemingly isn't going to be an option anytime soon. If open economic intertie bidding were available, and especially if other enhancements were made, as TEA has suggested previously, around the granularity of ELAP and DGAP modeling, EDAM LSEs could use economic bids to hedge their price risk at import interfaces relative to their load-based settlement exposure[1]. This would be the preferred option in most instances and would significantly reduce self-scheduling and its inefficiencies. Still, if Tier One treatment was still available for 7-FN import self-schedules even with economic intertie bidding and especially if export and wheelthrough 7-F users continued to self-schedule because carve-outs had not been made an option, the same allowances requested above would still need to be extended to 6-NN import self-schedules for the reasons TEA explained in its presentation and prior comments – e.g., the fact that use of 6-NN is most often what EDAM LSEs are forced to do based on the policies and limitations of their EDAM transmission service provider, not something they choose, and that 6-NN users still pay exactly the same portion of the EDAM transmission service providers transmission revenue requirement as if they were to only be using 7-FN.

CAISO and the EDAM Entity BAs supporting this treatment would in no way have to “open the door to a hedge for non-firm transmission rights”. The limited allowance for 6-NN rights used to import energy in EDAM would be done on an interim basis and would be constrained by Tariff language and business practices, just like every other market policy and process. TEA trusts that stakeholders are capable of differentiating down the road between a narrow allowance under certain conditions for an interim period and a blanket allowance under all conditions for all time. There are numerous examples of CAISO making interim allowances where conditions were warranted. This is simply another of those and it would be inconsistent for CAISO to dismiss the idea on the grounds stated without even exploring the concept fully with impacted stakeholders.

TEA would welcome an opportunity to explore this option further or answer CAISO's, or other stakeholders' questions regarding it.

[1] TEA is not suggesting this would remove the need for comprehensive, long-term CRA changes, but rather highlighting that having some ability to locationally- and economically-hedge price risk is preferable to having no ability, which is the case in EDAM for most EDAM load-serving entities most of the time.

1. Please provide your organization's overall feedback regarding the EDAM Congestion Revenue Allocation Phase 2 working group meeting held on May 11, 2026.

WPTF appreciates the continued stakeholder engagement and CAISO’s efforts to further refine the EDAM Congestion Revenue Allocation (CRA) framework. The May 11 working group discussion provided additional detail regarding the three conceptual approaches under consideration, including implementation mechanics, settlement implications, and SFT modeling considerations.

WPTF continues to believe the long-term EDAM design should appropriately balance preservation of existing OATT transmission rights, efficient market outcomes, transparency, and compatibility between bilateral transactions and centralized market operations.

2. Please provide your organization’s feedback regarding CAISO introduced Design Concept #1, including any key issues to be addressed or variations in design to be considered.

WPTF views Design Concept #1 as a potential incremental improvement over the current EDAM framework and believes it could serve as an interim or bridge solution while a more comprehensive long-term framework is implemented.

As presented, the concept would allocate congestion revenues associated with parallel flows based on cleared balanced schedules tied to eligible OATT rights. WPTF recognizes this may provide near-term improvements if implemented relatively quickly, but does not view the concept as a durable long-term solution.

WPTF supports continued development of Design Concept #3 as the preferred long-term approach and believes Concept #1 could be considered as part of a broader implementation roadmap toward that end state.

3. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #2, including any key issues to be addressed or variations in design to be considered.

WPTF does not believe Design Concept #2 represents a viable long-term solution.

As structured, the proposal creates two categories of OATT rights based on whether the rights fall within or outside a historical baseline established. Rights within the baseline would receive broader congestion revenue entitlements, while rights outside the baseline would receive more limited treatment.

WPTF is concerned this framework creates inequitable treatment among transmission customers and ultimately provides only limited improvement over the current EDAM design. As the proportion of rights outside the historical baseline grows over time, the market effectively reverts back toward the original EDAM framework for most rights.

For these reasons, WPTF does not believe stakeholder efforts should prioritize further development of Concept #2.

4. Please provide your organization’s overall feedback regarding CAISO introduced Design Concept #3, including any key issues to be addressed or variations in design to be considered.

WPTF believes Design Concept #3 represents the most viable long-term solution and should continue to be prioritized for further development.

WPTF supports continued evaluation of using a simultaneous feasibility test (SFT) framework that would evaluate eligible OATT transmission rights and CRRs together. This approach appears to provide a more uniform, scalable, and economically rational framework than the alternatives presented.

WPTF also appreciates the additional detail CAISO provided regarding incorporation of OATT rights into the annual and monthly CRR allocation processes. To continue developing this framework, WPTF puts forth a set of questions below that should be considered as the details of this framework are developed.

Key areas that still require further stakeholder discussion include:

1. How quantities that could be nominated (i.e., included in the SFT with CRRs) would be determined. For example, will entities only be able to nominate a certain percentage of the total OATT rights to be included in the various tiers of the CRR process or be able to nominate 100%?
2. How source locations would be selected for NITS rights and whether historical usage patterns should inform modeling assumptions. Ideally the source locations used in the SFT will align as much as possible with actual sources used to serve load.
3. Whether OATT rights clearing through the SFT process would also be allocated any CRR revenue shortfalls.
4. Whether timing of when OATT rights are acquired aligns with existing annual and monthly CRR processes. For example, are monthly OATT rights known early enough such that they can be included in the monthly CRR processes?
5. How rights that do not clear or qualify through the SFT process would be treated.

WPTF believes one of the primary advantages of this concept is that it could allow more direct settlement treatment with OATT right holders. While additional discussion is still needed, WPTF believes Concept #3 most closely aligns with the stated design principles and should remain the primary focus of stakeholder development efforts.

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

WPTF encourages CAISO to continue evaluating additional enhancements and refinements proposed by stakeholders, including concepts discussed by TEA and others during the stakeholder process.