SPP’s Markets+ hit a snag July 31 after FERC issued a deficiency letter outlining 16 problems the RTO must address in the tariff it filed for the proposed Western day-ahead market in March (ER24-1658).

How significant a snag remains an open question.

The commission’s letter stipulates that SPP has 60 days to respond. Sources involved in Western market developments, but not authorized to speak for attribution, shared mixed views with RTO Insider about SPP’s ability to adequately resolve the issues on that timeline, particularly if it must consult with stakeholders on any of them.

They also wondered whether the development would shift decision timelines for entities leaning in favor of joining Markets+. They acknowledged uncertainty about the gravity of the deficiencies, but one source pointed to the seeming “structural” nature of some of FERC’s concerns.

For its part, SPP played down the significance in a statement released shortly after FERC released the letter.

“The limited scope of the commission’s requests for additional clarity indicates its broad understanding and acceptance of the Markets+ design as proposed, with a need for more detail on some specific, nuanced market characteristics,” SPP said. “The additional work necessary to respond to the commission’s questions will not negatively impact the Markets+ timeline.”

“The Markets+ development timeline has always had flexibility,” Antoine Lucas, SPP vice president of markets, said in the statement. “We allowed ourselves time expecting an extended review at FERC, and we’re prepared to spend the time necessary to assure the commission we’ve accounted for every possible contingency in the market’s operation.”

The deficiencies outlined in the commission’s letter deal with multiple subjects in the market’s rules, including treatment of transmission, integration with the Western Power Pool’s Western Resource Adequacy Program (WRAP), self-schedules, greenhouse gas pricing provisions and offers from hydroelectric resources.

Under the transmission category, the commission asked SPP to clarify provisions around when capacity is considered unavailable for use in Markets+ and explain the process and timeline for communicating unavailability to market participants.

The commission also sought clarity on how “SPP expects that transmission capacity that is opted out [of the market] but that is not otherwise scheduled will be made available for use” — and on the workings of the opt-out process.

Another deficiency relates to the tariff’s “Markets+ transmission contributors” provision, which allows participants to contribute their transmission rights to a system operated by a transmission service provider not participating in the market, a rule that prompted a protest from PacifiCorp. (See SPP Markets+ Tariff Sparks Concerns for PacifiCorp, NV Energy.)

The commission asked SPP to explain “whether SPP or the Markets+ transmission contributor will be responsible for coordinating transmission schedule changes, curtailments and other operational concerns with the nonparticipating transmission service provider and how this information will be shared, as necessary” and “whether and how ancillary service needs for contributed transmission capacity will be communicated to the Markets+ transmission contributor’s nonparticipating balancing authority.”

It also asked whether Markets+ or the transmission contributor would be responsible “for potential costs associated with usage of the nonparticipating transmission system, including redispatch costs incurred because of schedule changes.”

Regarding the day-ahead market’s integration with WRAP, FERC asked SPP to cite the tariff provisions describing “how Markets+ would ensure that WRAP-related exports, imports or wheel-through transactions’ firm transmission priorities would be treated and/or retained in the Markets+ framework, and how ‘high priority within the market clearing processes’ would ensure preservation of a WRAP-related transaction’s associated transmission priority.”

‘Full Confidence’

The deficiency letter additionally seeks clarity on rules related to the treatment of hydroelectric resources, provisions important to Canada-based Powerex and federal power agency Bonneville Power Administration — whose staff in March recommended the agency choose Markets+ over CAISO’s Extended Day-Ahead Market. (See BPA Staff Recommends Markets+ over EDAM.)

FERC’s concerns centered around the calculation of the seasonal hydroelectric offer curve (SHOC), which is designed to estimate the opportunity costs for hydroelectric resources so those costs can be factored into their market offers.

FERC’s deficiency letter comes a week after all four U.S. senators from Oregon and Washington sent a letter to BPA Administrator John Hairston urging the agency to delay its decision on joining a day-ahead market until more developments play out around Markets+ and EDAM. (See NW Senators Urge BPA to Delay Day-ahead Market Decision.)

“The SPP Markets+ tariff was filed at FERC in April and is still under review,” the senators wrote. “FERC has a new slate of commissioners, and it remains unclear whether the tariff, as submitted, will be approved or found deficient. Indeed, deficiency letters for novel filings are common and require additional time and effort to resolve.”

“The innovative and complex market structure of Markets+ is proposed under a standalone tariff,” SPP’s Lucas said in the RTO’s statement. “We’ve always anticipated that a deficiency letter from FERC was a possibility given the intricacies of the market structure. We have full confidence we can quickly and effectively address FERC’s request.”

CAISO’s EDAM tariff won relatively clean approval from FERC last December, with the commission only rejecting a “separable” and temporary measure designed to ensure interim compensation for transmission providers that suffer financial losses during their transition into the new market. The commission approved the ISO’s revised version of that measure in June. (See FERC Approves EDAM Tx Revenue Recovery Plan.)