West-wide Governance Pathways Initiative Overview

The Pathways Initiative was launched by regulators from five Western states, including Arizona, California, New Mexico, Oregon, and Washington in July 2023, to explore continued evolution of the governance of western energy markets to ensure that benefits are maximized for customers across the West. A launch committee was then formed by and comprised of a diverse group of Western stakeholders, to develop a proposal for how this evolution of governance could occur. While the California ISO (CAISO) provides technical support to the Pathways Initiative, it is not a participant.

Pathways Initiative Step 1

The launch committee developed a “stepwise” approach to evolving the governance of the western energy markets. The Pathways Initiative Step 1 of this approach was formally adopted as a recommendation of the committee in June 2024. The Step 1 proposal was intended to maximize the independence of the Western Energy Markets (WEM) Governing Body from the CAISO Board of Governors within the bounds of current law.

Core elements of the Pathways Initiative Step 1 include:

1. Primary Authority: Elevate the decision-making authority of the WEM Governing Body in market-related matters from “Joint Authority” to “Primary Authority,” placing the initial vote to approve or reject a proposed tariff change in the Governing Body’s hands. Their decisions would then be placed on the consent agenda of the CAISO Board of Governors.

2. Dual Section 205 Rights: Modify the process when the WEM Governing Body and the CAISO Board of Governors do not both approve the same proposal. In the event of an unresolved disagreement between the two bodies, CAISO could make a “dual filing” pursuant to Section 205 of the Federal Power Act containing two proposals – one approved by each body – for FERC to decide between.

3. Public Interest Provisions: Change provisions of the Charter for the Western Energy Imbalance Market (WEIM) and the Extended Day-Ahead Market (EDAM) Governance that define the responsibilities of the WEM Governing Body to add a responsibility to account for consumer and other state/local interests in its decision-making process, including an advisory role for the Body of State Regulators.

4. Trigger Threshold: The Pathways Initiative Step 1 governance transition was triggered when a set of geographically diverse, non-CAISO entities execute agreements to join EDAM and whose collective annual load equals at least 70% of the CAISO’s annual load in 2022.

After adoption of the Pathways Initiative Step 1 proposal, the launch committee submitted its recommendation jointly to the CAISO Board of Governors and the WEM Governing Body for consideration. At the direction of the Board of Governors, CAISO staff then initiated a stakeholder process to consider the Step 1 proposal and the changes that would be required to implement the governance changes it sought. For more information on the Stakeholder Policy Initiative for Step 1, please see Stakeholder Guidance or Pathways Stakeholder Process.

The CAISO Board of Governors and WEM Governing Body jointly approved the Pathways Initiative Step 1 recommendations in August 2024, and FERC approved certain changes needed to implement Step 1 in April 2025. The Step 1 governance structure became effective in July 2025 when the trigger threshold for implementation was met. View the Step 1 Trigger Calculations.

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Pathways Initiative Step 2

The Pathways Initiative Step 1 proposal can be accommodated under existing statutory authority of the CAISO Board of Governors, and through its delegation of authority, the WEM Governing Body. However, for California parties to participate in a market governed by a Regional Organization (i.e., the Pathways Initiative Step 2 recommendation), modifications to California statutes governing CAISO are requried. Adopted by the launch committee in November 2024, the Pathways Initiative Step 2 proposal calls for transferring sole authority (including exclusive Section 205 filing rights) over the western energy markets to a newly formed, independent Regional Organization. For more information, please see the Step 2 Final Proposal.

CAISO does not take a position on the Pathways Initiative Step 2 proposal or the ongoing legislative effort in California. We do, however, provide technical assistance to both the state Legislature and the Governor’s Administration as requested.