Comments on Straw Proposal and 2/12 Meeting

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Please see attached BANC comments.

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

Please see attached BANC comments.

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

Please see attached BANC comments.

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

Please see attached BANC comments.

5. Please provide any additional feedback.

Please see attached BANC comments.

1. Please provide your organization’s comments on the Feb 12, 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 California Independent System Operator (CAISO) initiating a stakeholder process 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 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.

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 response in Section 1.

5. Please provide any additional feedback.

CalCCA has no additional feedback at this time.

1. Please provide your organization’s comments on the Feb 12, 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 review CAISO’s Financial Planning proposals and ask key questions regarding the increase in the CAISO’s revenue requirement, whether CAISO is planning for different outcomes that are outlined in Assembly Bill (AB) 825 (Petrie-Norris, 2025), and cost allocation. 

[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]

Given these significant increases, ED Staff is interested in ensuring the fair allocation of the existing EDAM General Management Charge because the increase in the revenue requirement cap disproportionally affects the CAISO BAA. ED Staff understands that EDAM costs are charged using a “ramp-in” method where costs ramp-up over the first four years of EDAM in order to incentivize new participants to EDAM,[4] and so these costs will fall to California ratepayers to cover in the early years of BAAs’ participation. CAISO explained that this was just and reasonable because “the incentive of the ramp-in model for early adoption increases the overall benefit for California entities,” and because of congestion revenue rights and ancillary services, “EDAM entity load will not have the same access to all these services as the California load will.”[5] However, ED Staff is concerned with ensuring that California ratepayers in the CAISO BAA are not unduly burdened by the costs to implement EDAM while other states enjoy the benefits.

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….”[6]   

ED Staff understands that CAISO is planning for unanticipated outcomes. Given that 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,”[7] ED Staff has a few questions:

• 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 also planning for the costs for maintaining the technical capability to operate separate market services as required by AB 825?
• 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.[8]  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] A summary of the “ramp-in” method is provided in the CAISO Board of Governor’s Memorandum on Decision on 2023 Cost-of-Service Study driven rate and fee changes (Memo on 2023 Fees), September 13, 2023, available at: https://www.caiso.com/documents/decisionon2024-2026costofservicestudydrivenrateandfeechanges-memo-sep2023.pdf

[5] Memo on 2023 Fees at 7. 

[6] Straw Proposal at 9. 

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

[8] AB 825, Public Utilities Code Section 345.6(e)(1) requires CAISO to

“maintain the necessary technical capability to operate energy markets in a manner that enables California electrical corporations, local publicly owned electric utilities, and other applicable market participants to withdraw from the markets governed by the independent regional organization and instead the Independent System Operator would provide separate market services for those entities.”

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 suggests that CAISO consider allocating the ROWE charge based on participation in the WEIM only because WEIM participation more accurately reflects the future use of EDAM and these costs should be allocated to all participants of EDAM. 

ED Staff however appreciates that charges to fund ROWE start-up costs will be allocated based on MW or MWh participation in the markets instead of the ramp-in methodology that will be used for the General Management Charge. 

5. Please provide any additional feedback.

ED Staff is unclear what it is meant in the staff proposal on page 17 where it states that ROWE start-up costs are allocated “in proportion to market participants’ benefits,”[1] which suggests that that allocation would be based somehow on WEIM benefits methodology, EDAM benefit methodology, or the benefit of the ROWE.  The WEIM benefits is not available on a disaggregated basis, and the EDAM benefit methodology incorporates imbalance reserves into the counterfactual, which have not yet been implemented. The EDAM benefits methodology does not compare participation in EDAM to a counterfactual based on status quo market participation today or to CAISO BAA’s participation in EDAM to current day-ahead market participation. 

[1] Straw Proposal at 17. 

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Environmental Defense Fund (EDF), on behalf of NW Energy Coalition (NWEC) and Natural Resources Defense Council (NRDC), appreciates the opportunity to provide comments to CAISO on the Financial Planning Initiatives, including start-up funding for the Regional Organization for Western Energy (ROWE). EDF greatly commends CAISO’s continued efforts to advance the Pathways Step Two Final Proposal and strongly supports the proposal for ROWE to secure debt financing to cover start-up costs.

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

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

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

EDF generally supports the start-up funding details outlined in the Straw Proposal. Specifically, EDF supports the ISO providing credit backing for a commercial loan or line of credit to ROWE and appreciates the proposed $8.5 million cap. EDF emphasizes that the commercial loan should not be a blank check, and keeping start-up costs low will help ensure charges to market participants remain minimal. This approach will allow ROWE to maintain a competitive edge as it seeks to maximize its market footprint while reducing ratepayer impacts.

