CAISO's Day-Ahead Market Enhancements (DAME) and Extended Day-Ahead Market (EDAM) are reshaping how the Western grid operates. Whether you're trying to understand the mechanics or preparing your trading strategy, we've gathered the most common questions and answers, so you're ready from day one of the western expansion.
What is the expected volume of inter-regional trade for EDAM, relative to MISO or PJM?
We expect EDAM to influence inter-regional trading volumes over time. The initial phase focuses on improving transparency in day-ahead market signals. As participants learn from these signals, market design can evolve to better incentivize efficient generation and power transfers across regions. While trading volumes may not shift significantly in the first year, growth is expected in subsequent years.
Direct comparisons to MISO or PJM are difficult due to fundamental topological differences between the Eastern Interconnection and WECC. EDAM is designed specifically for the needs of Western Balancing Authorities and transmission service providers. Unlike the West, PJM and MISO have more interconnection points across their systems, enabling greater opportunities for scheduled power transfers.
Will there be any changes to virtual trading under EDAM?
There are no changes to virtual trading within CAISO—they remain fully supported. However, virtuals can still indirectly influence imbalance reserves by affecting Integrated Forward Market (IFM) outcomes. Virtual bids and offers may displace physical supply, altering how energy, ancillary services (AS), and imbalance reserves (IR) clear. EDAM participation will shift CAISO congestion patterns by expanding the day-ahead optimization footprint, improving efficiency and reliability. Enhanced intertie modeling will also produce more accurate power flows and congestion pricing. EDAM entities may choose whether to allow virtuals in their BAA upon entry or operate without them for up to two years, pending broader policy decisions.
How do you think DAME will impact day-ahead locational marginal prices (LMPs) for SP15 and NP15 vs. current LMPs? Do you expect the price changes to be higher, lower, or net-zero?
Due to the creation of the new imbalance reserve product, we can expect there to be some directional impacts at the hubs in the positive direction due to this additional flexible capacity now being held back in the IFM. The largest price impacts will be time- and location-dependent, because congestion related to imbalance reserve procurement will materialize where forecast uncertainty is greatest.
Imbalance reserves are procured based on locational historical and forecasted uncertainty of wind, solar, and load. Transmission capacity is set aside to ensure imbalance reserves are deliverable in case they are needed in real time. Additionally, the introduction of imbalance reserves is intended to reduce the need for out-of-market actions in the Residual Unit Commitment (RUC) process. Historically, CAISO operators have manually increased demand forecasts to clear more supply in RUC to account for day-ahead (DA) to real-time (RT) uncertainty, and now imbalance reserves will price that uncertainty into the IFM, thus reducing out-of-market actions.
Overall, the market design for EDAM/DAME is intended to create more DAM pricing of flexibility and increased capacity, not less, so overall on average we don’t expect to see significant price disruption as a result of EDAM/DAME, all else constant.
Will there be any changes to the Tier 1 RUC fee as a result of the RUC-related changes?
The Tier 1 RUC fee is undergoing significant changes now that RUC will be procuring Reliability Capacity Up (RCU) and Reliability Capacity Down (RCD).
The Tier 1 RUC cost allocation is being split into an RCU Tier 1 Allocation and an RCD Tier 1 Allocation to cover the costs of procuring RCU and RCD, respectively. Reliability capacity costs not recovered through the RCU and RCD tier 1 cost allocations will be allocated to scheduling coordinators in proportion to their metered demand in the relevant trading hour.
See FERC-approved Tariff language for EDAM and DAME section 11.8.6.5.3, Allocation of the RUC Compensation Costs, and Charge Codes 8806 and 8816 for more detail on RUC Tier 1 Cost Allocation.
Will the new DAME products allow virtual trading?
No, imbalance reserves are only awarded to 15-minute dispatchable physical resources, capped by their 30-minute ramping capability. However, virtuals can still indirectly affect imbalance reserves by influencing IFM outcomes. Virtual bids and offers may displace physical supply, changing how energy, ancillary services (AS), and imbalance reserves (IR) clear.
Will IRU and IRD congestion prices affect convergence bidding settlement?
