Arizona Public Service would save $110 million/year by joining CAISO’s Extended Day-Ahead Market (EDAM) rather than SPP’s Markets+, a new analysis has found, even if other Arizona utilities remained with Markets+.
The analysis by Aurora Energy Research for the Environmental Defense Fund, released Feb. 9, looked at day-ahead market participation by APS, Tucson Electric Power and Salt River Project. All three, along with Unisource Energy Services, announced their plans to join Markets+ in November 2024.
TEP would save an estimated $8.1 million/year by joining EDAM even with APS and SRP participating in Markets+, Aurora’s analysis said. In contrast, SRP would see a cost increase of $4 million/year or more by joining EDAM instead of Markets+.
The annual figures are averages for 2027 to 2040. Aurora based its market footprints on commitments made to join either EDAM or Markets+, and in some cases which direction an entity seems to be leaning. Included in the EDAM footprint are NV Energy, which is awaiting state regulatory approval for its EDAM choice; Idaho Power, which is deemed a likely EDAM participant; and Seattle City Light, which has expressed interest in EDAM.
The analysis assumes the Western Area Lower Colorado (WALC) balancing authority area remains uncommitted to either day-ahead market. WALC — which spans parts of Arizona, California and Nevada — is run by the Western Area Power Administration’s Desert Southwest Region, which in March 2024 pulled out of the second phase of Markets+ development after determining it would see few benefits from joining a day-ahead market. (See WAPA DSW Cites Lack of Benefits in Markets+ Withdrawal.)
Aurora also looked at an Arizona-wide scenario in which APS, TEP, SRP and WALC participated in EDAM. In that case, the entities would save $115 million/year on average compared to APS, TEP and SRP joining Markets+ and WALC staying uncommitted.
“Choosing a West-wide market is one critical step in managing affordability and strengthening grid resilience,” Alex Routhier, senior policy adviser with Western Resource Advocates, said in a statement. “Utilities must evaluate all available options and choose the market that will deliver the greatest cost savings and reliability benefits to Arizonans.”
Governance Questions
EDF said EDAM “is poised to be the largest and most resource-diverse market in the region.” Following the passage of California Assembly Bill 825 in 2025, EDAM will be governed by a new independent Regional Organization for Western Energy — a step that might alleviate some concerns about independent governance — and CAISO will operate the market itself.
But Nick Myers, chair of the Arizona Corporation Commission, said he still has issues with EDAM.
“Should EDAM decide to address the governance and resource adequacy issues in a manner that is acceptable to others, which means providing a level playing field for all states, then I can envision a scenario where we could re-evaluate” the utilities’ participation in Markets+, Myers said in a statement to RTO Insider. “But until that time, Arizona is unlikely to choose a market that disproportionately favors California interests to the detriment of Arizona customers.”
Myers said he had not yet fully reviewed the Aurora report. He noted that Arizona utilities have their own studies showing that customers could benefit from either market.
In announcing its plans to join Markets+, SRP said it was drawn to its governance structure, which promotes independence, transparency, inclusivity and stakeholder-driven decision-making. (See 4 Arizona Utilities Commit to Joining Markets+.)
Resource adequacy was another factor in the utilities’ decision. SPP will require Markets+ participants to join the Western Power Pool’s Western Resource Adequacy Program.
APS said it did not participate in the Aurora study. Instead, the company performed “a rigorous evaluation of all market options,” factoring in reliability, affordability, customer protections and governance.
“The analysis indicates that Markets+ provides the greatest long-term value for our customers,” APS said through a spokeswoman. “We continue to be excited about customer benefits as we prepare to participate in Markets+ in late 2027.”
Costs and Savings
If APS joined EDAM while TEP and SRP stayed with Markets+, APS’ production costs would increase because of the need for more thermal generation in response to decreased thermal imports from SRP, according to the report. But bilateral trading costs would fall as overall import volumes decrease and access to renewables grows in the wider EDAM footprint.
APS’ congestion and wheeling revenues would increase because of greater use of transmission capacity from trade with PacifiCorp East and Public Service Company of New Mexico (PNM).
TEP’s savings from joining EDAM rather than Markets+ are in part from a $25 million decrease in production costs, as baseload thermal generation declines because of reduced exports to Markets+ balancing areas, the report says. Those savings would be partially offset by decreases in congestion and wheeling revenues. Export revenues would fall as TEP’s trading footprint shrinks. Under EDAM, TEP would trade more with PNM and less with APS and SRP.