EDF acknowledges that any additional charge on market participants may discourage market participation. EDF encourages CAISO to explore all options that could minimize costs, including potentially spreading them over a longer period (24-36 months). However, EDF recognizes that beginning with a 12-month repayment period is an acceptable starting point.

Finally, EDF notes that before ROWE was established, the West-Wide Governance Pathways Initiative sought out a federal grant of nearly $1 million to support its efforts to establish a Western regional organization, which was ultimately cancelled. If the funding becomes available to ROWE in the future, it could help offset the need for the full loan amount and ultimately reduce costs for market participants.

5. Please provide any additional feedback.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

PG&E appreciates the opportunity to comment on this proposal. 

• PG&E supports giving the CAISO flexibility in this instance given the timing of EDAM and DAME go-live.
• PG&E supports giving CAISO the funds it needs to be successful as the footprint grows
• PG&E Supports ROWE and funding the start-up loan but does not support the proposed allocation

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

PG&E supports giving the CAISO flexibility in this instance given the timing of EDAM and DAME go-live.  

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

PG&E supports giving CAISO the funds it needs to be successful as the footprint grows. Despite the increase in budget, the expanding footprint will result in lower GMC rates and help keep costs low during a time where affordability is top of mind

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

PG&E Supports ROWE

PG&E has been a strong supporter of the creation of the Regional Organization for Western Energy (ROWE) and PG&E continues to support the effort to create an equitable regional governance for our regional markets.

PG&E supports CAISO involvement in providing a funding mechanism to start-up and enable initial funding for ROWE through the CAISO Tariff.

The funding and allocation decisions used here do not create and PG&E would not support these solutions being applied in the future funding of the ROWE. The specific needs associated with start up funding are isolated to this function only and do not reflect PG&Es opinions or thoughts on future funding for the ROWE. This is an isolated,  one-time deal.   

PG&E does not support the proposed allocation

PG&E does not support the identified cost allocation under the current proposal, WEIM participants will only be allocated costs based on their real-time volume where the EDAM participants, including CISO BAA will be allocated costs on both their real-time and day-ahead volumes. 

The proposed allocation has no clear connection to ROWE governance, which is a direct benefit to and request of all market participants.  The proposed allocation is skewed because day-ahead market transaction activity is typically 10-20x greater than real-time transactions. Inclusion of day-ahead volumes will unnecessarily and unfairly skew cost responsibility heavily toward the initial EDAM participants without any connection to the ROWE governance change. PG&E estimates this asymmetry would mean day-ahead participants would pay over 75% of the ROWE start-up funding.

Real-time load may be a better proxy for ROWE participation

Realtime (WEIM) load-share is a better proxy for ROWE participation and connection to the benefits represented by ROWE independent governance. An allocation of market cost burdens to those that benefit from the implementation and gain in independence created with the ROWE across the larger and relatively stable population of market participants in WEIM is a better aligned allocation to the funding cause.

The plan should consider the impact of potential ROWE implementation delays

Finally, with regard to the loan repayment timetable, PG&E believes the loan terms, collection schedule, and repayment schedule must appropriately consider the ambitious time schedule to target start-up of ROWE operations in January, 2028.  CAISO is merely the loan guarantor and should not be placed into a challenging situation of repaying the loan from its own funds.

5. Please provide any additional feedback.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

PacifiCorp appreciates the opportunity to comment on the CAISO’s Issue Paper and Straw Proposal for the Financial Planning Initiative. PacifiCorp’s comments and questions on each of the relevant topics are below.

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

PacifiCorp does not have any major concerns with the cost-of-service study extension because PacifiCorp understands the challenge of trying to include any Extended Day-Ahead Market impacts in a 2026 cost-of-service study. Furthermore, PacifiCorp believes the transitional ramp-in of EDAM charges from the 2023 cost-of-service study is still prudent. While PacifiCorp does not have major concerns, the Company would like to better understand the CAISO’s processes for performing a cost-of-service study. In particular, PacifiCorp would like to better understand the time and effort required by CAISO staff to perform the study. It is difficult for PacifiCorp to effectively judge whether extending the cost-of-service study is better than performing a cost-of-service study in 2026 without knowing the strain it may put on CAISO staff. Therefore, PacifiCorp requests the CAISO provide some background on the process at the next stakeholder meeting.

