07/01/2025

CAISO governance continues to evolve with EDAM’s broadening reach

Stacey Crowley, VP, External Affairs

We are thrilled to share that Public Service Company of New Mexico (PNM) has signed an agreement to join the Extended Day-Ahead Market (EDAM) in 2027. Already a great partner in the Western Energy Imbalance Market since 2021, PNM’s participation in the day-ahead market will further enhance reliability and affordability across our expansive Western market footprint.

PNM’s decision also triggers an important step toward more independent market governance, which is what I want to address today in this Energy Matters blog.

See what others are saying about the PNM news.

Independent governance of the Western Energy Markets is crucial for establishing a strong day-ahead energy market that will maximize consumer benefits. The West-wide Governance Pathways Initiative, launched in 2023 by regulators from California and several other Western states, approached this challenge head-on. A diverse group of regional stakeholders formed a Launch Committee to develop a two-step approach to evolving market governance. The committee’s stated purpose: to establish governance that supports the largest possible market footprint in the West to drive maximum consumer benefits.

In 2024, the Pathways Launch Committee adopted Step 1 and Step 2 proposals to support this evolution. Step 1, taking effect today with PNM’s signing, elevates the Western Energy Markets (WEM) Governing Body to primary decision-making authority for the Western Energy Imbalance Market (WEIM) and EDAM. Previously, this authority was shared with the ISO Board of Governors, whose members are appointed by the California governor and confirmed by the state Senate.

The Step 1 proposal aimed to promote “expansion of the geographic footprint of EDAM in the near term to accelerate the benefits of greater regional coordination,” while the longer-term development and implementation of Step 2 could take place.

For Step 1 changes to take effect, the Launch Committee recommended:

Execution of EDAM implementation agreements by utilities representing non-CAISO balancing authority area load that is equal to or greater than 70% of CAISO balancing authority area load; and
Geographic diversity among the non-CAISO participants beyond PacifiCorp, BANC and LADWP that includes at least one additional non-California entity each from the Northwest and the Southwest.

With PNM signing the EDAM agreement, it becomes the 7th entity to formally commit to joining the Extended Day-Ahead Market. This pushes participation over the required thresholds: cumulative commitments now exceed the 70% of load benchmark, and PNM, located in the Southwest, joins Portland General Electric from the Northwest with a signed agreement.

As a result, the Step 1 governance changes recommended by the Pathways Initiative are now in effect. In addition to the WEM Governing Body now having primary authority over market rules, Step 1 includes two additional changes:

Adds public interest protections to the charter for WEIM and EDAM governance, and
Modifies the existing dispute resolution process between the ISO Board and the WEM Governing Body to provide the ability for two proposals to be filed with the Federal Energy Regulatory Commission (FERC) if an unresolved dispute occurs.

The dual-filing dispute resolution process mentioned above, modeled after ISO New England’s approach, received FERC approval in April. If a dispute arises between the two governing bodies and cannot be resolved after additional stakeholder engagement, both the WEM Governing Body and the ISO Board of Governors can each file their own tariff-related proposals to FERC. These would be reviewed as “co-equal” proposals. FERC could then approve either proposal or potentially adopt elements of each.

What comes next?

Step 2 of the Pathways proposal aims to transfer exclusive governance over the markets and sole tariff-filing rights to an independent corporate entity, the Regional Organization, a move that requires changes to California law.

Senate Bill 540, co-sponsored by Sen. Josh Becker and Sen. Henry Stern, is progressing through the legislative session. The bill, which has passed the Senate, would authorize the ISO Board of Governors to transition governance to a Regional Organization in alignment with the Step 2 proposal, if certain conditions are met.

If enacted, the ISO would retain its core responsibilities as a balancing authority in California, focusing on reliability, generation interconnection, and coordinating with the state on transmission planning. California would maintain control over its energy policies, such as resource procurement and the Renewables Portfolio Standard. The ISO would have the discretion to voluntarily participate in or withdraw from the services under the newly formed Regional Organization, aligning it with other Western balancing authorities.

These changes aim to build the strongest day-ahead market possible, empowering utilities to meet their states’ energy policies while significantly enhancing reliability and affordability. By sharing diverse resources and leveraging transmission interconnectivity, we fortify the Western Interconnection in the face of more extreme heat events and growing demand. Together, we are not just shaping the future of energy markets; we are pioneering a sustainable and resilient path forward.