Comments on Draft Final Proposal

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (CAISO) proposal to obtain start-up funding for the Regional Organization for Western Energy (ROWE). CalCCA is committed to the success of the ROWE and is a part of the group of stakeholders that have provided donations to support start-up. To cover costs in excess of those donations, grant funding, and volunteers, CalCCA supports with one caveat the CAISO’s proposal to secure debt financing as a co-signer and to recover the debt financing costs through supplemental rates charged to market participants benefitting from market expansion. 

The CAISO should modify its proposal to provide its board the authority to approve additional credit backing if ROWE start-up costs exceed initial estimates. The CAISO proposes to “provide credit backing for a commercial loan or line of credit to the ROWE in an initial principal amount not to exceed $8.5 million to fund the ROWE’s start-up costs.”[1] The CAISO should clarify in its proposal that this $8.5 million is a soft-cap. As a unique entity in its early start-up phase, cost estimates may evolve as the ROWE progresses through start-up. It is paramount to the success of Western regional coordination that the ROWE has sufficient funding to launch successfully. To the extent the ROWE requires additional funds beyond the amount available through donations, grants, and the initial $8.5 million loan amount backed by the CAISO, the Final Proposal should provide the CAISO board the authority to approve credit backing of an additional 50 percent above the initial loan amount of $8.5 million.

The proposed Tariff language of Schedule 2 Part B should be modified as follows to incorporate this change:

Part B – Monthly Adjustment On a monthly basis, the CAISO will recalculate the estimated ROWE repayment amount to reflect the current principal amount of the ROWE’s loan, additional principal amounts the ROWE is expected to draw, the current balance of the ROWE start-up charge balancing account, accrued interest to date and forecasted interest for the remaining of the term of the loan, provided that the total amount to be recovered through the ROWE start-up charges may not exceed $8.5 million plus interest unless an increase of not more than 50 percent is otherwise approved by the CAISO Governing Board . Each rate of the ROWE start-up charges will be adjusted automatically on a monthly basis, up or down, according to the formulae listed in Appendix F, Schedule 2, Part A. Such adjustment will be effective the first day of the next calendar month.

[1]            Draft Final Proposal, at 19 (footnote omitted).

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

CalCCA has no comments at this time.

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

CalCCA has no comments at this time.

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

See comments in Section 1.

5. Please provide any additional feedback.

CalCCA has no additional comments at this time.

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

No comments. 

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

CDWR-SWP appreciates the opportunity to comment on CAISO’s proposal to extend the schedule for the next Cost-of-Service study. Extending the Cost-of-Service study timeline would allow CAISO to incorporate 2026 transition-year data from EDAM implementation, as well as 2027 EDAM fully operational data, into future updates of the GMC rate structure and the GMC revenue requirement allocation. CDWR-SWP agrees that using more complete and representative EDAM data will improve the accuracy and transparency of the GMC revenue requirement allocation.

For these reasons, CDWR-SWP supports CAISO’s proposal to extend the Cost-of-Service study. CDWR-SWP believes the proposed extension is reasonable and will lead to more robust outcomes.

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

CAISO proposes its GMC revenue requirement and cap will increase. These adjustments will result in a substantial cost increase for market participants, with an overall 17% increase in 2027 and notable impacts across all GMC rate categories. In particular, the CRR Services charge is projected to increase by approximately 19%. Given this material cost impact, CDWR-SWP requests that CAISO provide detailed explanations of specific drivers behind each component of the revenue requirement increase, especially on CRR services. Furthermore, CDWR-SWP requests that CAISO publish a full list of Charge Codes that will be affected by this GMC Revenue Requirement and the forecasted (2027-2028) rate increases.

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

No comments.

5. Please provide any additional feedback.

No comments. 

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Energy Division staff (ED 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. 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.^[1]  Further, Staff advocates on behalf of California ratepayers at the Federal Energy Regulatory Commission (FERC), under whose jurisdiction CAISO’s transmission planning falls. 

ED Staff appreciates this opportunity to comment on updates and clarifications CAISO made on its Draft Final proposal in this Financial Planning Initiatives and reiterates some comments made on the initial draft straw proposal.  ED Staff comments on the March 19, 2026 meeting throughout.  In these comments ED Staff:

1. asks for further clarification regarding the increase in the CAISO’s revenue requirement, especially whether CAISO is planning for different outcomes than are outlined in Assembly Bill (AB) 825 (Petrie-Norris, 2025), and
2. requests reconsideration of CAISO’s proposal on cost allocation, suggesting that volumetric charges are not appropriate for a cost related to governance. 

[1] More information about the CPUC Energy Division is available at: https://www.cpuc.ca.gov/about-cpuc/divisions/energy-division

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

Energy Division Staff has no comment at this time on the cost-of-service study extension.   