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

PacifiCorp understands the need for the revenue requirement cap to increase due to projected revenue requirement increases. One piece of the revenue requirement increase PacifiCorp wants more explanation on is the re-inclusion of cash funded capital in 2027 and 2028. PacifiCorp requests that the CAISO explain, in a future stakeholder meeting or draft final proposal, why cash funded capital is being re-included in 2027, why it was not included for 2026, and what the cash funded capital will be used for.

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

PacifiCorp supports the CAISO’s proposal for the Regional Organization for Western Energy start-up funding. PacifiCorp believes the CAISO is the best organization to act as the loan guarantor and to collect charges from market participants that benefit from the ROWE.

5. Please provide any additional feedback.

No comment.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Portland General Electric Company (PGE) appreciates CAISO’s overview of the Financial Planning Initiatives and the discussion of the proposed approach to ROWE start-up funding during the February 12 stakeholder call. PGE found the discussion of the overall structure of the initiative helpful, particularly the explanation of how CAISO is proposing to guarantee a commercial loan for ROWE start-up costs and recover repayment through a distinct charge assessed to market participants beginning in 2028.

At the same time, PGE encourages CAISO to continue clearly distinguishing between the Financial Planning Initiative elements related to the Grid Management Charge (GMC) and the ROWE start-up funding proposal. From PGE’s perspective, maintaining clear separation of these topics will help stakeholders better evaluate the scope, sequencing, and implications of each proposal and provide more focused feedback as the initiative progresses.

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

PGE understands CAISO’s rationale for proposing a two-year extension of the next cost-of-service study from 2026 to 2028 to allow the study to incorporate data reflecting both the transition to EDAM in 2026 and a full year of EDAM operations in 2027. PGE agrees that a study based solely on 2025 data would not capture EDAM related operational and cost drivers and could produce results that are misaligned with the post EDAM operating environment.

However, PGE requests additional clarity regarding how CAISO will ensure transparency and rate accuracy during the interim period. In particular, PGE encourages CAISO to outline anticipated stakeholder checkpoints between now and completion of the 2028 cost-of-service study and to explain how CAISO will monitor evolving EDAM-related cost drivers while maintaining the existing 2023 cost-of-service allocations and rates.

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

PGE requests additional transparency regarding the projected increase in the net GMC revenue requirement and the associated proposal to increase the annual revenue requirement cap for 2027 and 2028. The Straw Proposal indicates that the net revenue requirement is expected to increase from approximately $249.9 million in 2026 to $298.8 million in 2027 and $313.4 million in 2028, with proposed cap levels of $305.0 million in 2027 and $320.3 million in 2028.

PGE recognizes the cost drivers identified by CAISO, including reduced offsets as certain services transition into EDAM, normalization of prior year adjustments, re-inclusion of cash funded capital beginning in 2027, inflationary impacts, and potential changes in market participation that could affect offsetting revenues. Given the magnitude of the projected increases, PGE encourages CAISO to provide additional detail on the assumptions underlying these projections and the relative contribution of each driver so stakeholders can better assess cost allocation impacts and implications for EDAM participant net benefits. At a time when customer affordability is of key importance, all necessary costs should be held to the lowest possible level.

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

PGE supports CAISO’s proposal to provide collateral support for ROWE start-up financing through a guaranteed commercial loan or line of credit, with repayment recovered from market participants through a distinct charge. PGE recognizes the value of an independent regional governance structure and supports timely establishment of ROWE in a manner that facilitates broader participation in CAISO administered regional markets.

PGE notes that the Straw Proposal estimates ROWE start-up costs in the range of approximately $7 to $8 million, contemplates a guaranteed loan with an initial principal amount not to exceed $8.5 million, and anticipates repayment beginning in early 2028 with charges assessed during 2028 at a level expected to be less than two cents per MWh. From PGE’s perspective, this approach can be reasonable and workable provided that the scope of recoverable costs remains narrowly tailored to start up activities and that cost allocation and billing mechanics are implemented transparently. PGE also requests insight and clarity into loan terms.

PGE also requests additional clarity regarding tariff treatment, settlement presentation, and invoicing mechanics for the ROWE charges. In particular, PGE encourages CAISO to ensure that ROWE charges remain clearly distinguishable from Grid Management Charge components so that market participants can readily identify, validate, and, if necessary, dispute the underlying billing determinants and calculations.