Yes, imbalance reserves up (IRU) and imbalance reserves down (IRD) congestion prices will indirectly affect convergence bidding settlements through impacting DA congestion patterns. Energy, AS, and imbalance reserves (IR) will be co-optimized in the IFM. IR procurement can create additional binding transmission constraints, since the IFM sets aside transmission capacity to ensure RT deliverability of IR in case they are called upon. These binding constraints, reflected in the IRU and IRD congestion prices, will impact DA congestion patterns and how the market optimization clears both physical and virtual energy alongside AS and IR.
How will EDAM, SPP West, and bilateral markets operate when transferring power between regions?
EDAM and SPP’s Markets+ will reshape the WECC market landscape, dividing it into four distinct markets: CAISO, EDAM, SPP, and Markets+. This structure will create new market seams, and the relative position of Balancing Authorities (BA) and transmission service providers to these seams will significantly disrupt existing bilateral trading frameworks.
Understanding the scheduling mechanisms of EDAM and Markets+ is essential for participants in WECC. While these frameworks introduce added complexity, they are critical for calculating day-ahead schedules and revenues across market seams.
Within EDAM, the modeling and scheduling of power imports and exports between Balancing Authority Areas (BAAs) are managed through Transfer System Resources (TSRs). These mechanisms are designed to optimize transfers and fall into four categories based on how capacity is released:
Type 1: Energy transactions handled bilaterally between transmission customers
Type 2: Capacity released by transmission customers for EDAM optimization
Type 3: Capacity eligible for Resource Sufficiency Evaluation (RSE) released by EDAM entities
Type 4: Capacity released by EDAM entities that is not RSE-eligible
Could you help us understand how joining the EDAM market impacts generators with power purchase agreements (PPAs)? With PacifiCorp being the sole entity to join the market, how does that impact the way contracted PPA generators are dispatched within the market structure?
The biggest impact to PPA generators is that EDAM is no longer supporting base schedules. Self-scheduling and exercising existing transmission rights can achieve a similar result to base scheduling, but the resources will be settled directly through the market.
All resources within an EDAM BAA must participate in both the DA and RT markets by submitting economic bids or self-schedules. Resources will receive DAM schedules and so won't need to submit base schedules to the RT WEIM. Additionally, all EDAM participants will either need to be their own scheduling coordinator (SC) or must be represented by an EDAM SC.
Will EDAM be expected to "dry up" existing bilateral transactions?
No, EDAM is not expected to “dry up” bilateral trading, though some gradual decline may occur as incentives to self-schedule decrease with a larger footprint and growing market confidence.
EDAM is designed to complement bilaterals, with mechanisms that preserve third-party transmission rights and align with open access transmission tariffs. Type 1 transfer system resources (TSRs) support bilateral transactions, allowing transmission customers to self-schedule using their physical and financial rights. While higher-priority schedules may displace physical flows, Type 1 TSRs retain financial rights and remain RSE-eligible.
EDAM also supports inter-scheduling coordinator trades outside the CAISO BAA to facilitate bilateral settlement. Additionally, a transition period will allow contracted RA and RPS imports to be bid at internal EDAM interties (e.g., CAISO–PacifiCorp) to support market launch.
How will market participants that are not their own scheduling coordinators be settled in the market?
All transactions in CAISO and EDAM—except CRRs—must be conducted through a registered scheduling coordinator (SC), as CAISO settles financially only with SCs. Utilities and independent power producers (IPPs outside EDAM or WEIM must either register as an SC or work with one to submit bids or self-schedules at external interties. The SC assumes full financial responsibility for all schedules, dispatch instructions, and ancillary service awards.
Will IPPs located in the Desert Southwest be able to participate in EDAM, and how does transmission factor into that participation?
Yes, IPPs in the Desert Southwest can participate in EDAM, but the structure depends on whether the BAA the IPP belongs to is located inside or outside of the EDAM or WEIM market footprint. IPP resources within an EDAM BAA participate similarly to resources in CAISO today. Resources outside the EDAM footprint can still self-schedule or submit economic bids, though requirements vary by intertie type (internal vs. external), host-BAA's market participation, and whether the resource is location-specific. EDAM does not allow base scheduling—resources must actively participate and be registered for both EDAM and WEIM, as day-ahead schedules create real-time obligations. In all cases, resources must secure transmission to the EDAM boundary and will be subject to EDAM transmission access charges.
When does the change to the calculation for Notional CRR Value, i.e. imbalance congestion, start?
We expect these changes to begin with the market go-live on May 1, 2026.
Have more questions? Learn how we can help you navigate CAISO EDAM and DAME.