Developing an Extended Day-Ahead Market framework

The agenda for our upcoming Extended Day-Ahead Market (EDAM) Forum is set and I could not be more excited about the important conversation that will re-launch the public discussion to make EDAM a reality.

When the ISO launched the Western Energy Imbalance Market (EIM) in 2014, the idea of a true and measurable regional collaboration of energy providers in the Western U.S. was difficult to imagine. Today, with the EIM’s growth, more than $1.4 billion in economic benefits and many substantial operational advantages for participants and their customers, we have tangible evidence and a growing appreciation of the value of greater connectivity through regional markets. We believe this is an opportune time to again work on generating additional benefits through expansion of the day-ahead market.

On October 13^th, the California ISO is bringing together industry leaders, policymakers, and expert stakeholders across the West to share ideas about developing an EDAM framework. The virtual webinar is free, from 8:30 a.m. to noon. You can go here to learn more and register to participate.

The time is right for this event. California and states across the West have embraced ambitious clean-energy goals, as we contend with the impacts of climate change, severe drought, wildfires, and the need for a new way of thinking about how to transition to a reliable, clean energy future - now. I am convinced we all do better when we look out for one another through collaboration and coordination on such crucial issues as reliability, transmission development and sharing renewable power across the vast and abundant West.

The Forum provides an excellent opportunity to build on the economic and environmental success of the Western EIM and the recent governance changes adopted in September by the ISO Board of Governors and EIM Governing Body, which each approved a shared authority model for the EIM market.

This year alone, the Western EIM welcomed seven new participants, the most since its inception. By 2023, the real-time energy market is expected to have 22 entities that represent 84 percent of the demand for power within the Western Interconnection. During the extreme heat events that affected the West in 2020 and again this summer, EIM participants across 10 states were valuable partners in sharing energy resources with other utilities throughout the region during stressed grid conditions. We know these partnerships are valuable and that the West is better when we are working together toward our shared interests.

The EIM has delivered important benefits

The EIM’s economic, and operational efficiencies are notable. This past July, the ISO reported gross financial benefits of $1.42 billion among the 15 participating regional balancing authorities since the EIM’s launch in 2014. These benefits result from the efficient transfer of surplus energy in one balancing area to displace higher-cost energy in another.

Beyond the economic and operational benefits, regional collaboration has resulted in lower greenhouse gas emissions because surplus renewable energy that would have been curtailed and lost is used to displace higher-emitting resources in other areas - and at lower cost.

Building on EIM-ISO shared governance

To be successful, all participants in an energy market must feel heard and know their concerns are considered seriously. To ensure that is the case, the EIM Governing Body initiated a review of the Western EIM’s governance, jointly selecting with the Board of Governors a diverse group of engaged stakeholders to lead the discussion and development of potential changes. 

As a result, the EIM Governance Review Committee (GRC) was established and worked with stakeholders to create proposed improvements to the Western EIM governance framework that reflect evolution of the market. The two proposals developed from those meetings included a shared authority model over market rules that are applicable to the Western EIM and EIM entities. Both proposals were unanimously approved by the Western EIM Governing Body and Board of Governors, and are now integrated into the corporate bylaws and other governance documents.

The important issue of a meaningful and robust governance framework for the Western market is close to my heart. I know from my many years working with energy partners throughout the region that this is how we establish the trust and lasting relationships needed to address common challenges. It is also how we benefit the people we serve by developing best practices and solutions with the incredibly talented and hardworking people throughout this unique part of our country. And I believe it is where we must continue to strike the right balance for a healthy and prosperous future.

Unlocking more benefits for the region

For many of our stakeholders, the EDAM Forum discussion may feel somewhat familiar. In September 2019, EIM entities began talking about the potential benefits of extending some of the successful principles and practices of the Western EIM to the larger and more impactful day-ahead market.

The EIM, after all, includes less than 10 percent of the energy transactions in the ISO’s real-time market. Additional enhancements would unlock even more benefits for the region and, ultimately, for the consumers we serve.

When the ISO launched the EDAM stakeholder process two years ago, it became apparent there were significant differences among participants on what an extended day-ahead market would look like and how it would perform. Those differences, coupled with the need to shift our focus to prepare for challenging summer conditions, led the ISO to pause the stakeholder process with the intent of resuming it at a more opportune moment.

Restarting with agreed-upon concepts and principles

Earlier this year, the ISO brought together a small group of Western EIM entities and California investor owned utilities to discuss diverse perspectives on the foundational concepts of a day-ahead market. No one knew how the talks would progress, but during these candid conversations, the group identified mutual design concepts and principles to help guide an EDAM framework. There was agreement that the ISO should re-start the policy design process.

These common design concepts and principles will assist in the development of an EDAM framework that will ultimately strengthen the Western EIM, expand on economic efficiencies and reliability while advancing Western states’ energy goals:

• Voluntary participation during a minimum commitment period, with all load being optimized through EDAM
• Maximize transmission capacity made available to EDAM while respecting contractual commitments and open access transmission tariff frameworks
• Maximize supply made available for EDAM optimization through a robust resource sufficiency evaluation that respects state, local, or other resource adequacy or resource planning programs
• Equitable accounting of EDAM transfers for greenhouse gas emission policies in different participant jurisdictions, and
• Considering the principles above, EDAM transfers must be reliable and considered firm transactions to ensure that participants can rely on these under normal and stressed system conditions

These concepts and principles will be discussed in more detail at the EDAM Forum to get feedback from a broad set of voices throughout the morning. The Forum kicks off with opening remarks from Elliot Mainzer, the ISO’s president and CEO, who will also moderate a roundtable discussion among utility CEOs and presidents representing a range of views in the West.

A second panel, moderated by Mark Rothleder, the ISO’s senior vice president and chief operating officer, will feature more utility experts and focus on the EDAM conceptual framework. Forum participants will also hear regional regulators and policy experts discussing the key principles of extending the day-ahead market across the West, needed governance changes, and opportunities to efficiently optimize resources to meet state goals effectively and reliably. Therese Hampton, executive director at the Public Generating Pool and chair of the Western EIM Governance Review Committee, will moderate. Several ISO executives will officially kick off resumption of the EDAM stakeholder initiative with an overview of the process.

On behalf of everyone at the ISO, I hope you can participate in the Forum as we work together to improve the reliable and cost-effective delivery of our modern energy resources for consumers now and future generations.