5. Please provide any additional feedback.

PGE encourages CAISO to clearly articulate how decisions related to the Financial Planning Initiative and ROWE start-up funding will be sequenced and approved, including which elements are being advanced together and which will be addressed through subsequent stakeholder processes. Given the interaction between EDAM implementation, projected administrative cost increases, and evolving cost allocation frameworks, continued transparency and stakeholder engagement will be essential to maintaining confidence as these initiatives move forward.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Puget Sound Energy (PSE) appreciates the opportunity to comment on the California Independent System Operator (CAISO)’s Issue Paper & Straw Proposal for the Financial Planning Initiative (including Start-up Funding for the Regional Organization for Western Energy) (Straw Proposal). PSE’s comments on the Regional Organization start up funding are included below. It is important that this initiative not just address the debt financing but also establishes the framework to facilitate a smooth transition of charges from repaying start up costs to facilitating ongoing funding of the ROWE.

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

PSE does not oppose using the grid management charge (GMC) as a model to make the proposed charge to support the ROWE’s start-up funding and supports the transparency of creating a separate charge line to show the costs associated with the Regional Organization for Western Energy (ROWE) on settlement statements. However, there are some issues and considerations the CAISO should address in a revised proposal when fleshing out the details of the proposed services charges. Specifically, the CAISO should detail how it would address under or over collection of the discrete charges associated with loan used to stand up the ROWE and provide more details on the proposed mechanism CAISO will administer for future ROWE funding.

The straw proposal details that the service charge would be gathered in 2028 to pay for the costs of debt to finance the ROWE’s start up by the end of 2028. This implies that the service charge is going to be collected over a discrete period of time and would be discontinued after the loan is repaid. This creates some implications for dealing with under or overcollection of revenues from the charge specifically associated with this debt. Typically, the over or under collection of rates for the GMC is factored into the calculation for new rates for the next year. However, if the service charge is discontinued following loan repayment there would be no new rates to adjust. This means there needs to be another method to handle a difference in what was collected and what was needed to pay off the loan. This could be addressed with a one time reimbursement/collection of the final amount after 2028 to cover any gaps or surplus. Alternatively, if CAISO chooses to continue making use of this kind of service charge to support ongoing operations, the over or under collection amount could be rolled over into 2029 rates as an outstanding cost or surplus, but CAISO should clarify and set the expectations for how the debt repayment charge would interact with the ongoing cost recovery framework for those funding this charge. In its final proposal, CAISO should present some options for CAISO and stakeholders to consider for how to handle an under or overcollection of service charges related to repayment of the loan.

CAISO also states in the proposal that the intention of the design is that the service charges could be used for ongoing recovery of ROWE costs in the future, depending on stakeholder input. PSE acknowledges that the specifics of what the ROWE does is going to be the decision of the future ROWE board, but CAISO’s final proposal would benefit from detailing the way that this future service charge could be used, what kind of analysis the ROWE should have to make its decision, and how staff intended the charges to be adapted by the ROWE. This explanation will be important context for the initiative record as the ROWE will likely have multiple work streams in progress during its start-up activity. It is unclear what CAISO envisions as end point of that design. Clarification is needed on the following questions, and perhaps others:

1. Does CAISO intend to design the service charge so that it could be seamlessly adopted by the ROWE to support ongoing funding on day 1 – at the same time it adopts charges to pay costs associated with the one-time loan - using the same or potentially updated allocations based on stakeholder input and estimations of the ROWE’s yearly costs?
2. Or does CAISO envision the design as the starting point for a new service charge the ROWE would stakeholder and implement – with new expenses and a new cost allocation structure?
3. How would staff determine future market activity to update the total collected amount as well as the cost allocation percentages?

5. Please provide any additional feedback.

 PSE appreciates the opportunity to comment.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Salt River Project Agricultural Improvement and Power District (SRP) appreciates the opportunity to comment on CAISO’s Financial Planning Initiatives, including start-up funding for the Regional Organization for Western Energy (ROWE). The CAISO proposes to increase the annual Grid Management Charge (GMC) revenue requirement cap in 2027 and 2028, which will include funding for the ROWE.

SRP is encouraged by the development of the ROWE and the independent governance structure it can provide to those who are operating within Western Energy Markets (WEM). This is a major milestone which benefits the Western Interconnection, and SRP looks forward to continued engagement with CAISO, ROWE, and the various market participants within WEM.

SRP is seeking clarification from the CAISO and ROWE on whether, and how, the charges related to the ROWE’s start-up costs will be assessed to entities such as SRP whose involvement in EDAM is limited to registration as an EDAM Scheduling Coordinator. SRP expects to utilize transmission rights on an EDAM Transmission System Provider System but not otherwise be a member in WEIM or EDAM, and the straw proposal is unclear as to whether entities such as SRP will be responsible for paying for ROWE’s costs.

