Comments on EDAM Benefits Methodology (1/20/2026)

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market (EDAM) Benefits Methodology Stakeholder Meeting held on January 27, 2026.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) appreciates the opportunity to comment on the California Independent System Operator Corporation’s (CAISO’s) EDAM benefits draft methodology.[1]  Cal Advocates provides several recommendations, detailed below, to enhance the methodology.

 

Within-BAA benefits of the EDAM engine

CAISO proposes to compare the EDAM day-ahead (DA) market run with the results of a counterfactual run; the counterfactual run would use the EDAM engine and inputs, but would not include the EDAM’s optimizations for transfers between balancing authority areas (BAAs).[2]  Cal Advocates’ understanding is that BAAs outside of the CAISO BAA currently do their day-ahead scheduling without using CAISO's optimization tools. Therefore, the change to using the EDAM engine will bring two significant changes: optimization of between-BAA transfers and a change in the within-BAA DA scheduling.  The Draft Methodology only aims to calculate the former.  However, any alteration to DA scheduling could have a large impact.  If the EDAM DA optimization achieves lower costs than those BAAs' current practices, this omission would understate the benefits for non-CAISO BAAs.  The Draft Methodology emphasizes that CAISO and other EDAM participants cannot maintain existing DA practices.  However, CAISO should study whether there are any meaningful differences in scheduling outcomes between the EDAM optimization and the non-CAISO BAA’s existing dispatch practices.

 

Other operator actions

The Draft Methodology discusses residual unit commitment (RUC) adjustment, noting "any RUC adjustment applied in the EDAM scenario is also applied in the counterfactual scenario, ensuring that differences in estimated benefits are not driven by inconsistent assumptions."[3]   This is the correct modeling choice – it gets at the heart of making these results comparable.  Without adjustments like this, the study would incorrectly compare an unadjusted model-only outcome to the actual market run, with all of the market run's real-world adjustments.  CAISO’s calculation of EDAM benefits should also apply any other operator actions to both the EDAM DA market run and the counterfactual run.

 

Counterfactual transfers

CAISO’s proposed comparison assumes that transfers between EDAM areas (except between the PacifiCorp regions PACW and PACE) are equal to the TSR types 1 and 3 CAISO uses in actual EDAM operations.[4]  A risk with this approach is that it's extremely likely the presence of EDAM will change these kinds of bilateral trades and self-schedules.  CAISO should check if these post-EDAM TSR volumes look similar to the pre-EDAM schedules.  If not, CAISO should consider a different counterfactual, based on historical transfer schedules.

 

Counterfactual reliability reserves

CAISO should estimate a counterfactual quantity of reliability reserve procurement.  The Draft Methodology states that "Imbalance reserves are included in benefits estimation, but adjusted to match the same volume of reserve requirement procured in both scenarios."[5]  Cal Advocates understands that with the launch of EDAM, imbalance reserves (IR) will replace other reliability measures balancing authorities might be taking today, and that it is important to account for reserves’ contribution to overall system costs.  However, IR is part of EDAM.  A separate evaluation of IR costs and benefits is not part of Cal Advocates’ recommendations, does not recommend that CAISO evaluate IR separately in this methodology; however, we note that part of the cost (and benefit) of EDAM is the cost (and benefit) of IR.  The CAISO BAA does not currently have an IR product.  Cal Advocates recommends that each EDAM BAA, including CAISO, develop an approximation function for the quantity of reserves they currently procure, in a format that CAISO can apply to future grid conditions.  This submission would happen once, not on an ongoing basis. The counterfactual run could then procure this counterfactual quantity of reserves (procuring them as IR).

For the CAISO BAA, Cal Advocates' understanding is that there is no single, specific product that serves the conceptual role of IR for the CAISO BAA.  However, the quantity of RUC that CAISO procures in excess of the load forecast (that is, "RUC adjustment"), along with real-time operator actions, fill a similar role of providing reliability in the face of forecast uncertainty.  CAISO should estimate how RUC procurement has varied as a function of grid conditions, then use this estimate as the IR quantity in the counterfactual run.

RUC adjustment is not identical to IR.  Among other things, the market optimization will incur significant costs to reach a RUC adjustment target, while IR has a demand curve that reduces the quantity procured at higher prices.  CAISO could approximate this pattern by removing the IR demand curve from the counterfactual scenario for the CAISO BAA.