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

CAISO is requesting an increase in the revenue requirement cap of $55 million for 2027 compared to 2026.  This increase follows a number of increases to the revenue requirement cap since 2023, CAISO increased the revenue requirement cap from $202 million in 2024 to $245 million in 2025 and $250 million in 2026.[1] CAISO proposes increasing the revenue requirement cap in 2027 by $55 million to $305 million and by $15.3 million in 2028 to $320.3 million. These increases are out of the norm because between 2015 and 2023 the cap remained at $202 million. CAISO explains that this increase is due to “higher operating funding needs, the re-inclusion of cash-funded capital beginning in 2027, and inflationary cost impacts...”[2] and “reduced offsetting revenues as services transition into EDAM.”[3]

One of the key components of the increase to the revenue requirement cap is a request for $31 million in cash-funded capital starting in 2027. CAISO explains that headroom is needed to provide a buffer “to address potential variability in cost recovery arising from changes in market participation, including the potential exit of participants” from the CAISO that could result in “unanticipated reductions in offsetting revenues….”[4]   

ED Staff understands that CAISO is planning for unanticipated outcomes. AB 825 requires CAISO to “maintain the necessary technical capability to operate energy markets in a manner that enables California [market participants] to withdraw from the markets governed by the independent regional organization.”[5] At the March 19, 2026 stakeholder meeting, ED Staff asked whether the cost to maintain this technical capability is included in the revenue requirement.  CAISO Staff encouraged ED Staff to include this question in comments. ED Staff’s questions include:

• Is CAISO planning for the costs for maintaining the technical capability to operate separate market services as required by AB 825 in the revenue requirement?  Does this partially explain the proposal to increase in the revenue requirement cap?
• What changes in market participation is CAISO planning for?  Is CAISO planning contingencies for both WEIM participants and EDAM participants exiting the markets?
• Is CAISO planning for any other unanticipated reductions in offsetting revenue such as reductions in wheeling revenue due to the Subscriber PTO model, or charges to the CAISO BAA from Subscriber PTOs for load that does not sink in California?

CAISO’s request for an increase appears to consider unanticipated costs that could arise if a market participant exits WEIM or EDAM, but does not appear to have accounted for the costs for maintaining the technical capability to offer separate market services as required by AB 825.  ED Staff suggests CAISO consider these factors in its revenue requirement.  

[1] Memo on 2023 Fees at 5.

[2] Financial Planning Initiative Issue Paper & Straw Proposal (Straw Proposal) at 8, February 5, 2026, available at: https://stakeholdercenter.caiso.com/InitiativeDocuments/Issue-Paper-Straw-Proposal-Financial-Planning-Initiative-Including-Start-up-Funding-for-Regional-Organization-for-Western-Energy-Feb-05-2026.pdf

[3] Financial Planning Straw Proposal Meeting, February 12, 2026 at approximately 6 minutes 25 seconds, available at: https://www.youtube.com/watch?v=YrhwKmBdTYA.

[4] Straw Proposal at 9. 

[5] California Public Utilities Code (PUC) Section 345.6(e)(1).   

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

ED Staff is concerned that the majority of the charge will be allocated to the CAISO BAA because the charge is based on the volume of participation in both WEIM and EDAM.  ED Staff recommends CAISO reconsider the allocation of this charge because as-is the CAISO BAA stands to pay the majority of the charge, creating a mis-match between funding and the ROWE governance structure.  ED Staff suggests that CAISO consider allocating the ROWE charge based on participation in the WEIM only. 

During the March 19, 2026 meeting CAISO staff explained that allocation based on EDAM and WEIM volumetric charges is appropriate because EDAM participants benefit more from the day-ahead market than WEIM participants that only participate in the real-time market.  ED Staff understands the point CAISO is making about the benefits of the day-ahead market.  ED Staff agrees that volumetric charges are appropriate for direct market services, like the General Management Charge (GMC) that funds CAISO’s operations.  Market participants in the CAISO BAA may need more market services from CAISO due to a higher volume of MWs in the market.  Dynamic volumetric charges are appropriate for the GMC because the volume of MWs is a measure of an entity’s use of CAISO markets.

However, ED Staff finds it is less clear whether the benefits any entity receives from the independent ROWE governance services are proportional to the volume of MWs in the market.  All entities benefit from an independent governance structure, and all entities will be given the opportunity to join EDAM/WEIM under this new structure.  Further, benefits any entity may receive based on the new the ROWE governance structure would be difficult to measure.  ED staff therefore suggests that volumetric charges are not appropriate for a cost related to governance.  

ED Staff considered whether a flat charge would be appropriate so that all participants share equally in the cost of governance, however this approach may not be equitable from the perspective of smaller entities.  While volumetric charges are not appropriate for the ROWE governance costs from a cost-causation perspective, CAISO should consider using WEIM volumes as a proxy for entity size to more fairly allocate ROWE start-up governance charges.   Using WEIM volumes as a proxy for entity size, ROWE start-up governance costs would be allocated evenly across all participants, proportional to the benefits each entity receives from independent governance.       