SRP is supportive of CAISO’s proposed timeline for assessment and collection of the ROWE Market Services & ROWE System Operations Real-Time Dispatch charges, which will begin January 2028. This timeline will provide market participants an on-ramp to begin planning for these expected charges while also offering an opportunity to those planning to exit WEIM to avoid being charged for a governance structure they will not have representation within.

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

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

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

See answer to question 1, above.

SRP plans to join Markets+ on October 1, 2027; therefore, SRP will not be a participant in EDAM or WEIM at the proposed start of the ROWE charges in 2028. SRP is an EDAM Scheduling Coordinator because it has rights on PacifiCorp’s transmission system. SRP requests that the CAISO clarify if/how the ROWE charges would be allocated to entities such as SRP that are EDAM Scheduling Coordinators due to transmission rights on an EDAM entity transmission system but are not EDAM or WEIM participants.

SRP also requests CAISO confirm that any change proposed to the January 2028 start would be addressed through a stakeholder process with adequate notice to impacted entities.

5. Please provide any additional feedback.

SRP is monitoring the timing for the start of the ROWE charges. As an entity that plans to exit WEIM prior to 2028, SRP is concerned about the statement on page 20 of the issue paper and straw proposal that the repayment schedule for the ROWE start-up loan could accelerate into 2027 and ROWE charges would begin then.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

San Diego Gas and Electric (SDG&E) appreciates the opportunity to comment on the Start-up Funding for the Regional Organization for Western Energy (ROWE) Issue Paper and Straw Proposal. SDG&E is in full support of CAISO’s efforts to implement a tariff-based rate and collection mechanism for the ROWE’s start-up costs. This is an important next step to achieving the milestones needed for the ROWE to assume its governance role and builds on the meaningful funding efforts completed to-date by pathways launch committee members and Pathway participants and supporters. SDG&E is also in full support of an equitable and broad-based sharing of these costs across market participants throughout the regional market footprint of the ISO, as the start-up and assumption of governance responsibilities by ROWE will benefit all participants in the CAISO market footprint.

While the proposal for the ISO to guarantee a commercial loan to the ROWE is a reasonable and appropriate structure for recovering the necessary start-up costs to support its formation, mirroring the allocation and assessment methodologies of the CAISO’s existing market services charge and system operations real-time dispatch charge may create an unfair allocation of ROWE start-up costs to California and EDAM load. This is despite all market participants, including real-time only participants, receiving equal representation by the ROWE as they assume their envisioned market governance responsibilities. CAISO should consider alternative cost allocation methodologies, such as recovering ROWE related costs fully from the system operations real-time dispatch charge. This would allow all participants to pay their share of the administrative costs for starting up ROWE’s governance and avoids an unnecessary cost shift to California and EDAM entities, who will not receive additional representation for participating in both the real-time and day-ahead markets.

Further, the methodology chosen for the regional organization’s start-up costs should not automatically be the default cost allocation plan for ongoing post-start-up costs for the ROWE; nor should it serve as a starting point.  The nature of start-up costs for the regional organization are separate and distinct from the long-term costs associated with continuing market operations, as they reflect governance benefits and not market participation benefits, and should not be conflated. The cost allocation methodology selected to get the ROWE started should not set the precedent for any subsequent stakeholder discussions regarding the ongoing cost allocation methodology for the ROWE.

We thank CAISO for their consideration of these comments and look forward to continuing our engagement on these topics with the goal of a successful ROWE.

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

No comment.

5. Please provide any additional feedback.

No comment.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

SCE appreciates the CAISO involving stakeholders in this discussion.  We also thank the CAISO for exploring creative ways to help with the start-up funding needs of the ROWE before the change in market governance (expect in 2028) occurs.

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.

SCE notes that with the increased volume projected in 2028, rates for services are expected to decrease for the Market Services and the System Operations and Real-Time Dispatch Charge relative to today.  This is a positive benefit of EDAM market expansion.   SCE notes that, should other EDAM BAAs adopt CRR-type services, it is possible that this rate could also decrease in the future.   

