Stakeholders are mostly supportive of CAISO’s proposed new method for allocating congestion revenues in its Extended Day-Ahead Market (EDAM) after months of workshops and multiple proposals on the topic, according to comments filed with the ISO ahead of a June 2 deadline. 

The congestion revenue issue is a top priority for CAISO this year. The “expedited” initiative began in March after Powerex published a paper contending that EDAM contains a “design flaw.” (See Fast-paced Effort will Address EDAM Congestion Revenue Issue.)  

The primary question is whether certain congestion revenues should be allocated to the balancing authority area in which the costs accrued or to the neighboring area where the transmission constraint is located, specifically in cases in which parallel — or loop — flows occur. 

Under EDAM’s existing rules, congestion revenues will be allocated to the BAA containing the constraint. The new method would allocate a portion of congestion revenue, such as network integration transmission service (NITS) rights, to the BAA where the energy is scheduled. 

CAISO committed to making the new method temporary to allow the ISO to maintain its go-live target for the FERC-approved market in 2026. “This narrowly tailored design change appropriately addresses congestion revenues allocated associated with parallel flows to ensure a just and reasonable congestion revenue allocation for EDAM go-live,” the proposal says. 

The ISO noted that stakeholders “were divided on the temporal aspect of the design.” Several argued it should establish a concrete timeline for consideration of a long-term solution, though without a hard sunset date for the temporary method. 

The Balancing Authority of Northern California said it generally supports the draft final proposal, published May 19. It is “a workable interim solution while … CAISO and stakeholders take the necessary time to develop a more durable approach that addresses the identified issues surrounding incentives for self-scheduling,” BANC General Counsel Tony Braun wrote. 

CAISO’s Department of Market Monitoring said it believes the new method is an acceptable transitional measure. While the department said it might create increased incentives to self-schedule that could reduce market benefits relative to the approved EDAM design, the implementation with the new allocation method “will still create market benefits relative to the current pre-EDAM market.” 

The Bonneville Power Administration also said it supported the proposal, although it, too, is concerned the method potentially incentivizes increased self-scheduling. 

Other stakeholders said the proposal is headed in the right direction but needs a few tweaks. San Diego Gas & Electric, for example, said that without additional analysis, it is challenging to evaluate with “any level of certainty whether this design supports market efficiency or minimizes cost shifts between the EDAM balancing authority areas.” 

“Although the flow patterns and market results from market simulation and parallel operations are likely to evolve significantly following go-live and as participants gain actual market experience, any reporting regarding the potential impact of the transitional methodology that CAISO can provide to participants would ground the working group efforts planned in 2026,” SDG&E staff said in their comments. “SDG&E recommends CAISO prioritize providing this information to the extent it is possible.” 

CAISO plans to publish the final proposal June 6. It then would be reviewed by the CAISO Board of Governors and Western Energy Markets Governing Body during a special meeting June 19.