5. Please provide any additional feedback.

Energy Division Staff has no additional feedback at this time.   

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

PG&E appreciates the opportunity to provide CAISO with feedback on the 2026 Financial Planning Initiative.  Our comments herein can be summarized by the following key points:  

• PG&E supports the ROWE and the ROWE’s start-up cost financing. 

• PG&E reiterates interest in seeing an alternative proposal for cost allocation of the ROWE start-up financing costs that is more equitable. 

• The currently proposed cost allocation disproportionately charges a budding day-ahead market in a way disconnected with governance attribution. 

• CAISO cost allocation needs to evolve as the CAISO markets evolve and the finite, clearly defined scope and amount associated with ROWE start up funding should not set precedent for any future funding effort. 

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

PG&E supports 

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

PG&E supports this revenue requirement cap increase given that overall rates are still falling.  Affordability is top of mind for PG&E and should be for CAISO as well.  
 

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

PG&E supports the ROWE and the ROWE’s start-up financing. 

PG&E reiterates our support for the governance transition to the ROWE, and for CAISO to guarantee a loan to finance start-up funding for the ROWE until it has FERC approval of a market revenue funding source.  
 

PG&E reiterates interest in seeing an alternative proposal for cost allocation of the ROWE start-up financing costs that is more equitable. 

The proposed allocation¹ is based on allocation of operational costs of both the day-ahead and real-time markets, where participation in both markets warrants a greater allocation than those only participating in one.  Although the ROWE start-up costs² are not significant relative to the total size of grid management charges allocated in the same manner, the proposed cost allocation is not equitable for governance funding and will disproportionately charge day-ahead market participants for governance activities received equitably by all, compared to a grid management charge for each MWh of market utilization.  

• WEIM and EDAM volumes differ greatly and should not be co-mingled in this case.     

Day-ahead transaction volumes are normally 15-20 times the volume in real-time across all organized wholesale electric markets.  The proposed allocation, by co-mingling day-ahead and real-time volumes, seems to imply that the day-ahead market requires 15-20 times the governance.³ 

• Governance costs are not volumetric.  

All market participants will rely equally on the new Regional Organization to set market rules and policies over markets under the ROWE’s jurisdiction, including WEIM and EDAM alike.  Comparing similar load volumes (e.g., annual load) is often used in cost allocation to account for different sized entities. This proposal does not do that (as noted above); rather, it compares two vastly different load volumes that do not correlate with governance needs and leads to day-ahead participants being allocated 74-78% of the costs.⁴ Governance costs are start-up fixed costs (not marginal) that should be paid on an equitable basis by all entities within the Western Energy Markets. 

PG&E reiterates that there is an easy alternative that would be more equitable. Ideally, these costs would be allocated to all market participants with some scaling for entity size; e.g., total annual load. We recognize that it is not possible for the CAISO to allocate based on total annual load for WEIM-only market participants. However, real-time load is a rough proxy for total annual load and is a better allocation method:  

• Applies to all market participants,  

• Scales with entity size, 

• Provides certainty as the allocation does not change as market participants switch from WEIM-only to EDAM (or vice versa), and 

• Is more equitable as both the EDAM and WEIM participants have equal treatment in the ROWE governance structure. Allocating costs 45 / 55 between these two equally represented groups is more equitable than 75 / 25.   

Allocation using real-time load as a proxy for total annual load can be achieved by changing the proposed allocation to 0% market services grid management charge and 100% real-time dispatch grid management charge.  

 
This allocation should not set precedent for future governance funding 

PG&E appreciates CAISO recognition that the current proposal is not precedential and we look forward to future cost allocation discussions for ROWE funding.   

CAISO cost allocation needs to evolve as the CAISO markets evolve.  

PG&E understands today’s accounting systems were not built to distinguish the cost contributions of different markets.  In the next iteration of its Cost of Service study, CAISO must develop accounting categories that properly distinguish the revenue requirement impacts of WEIM, EDAM and any other CAISO market products that may have distinct participation to support the evolving complexity of cost allocation needs. 

¹ 68% to the market services grid management charge and 32% to the real-time dispatch grid management charge. 

² This is based on an estimated $4.2MM/year cost of paying back the debt using a 24-month term and 6% interest rate compounded monthly.

³ PG&E estimates that the day-ahead market will have day-ahead volumes of approximately ~260 TWh per year and the real-time market of approximately ~3.5 TWh per year between day-ahead and WEIM-only participants. These data are based on 2022 WECC BAA annual load volumes. While these data are not that recent, they provide a close enough proxy to illustrate the disproportionate cost allocation. 