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

SCE supports the CAISO effectively co-signing a loan to cover the start-up costs of the Regional Organization of the Western Energy (ROWE).  SCE anticipates that as early as January 2028, the ROWE will assume governance over the regional electric markets operated by the CAISO.   As such, it is appropriate for the CAISO play a role in the start-up process of the ROWE.  SCE also supports the CAISO imposing a limitation on the amount of a loan it will guarantee (e.g., $8.5M).  The exact limit of the guarantee should be determined in consultation with the CAISO Board, the Formation Committee/ROWE, the WEIM Governing Body and stakeholders.

SCE supports the general structure proposed by the CAISO. That is, beginning in Q2 of 2028 the CAISO will collect funds from market participants to allow repayment of the loan within a year. 

While SCE generally supports the proposed structure, it recommends changing the allocation methodology that CAISO has proposed to one based on real-time participation. Real-time market participation is the sole common denominator across all entities subject to the ROWE governance structure. This will remain true regardless of whether, or when, individual entities elect to participate in the Extended Day-Ahead Market (“EDAM”), including during the initial implementation period in 2028. Allocating costs based exclusively on real-time participation therefore ensures that all participants contribute on a consistent and comparable basis, grounded in a market construct that is shared by all.

By contrast, the CAISO’s proposed allocation—based on combined Day-Ahead and real-time market participation—would disproportionately assign costs to EDAM participants. Given that the Day-Ahead Market is substantially larger than the real-time market – by an order of magnitude -  and that only a subset of entities participate in both markets, this approach would effectively shift the vast majority of costs onto EDAM participants. As a result, entities that participate only in the real-time market would contribute comparatively little, despite receiving ROWE-related benefits, creating an inequitable outcome akin to a free-rider scenario for WEIM-only participants.

Allocating costs solely on the basis of real-time participation avoids this result by normalizing cost responsibility across all participants using a shared, universally applicable metric. At the same time, larger participants will continue to pay a larger share than smaller participants. This approach better aligns cost responsibility with participation, promotes fairness, and removes even the appearance of disincentives to EDAM participation during its formative stages.

In sum, while SCE supports the overall ROWE cost recovery framework proposed by the CAISO, the proposal should be improved by allocating costs based exclusively on real-time (WEIM) market participation. Doing so will ensure that costs are assessed on a common, equitable basis and would avoid unintended free-rider outcomes, while remaining fully consistent reasonable cost allocation principles.

Cost Allocation

SCE agrees that all market participants will benefit from the ROWE governance framework and, accordingly, that all market participants should contribute to its associated costs. However, SCE respectfully recommends a refinement to the cost allocation methodology proposed by the CAISO. Specifically, SCE understands the CAISO proposal is to allocate loan repayments costs based on combined participation in both the Day-Ahead Market and the Western Energy Imbalance Market (“WEIM”) real-time market.  Instead, SCE recommends cost allocation solely on the basis of real-time (WEIM) market participation.

5. Please provide any additional feedback.

N/A

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Please see the Six Cities’ comments below.

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

The Six Cities do not have comments at this time.

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

The Six Cities do not have comments at this time.

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

The Six Cities do not oppose the CAISO’s proposal to assist in the implementation of the Regional Organization (“ROWE”) by providing a guarantee for the Start-Up Funding and a mechanism to recover the loan costs from market participants.  With respect to the allocation of costs, the Six Cities observe that the allocation proposed in the Straw Proposal is significantly weighted toward participants in the Day Ahead Market versus participants in the Real-Time Market.  To ensure an equitable cost allocation among market participants that are the intended beneficiaries of the ROWE’s market oversight, it would be reasonable to recoup the Start-Up Funding costs solely through the System Operations Real Time Dispatch Charge. 

The Six Cities wish to underscore that the methodology for recovery of the start-up loan costs should not be binding on any cost allocation for future, ongoing ROWE costs.  The Six Cities appreciate and support the CAISO’s commitment to future stakeholder proceedings, likely in 2027, devoted to the topic of ROWE’s ongoing post-start-up ROWE costs.

5. Please provide any additional feedback.

The Six Cities do not have further comments at this time.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

The City of Santa Clara, dba Silicon Valley Power (SVP) and the Modesto Irrigation District (MID), appreciate the opportunity to comment on CAISO’s Financial Planning Initiatives. The comments below address the material presented at the CAISO Stakeholder meeting on February 12, 2026 as well as CAISO’s February 5, 2026 Issue Paper and Straw Proposal. SVP and MID do not have specific comments regarding the February 12, 2026 stakeholder call.