 

Additional disaggregation would be beneficial

CAISO proposes to estimate the EDAM benefit for each BAA – that is, a single number for the BAA for the time period CAISO considers.  To the extent that CAISO is able to provide additional breakdowns, it would be valuable for stakeholders.

Possible slices include:

• Gains from reductions in resource curtailments.
• The pattern of results over hours of the year (e.g. seasonal or within-day patterns) may be useful to understand trends, such as peak-demand days or high-solar-production hours.
• Division of results for different market products (e.g. energy vs reserves).
• At a sub-BAA geography, CAISO could produce:
  • Differences in production costs (these are the same as the production costs CAISO plans to use for the whole BAA, but aggregated within a smaller region).  If CAISO includes smaller geographies in its analysis,  CAISO should note that the differences in production costs are not equivalent to differences in costs of serving load in the smaller region.
  • Differences in default load aggregation point (DLAP) prices.  These could be useful as an estimate of the difference in marginal costs of one more megawatt of load in the region.

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[1] CAISO, Draft Methodology for Extended Day Ahead Market Benefits, January 20, 2026 (Draft Methodology). Available as “Draft Methodology for Extended Day-Ahead Market (EDAM) Benefits – Jan 20, 2026” at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/Extended-day-ahead-market.

[2] Draft Methodology at 6.

[3] Draft Methodology at 9.

[4] Draft Methodology at 7.

[5] Draft Methodology at 14.

1. Please provide your organization's overall feedback regarding the Extended Day-Ahead Market (EDAM) Benefits Methodology Stakeholder Meeting held on January 27, 2026.

At this time, the Six Cities neither support nor oppose the proposed methodology for determining the how the CAISO will report certain benefits of the Extended Day Ahead Market (“EDAM”).  As discussed during the January 27^th stakeholder meeting, the calculation of EDAM benefits represents one measure of EDAM and Day Ahead Market Enhancements (“DAME”) outcomes.  There are other relevant reporting metrics that will be important to fully evaluate the costs and benefits of EDAM and DAME and that may inform any policy changes that might be needed once the EDAM/DAME are operational.  For example, the CAISO’s Department of Market Monitoring has posted a list of elements that it intends to monitor, analyze, and report upon.  See Dep’t of Market Monitoring, Extended Day Ahead Market Metrics (Dec. 15, 2025), available at  dmm-extended-day-ahead-market-metrics-dec-10-2025.pdf. 

The Six Cities request that the CAISO, to the extent it has not done so already, publish for stakeholder review and comment a similar list of elements that it likewise commits to monitoring and reporting upon.  For example, the choice of congestion revenue allocation methodology may not affect production cost calculations or the estimation of overall EDAM benefits under the benefits methodology that the CAISO has designed (as discussed in the CAISO’s Draft Methodology at pages 15-16), but it may affect the distribution of EDAM revenues (which would arguably represent a measurement of costs and benefits for EDAM participation) among participating balancing authority areas (“BAAs”).  At a minimum, CAISO should report on the congestion revenue amounts allocated to each participating BAA arising from constraints in a different BAA.  As another example, while the Draft Methodology asserts that the proposed calculation of the savings associated with the Imbalance Reserve (“IR”) product will result in an underestimation of benefits due to the removal of the diversity benefit from the calculations, it will be critical for stakeholders to understand the cost of the IR product more generally, as has been extensively discussed in the DAME Configurable Parameters effort.  Knowing what other reporting metrics the CAISO will use for reporting on EDAM/DAME results will help stakeholders assess if the proposed benefits methodology should be revised or include other elements. 

Additionally, the Six Cities have several questions about the Draft Methodology:

• Regarding the third bullet point on page 8, does the description mean that the counterfactual assumes there are no parallel flow impacts?  What are the potential implications of this assumption for the accuracy of the benefits calculations? 
• The Draft Methodology explains that in “estimating a counterfactual, it is not feasible to quantify how bilateral transactions would change or how the bilateral market would operate under that alternative scenario.”  See Draft Methodology at 8.  Because this limitation may lead to an over- or under-estimation of benefits, is there a way to estimate a margin of error for the benefits calculation?
• From the description the greenhouse-gas (“GHG”) emissions component of the benefits methodology (see Draft Methodology at 15) , the difference between the EDAM outcome and the counterfactual would benefit from clarification, because the two scenarios appear similar.  Is it as simple as the difference between gross GHG costs based on EDAM dispatch versus gross GHG costs for the counterfactual dispatch?