⁴ Generally, governance costs do scale with the size of the participating entity but should not discriminate between two similarly sized entities, which this proposal does. PG&E estimates roughly 74-78% of the ROWE start-up funding will be allocated to day-ahead market participants. The allocation is estimated using recent Western balancing area annual loads (supra n.3), forecasts of EDAM adoptions and Markets+ adoptions over the next five years, and the proposed allocation (supra n.1). Using the load volumes, the result is that day-ahead participants are charged roughly $3.2MM/year of the $4.2MM/year of start-up financing costs (76%); WEIM-only participants are allocated approximately $1MM/year (24%).  

For further illustration: PG&E expects there to be approximately 19 WEIM-only balancing authority areas with a total annual load of approximately 382 TWh and 3 EDAM balancing authority areas with a total annual load of approximately 309 TWh in 2027.  Assuming total annual load-share ratio as the allocation method, WEIM-only BAAs would be allocated 55% and EDAM BAAs would be allocated 45%. These allocations are more equitable in the context of governance and could be approximated using real-time load. 

5. Please provide any additional feedback.

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

PacifiCorp appreciates CAISO’s continued efforts and transparency regarding the Financial Planning Initiatives, including start-up funding for the Regional Organization for Western Energy (ROWE).

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

N/A

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

N/A

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

PacifiCorp wants to reiterate its support for CAISO’s proposal for the ROWE start-up funding. PacifiCorp appreciates CAISO providing additional context to allay stakeholder concerns related to the cost allocation methodology. It is clear that the proposed cost allocation methodology is solely meant to serve as the model for recovering the amount of the loan start-up funding, and that this methodology does not represent the long-term ongoing ROWE funding model.  PacifiCorp understands that due to the time sensitivity of planning for repayment of the loan, CAISO wanted to expedite the process and immediately propose a cost recovery plan and allocation methodology. Given this context, PacifiCorp agrees with CAISO’s approach of leveraging the proven GMC cost allocation methodology, with cost recovery of roughly (or less than) $0.02 per MWh beginning in 2028, aligned with the start of ROWE governance and loan repayment.

5. Please provide any additional feedback.

N/A

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

While San Diego Gas and Electric (SDG&E) is disappointed that CAISO chose not to adopt our recommendation for an alternative allocation for the start-up funding for the ROWE, we do not object to the proposed funding approach for the sole purpose of establishing the regional organization. However, as discussed further in our response to Question #4, our support is contingent on this approach being explicitly confined to that limited use. The mechanism used to fund startup activities must not evolve, either by implication or default, into the funding model for future ROWE activities.

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

No comment.

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

No comment.

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

As discussed in the proposal, startup expenditures for the ROWE are temporary, organizational, and governance-oriented in nature. The start-up costs at issue bear no relationship to the costs incurred to deliver ongoing market services or the benefits associated with market participation. Treating these fundamentally different cost categories as comparable would be inappropriate and risks prejudging decisions that must be made through a separate, deliberate stakeholder process. Accordingly, the startup funding methodology should not be presumed relevant to, or influence the outcome of, any future discussions regarding the allocation of ongoing ROWE costs.

We appreciate CAISO agreeing with the concerns raised by stakeholders, including SDG&E, on this point and their confirmation that this proposal is limited to startup costs only and should not establish precedent for future, ongoing ROWE costs. SDG&E reiterates this point for emphasis, as our support for this methodology is contingent on this statement

5. Please provide any additional feedback.

No comment.

1. Please provide your organization’s comments on the March 19, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

SCE continues to support the CAISO effectively co-signing a loan/letter of credit to cover the start-up costs of the Regional Organization of the Western Energy (ROWE).  As previously noted, ROWE could assume governance over the EDAM and WEIM as early as January 2028, and it is appropriate and important for the CAISO play a role in the ROWE start-up process.  SCE continues to support the CAISO imposing a limitation on the amount of a loan it will guarantee at the proposed $8.5M.  

In sum, while SCE supports the overall ROWE cost recovery framework proposed by the CAISO, SCE continues to believe costs should be allocated exclusively on real-time (WEIM) market participation. Doing so will ensure that costs are assessed on a common, equitable basis that better reflects the reason for a change in governance – that is to better facilitate and address issues raised by regional participants.  As SCE previously noted, the current allocation to both EDAM and WEIM instead creates an effective free rider issue for WEIM only participants.   In any event, is it important that the CAISO move forward with a mechanism that supports the funding needs of ROWE.

2. Please provide your organization’s comments on the Cost-of-Service Study Extension.

N/A

3. Please provide your organization’s comments on the Revenue Requirement Cap Increase.

N/A

4. Please provide your organization’s comments on Regional Organization Start-Up Funding.

See answer to question #1

5. Please provide any additional feedback.

N/A