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

Appendix F, Schedule 1 of the CAISO Tariff requires the CAISO conduct a Cost-of-Service Study as follows: “Every three (3) years, the CAISO will conduct an updated cost-of-service study, in consultation with stakeholders and using costs from the previous year.”  Given that EDAM is expected to begin operations in mid-2026, it seems warranted to extend the Cost-of-Service Study through an appropriate FERC-filed tariff amendment until 2028 so that a full year of EDAM operations during 2027 may be reflected in the 2028 Cost-of-Service Study.  SVP and MID do not object to the CAISO’s proposed extension.  However, CAISO should commit to completing the Cost-of-Service Study in 2028, with no further extensions. Extending a study to longer than 2028 would risk functionalization of rates departing from cost causation.  SVP and MID note that the Regional Organization for Western Energy (“ROWE”) is expected to launch in 2028.  However, so long as the CAISO is recovering its administrative costs through its own Tariff and the Grid Management Charge, the CAISO should strive to ensure that its rate functionalization follows cost causation.  The CAISO should be cautious not to undertake extensions past 2028, even with the implementation of significant market developments such as ROWE.  Doing so would be inappropriate given the importance of the Cost-of-Service Study in accurately determining the functionalization of rates under the Grid Management Charge Revenue Requirements and associated Revenue Requirement caps.

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

In its 2023 Cost-of-Service Study, CAISO provided accounting support for its proposed Revenue Requirements and Revenue Requirement caps (see 2023 Cost-of-Service Study at Appendix A). Similar support should be provided in this initiative to allow stakeholders to properly review the proposed Revenue Requirement increases for 2027 and 2028. In its Issue Paper and Straw Proposal, CAISO provides Table 2 and notes that the 2027 and 2028 Revenue Requirements will increase “due to a combination of factors, including reduced offsets from other revenue categories as certain services transition into EDAM, normalization of prior-year adjustments that have previously reduced the revenue requirement, the re-inclusion of cash funded capital beginning in 2027, and ongoing inflationary impacts.” Additional transparency and a more detailed explanation of the 2027 and 2028 Revenue Requirement increases should be provided, especially given the significant proposed increases.

In addition, to better assist stakeholder review of the proposed Revenue Requirement increases, CAISO should clarify how it proposes to apply the 2023 Cost-of-Service methodology to determine the 2027 and 2028 Revenue Requirement increases. It is not clear which 2023 Cost-of-Service Study cost category percentages CAISO means to use in calculating 2027 and 2028 Revenue Requirements. For example, comparing Table 1 in the Issue Paper and Straw Proposal with Table 1 of the 2023 Cost-of-Service Study, it seems the Issue Paper and Straw Proposal proposes to use cost category percentages for the Grid Management Charges consistent with the 2023 Study 2025/2026 charge categories but the Western Energy Imbalance Market charge categories used in the Issue Paper and Straw Proposal do not match the 2023 Study charge categories where the Real-Time Market charge is 64.5% and, for 2026, the Real-Time Dispatch charge is retired.

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

No comments at this time.

5. Please provide any additional feedback.

CAISO should clarify whether the deferral of the Cost-of-Service Study until 2028 should be raised before the CAISO Board of Governors or the WEM Governing Body.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

The California Municipal Utilities Association (CMUA) appreciates the CAISO’s efforts in hosting the February 12 stakeholder call. The call was helpful in clarifying the ISO’s initial thinking, but it also highlighted that several distinct topics are being addressed within a single, relatively compressed process, namely the proposed ROWE loan collateral, a cost-of-service study extension, and a significant revenue-requirement cap increase. CMUA believes each of these topics is important in its own right and will materially affect customers in the ISO footprint, including publicly owned utilities and their ratepayers. We therefore encourage the ISO to use this initiative to gather high-level feedback on ROWE-related questions while relying on the established budget and Grid Management Charge processes to more fully vet cost-of-service and revenue-cap issues, supported by clear analytical justifications and stakeholder dialogue. 

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

CMUA believes the underlying rationale for the extension, gathering EDAM data, is rational.  However, further clarification and commitment on how and when that will happen is needed.

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

CMUA recognizes that cost pressures and evolving market initiatives are driving CAISO’s proposal here. At the same time, CMUA is concerned about the magnitude of this projected growth and believes it warrants a more detailed explanation. In particular, stakeholders need to understand how much of the increase is driven by changes in market volumes (for example, any shift from WEIM to EDAM), how much is attributable to new ROWE-related obligations, and how much reflects broader administrative or capital cost growth. CMUA recommends that the ISO address these questions within the recurring budget process so that entities such as POUs can assess how the proposed cap would affect their participation decisions and long-term planning.

