The Future of Western Power Markets: Why Implementing a Day-Ahead Market Matters

The Western Interconnection is undergoing a major transformation with the transition to a full Day-Ahead (DA) Market. Two competing programs are set to launch in 2026/2027: CAISO’s Extended Day-Ahead Market (EDAM) and SPP’s Markets+. These competing programs will unlock new benefits for BAs across the West made possible by a DA market.

For decades, the West relied on bilateral trading, where utilities and Balancing Authorities (BAs) secured power through individual contracts rather than a centralized market. Unlike regions like PJM or MISO, which have long-established competitive energy markets, the West remained fragmented, forcing BAs to balance supply and demand on their own.

CAISO introduced the Western Energy Imbalance Market (WEIM) in 2014, allowing real-time trading across multiple BAs, which has since delivered $6.25 billion in benefits. However, WEIM only addresses real-time imbalances—it doesn’t provide the forward certainty of a full DA market. This is why EDAM and Markets+ are critical to the future of Western power markets.

It’s worth noting that WEIM will continue to operate alongside EDAM, providing real-time balancing for entities that do not participate in the DAMarket. However, SPP’s Western Energy Imbalance Service (WEIS), a comparable real-time market launched in 2021, will be retired in response to the introduction of Markets+.

Why Implementing a Day-Ahead Market in the West Is Critical

Unlike other regions with centralized DA markets, the West still relies heavily on bilateral trading, where utilities must negotiate individual contracts instead of accessing a shared market. This system creates inefficiencies, increases costs, and limits access to the region’s diverse generation mix. Without a unified DA market, BAs often rely on expensive, volatile real-time purchases when forecasts are off during volatile periods of inclement weather such as MLK Weekend 20

The move to a regional DA market offers a fundamental shift in how the Western grid operates, reducing last-minute scrambling for resources, improving renewable integration, and strengthening reliability. While WEIM has been effective for real-time balancing, it lacks the forward visibility that a full DA market provides. The introduction of EDAM and Markets+ represents a necessary evolution toward amore coordinated, cost-effective, and efficient power system.

WRAP: Laying the Foundation for Reliability

The WesternResource Adequacy Program (WRAP) is the first regional reliability planning program in the West that both Markets+ and EDAM participants can operate in. Nearly every BA has joined, and by 2027, participation will be binding. Currently WRAP is in the non-binding phase, meaning that participants aren’t legally required to adhere to the requirements, but they can adhere to the requirements if they’d like the benefits.

What WRAP Requires:

• Daily submission of a 7-day load forecast (hourly granularity).
• Daily submission of a 7-day renewable generation forecast (hourly granularity).

Importantly, WRAPis a prerequisite for Markets+ participation. While SPP does not require BAs to submit their own forecasts, WRAP compliance still mandates accurate forecasting.

It’s also worth noting that BAs can be both WRAP members and participate in EDAM, as WRAP is focused on regional reliability, while EDAM is a market participation framework.

Markets+ vs. EDAM: What’s the Difference?

Both markets aim to expand day-ahead trading and reduce real-time volatility, but they differ in forecasting, bidding, and penalties.

SPP Markets+

• Forecasting: No required forecast submission, as SPP provides BA-level load and renewable forecasts, but considering WRAP isa prerequisite for Markets+, participants must adhere to those forecasting requirements.
• Bidding: BAs submit bids through a “Market Participant” entity; no requirement to align bids with forecasts.
• Penalties: Only applies to generators deviating from schedules, not BAs or LSEs.
• Launch Date: Early 2027

CAISO EDAM

• Forecasting: No requirement, but BAs can submit a self-provided 7-day forecast to manage procurement.
• Bidding: Must be submitted through a Scheduling Coordinator (SC), a separate entity handling market participation.
• Penalties: No penalties if BAs align with CAISO’s forecast. But if they bid under their DA load, they must cover the shortfall at real-time prices plus penalties to discourage reliance on RTM.
• Launch Date: May 2026

Why Forecasting Matters More Than Ever

Historically, BAs could over-procure or adjust in real time to cover forecast errors. Now, with WRAP, EDAM, and Markets+ directly linking forecasting to market participation and financial exposure, forecasting is no longer just an operational tool—it’s a financial risk factor.

• Missed forecasts could lead to higher procurement costs, price volatility exposure, or penalties.
• EDAM participants can avoid penalties by using CAISO’s forecast but sacrifice procurement control. 
• Markets+ offers more flexibility, but WRAP compliance still requires accurate forecasting. 

The Takeaway: Forecasting is Now a Competitive Advantage 

The shift to Day-Ahead Markets isn’t just about trading—it’s about smarter planning.

BAs and utilities that invest in high-accuracy load and renewable forecasting will gain a competitive advantage, while those that don’t risk:

• Higher procurement costs
• Real-time price volatility exposure
• Market penalties for forecast deviations

In short, forecasting is no longer just about reliability—it’s about financial strategy.

If you’re not prioritizing short-term forecasting improvements now, you’re already behind.