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

CMUA supports continued progress toward independent regional governance and recognizes that a successful launch of ROWE could enhance regional coordination and market efficiency if designed and funded prudently. CMUA therefore supports CAISO-backed collateral for the debt-financing of the ROWE costs, to be repaid through market charges.

5. Please provide any additional feedback.

CMUA has none at this time.

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

We spport the CAISO partnering with stakeholders to provide a transparent and open stakeholder process.

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

The Launch Committee does not have a position on this element.

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

The Launch Committee does not have a position on this element.

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

Please see attached comments.

5. Please provide any additional feedback.

N/A

1. Please provide your organization’s comments on the Feb 12, 2026 Financial Planning Initiatives (including Start-up Funding for the Regional Organization for Western Energy) stakeholder call.

Western Resource Advocates (WRA) submits these comments in support of CAISO’s Financial Planning Initiatives, including Start-up Funding for the Regional Organization for Western Energy Straw Proposal (“Straw Proposal”).[1]  

We appreciate and support the CAISO stakeholder process.  This process provides the opportunity for written and verbal feedback; is open to all stakeholders; and does not have a fee or attendance requirement for full participation in the initiative development and decision-making process.[2]

We also appreciate that CAISO is conducting this initiative in a timely manner but balancing an efficient timeline with sufficient opportunities for feedback and consideration.  For example, there will be at least two rounds of the stakeholder process before a proposal is submitted to the governing entities for approval. Each round includes a written proposal for review, an open meeting to discuss the proposal and an opportunity for written comments after the open meeting. We have no objection to the first published document being a straw proposal. This is a limited initiative that does not involve market rules and timeliness is very important.

Finally, we appreciate the thoughtful materials provided prior to the stakeholder meeting and the thorough explanation during the open meeting which included sufficient time to address all stakeholder questions.

[1]CAISO Financial Planning Initiative Including Start-up Funding for the Regional Organization for Western Energy, Issue Paper and Straw Proposal (February 5, 2026), available at: https://stakeholdercenter.caiso.com/StakeholderInitiatives/financial-planning-initiatives-and-regional-organization-start-up-funding (“Straw Proposal”).

[2] See Markets+ Tariff Attachment O, Markets+ Governance.  To participate on committees, and thus have voting rights and access to closed meetings, a stakeholder must sign a membership agreement and pay an annual fee.  There is a sliding scale for “legitimate” organizations with U.S. IRS 501(c)(3) tax status. These entities must provide documentation and get approval for the reduced fee. The MPEC has added an attendance requirement for a stakeholder to maintain participation as a committee or task force member.

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

We support the proposal and the rationale for the proposal.

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

 No comment at this time.

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

We support the proposal and the rationale for the proposal and provide the following additional observations.

Pursuant to the loan terms provided in the Straw Proposal, the start-up cost, thus the loan amount, is reasonable; the terms of the loan are financially responsible; and based on the proposed loan terms participation in the imbalance and day ahead markets is truly voluntary.

Expanding on the last two points, the entire loan will be repaid entirely via a surcharge imposed and collected similarly to the GMC; thus, the market participants will pay off the loan in a share that is proportionate to their participation. It is estimated to be a reasonable $.01-.02 per megawatt hour on market transactions.[1]  The loan will be repaid within one year of the ROWE assuming its governance responsibilities, thus keeping total interest costs low.  And importantly, if a market participant chooses to leave the market, there is no lump sum payment required by, or cost imposed on, the participant for leaving. Thus, EDAM and EIM are in reality, truly voluntary market offerings. This is significantly different than the other day-ahead market (DAM) option offered in the West. In Markets+, if a participant leaves before the approximately $150 million implementation loan is paid off, some part of the loan must be paid in lump sum. The cost of leaving has the potential to be in the millions for some participants, or tens of millions for others.

We applaud the CAISO for supporting market participation that is truly voluntary. As the Straw Proposal states, CAISO recognizes and supports the value of a broad west wide market.[2]

[1] Straw Proposal at 16, 23.

[2] Straw Proposal at 16.

5. Please provide any additional feedback.

We support the recommendation for the WEM Governing Body and CAISO Board of Governors (“Board”) roles.  We agree this proposal should go to both governing entities for approval.  An ISO commitment to guarantee a loan or line of credit in the amounts contemplated would require Board approval. The proposed tariff amendment to charge EIM and EDAM market participants the ROWE start-up debt financing fall within the primary authority for the WEM Governing Body

Again, we support the timeline. This is a limited initiative and timeliness is important.