SPP reached a key milepost in its Western efforts Jan. 16 when FERC conditionally approved the RTO’s tariff for Markets+, a highly anticipated decision likely to ramp up the competition with CAISO’s Extended Day-Ahead Market (ER24-1658).

“We agree with SPP and various commenters that Markets+ has the potential to yield a range of benefits to market participants and customers in the Western Interconnection,” FERC wrote in the 154-page order. “We find that Markets+ will make more efficient use of the transmission capability and generation resources that participate.”

The commission said it expects Markets+ will provide its participants with “important economic and reliability benefits” and help them manage the impact of “increasing levels of variable energy resources, load growth and extreme weather events in the region.”

The order comes nearly six months after the commission issued the RTO a deficiency letter outlining 16 problems it needed to address in the tariff, which it filed last March after an intensive stakeholder process. (See FERC Finds SPP Markets+ Tariff ‘Deficient’ in Several Areas.)

The decision indicates SPP sufficiently addressed most of those deficiencies, with FERC asking the RTO to provide clarity where the tariff “lacks specificity on key points,” as Commissioner Judy Chang noted in a concurrence, such as in protocols covering “market and resource dispatch mechanics to account for state greenhouse gas programs and the ability for resources to be aggregated when participating” in the market.

“FERC’s approval of the Markets+ tariff is an important achievement for SPP,” SPP CEO Barbara Sugg said in a press release issued after the decision. “It reiterates what we know to be true about Markets+: It’s a superior market design that recognizes and values the needs of all participants.”

“We’re thrilled to see the Markets+ tariff approved,” said Antoine Lucas, SPP’s vice president of markets, who has been instrumental in the development of the market and was promoted to become the RTO’s COO on Jan. 14. “Markets+ is a collaborative, stakeholder-driven market, which will enhance reliability and provide significant economic benefits to participants across the Western Interconnection, and we look forward to the next phase of market development.”

Seams Issues Left Unaddressed

In the order — released around 6 p.m. ET, well after it was approved at the commission’s monthly open meeting — FERC dismissed a protest by the Colorado Office of the Utility Consumer Advocate, which argued that long-term trends show regional markets such as Markets+ generally do not provide savings for consumers despite claims that they foster competition and reduce electricity prices.

The commission countered that the office “provided no evidence that regional markets result in higher costs to consumers or that costs in regional markets are higher than they would be absent the regional market itself.”

FERC also dismissed concerns expressed by the Navajo Tribal Utility Authority (NTUA) regarding the “significant costs and operational complexity associated with participating in Markets+” and rejected NTUA’s request that SPP implement a mechanism such as CAISO’s metered subsystem to ease the financial and operational impacts of participating in the market.

“We do not believe that the lack of a metered subsystem model renders this proposal unjust and unreasonable or unduly preferential or discriminatory,” the commission wrote. “Markets+ is voluntary and should NTUA decide that a metered subsystem model is necessary for its own participation, it can choose not to join.”

The commission also largely rejected complaints by NV Energy, Idaho Power, Portland General Electric and PacifiCorp regarding the Markets+ “transmission contributors” option, agreeing with SPP that the tariff “will not force changes in the operations of nonparticipating transmission service providers’ systems.”

But FERC did find the tariff “insufficiently clear” on some points raised by the protesters and directed SPP to address those issues in a compliance filing.

Perhaps most significantly, the commission declined in the tariff proceeding to address various commenters’ concerns about potential issues at the seams between Markets+ and EDAM, agreeing with SPP that the affected parties and scope of the issues remain unknown.

“While borders between organized markets (and non-market areas) in the West are likely to arise, we disagree with commenters who argue that action is necessary at this time,” it wrote. “Consistent with our experience in the Eastern Interconnection, we anticipate that seams between centrally cleared markets (e.g., EDAM and Markets+) and between markets and non-market areas will necessitate agreements between parties that will address issues such as data sharing, congestion management, and transmission rights and use.”

‘Not Accurate’

Perhaps as significant as the content of FERC order is its likely near-term financial impact: Now, the biggest backers of Markets+ can start paying to fund its next phase — the Phase 2 implementation stage, which SPP estimates will cost about $150 million.

One of those backers, the Bonneville Power Administration, has previously committed to contributing its $25 million (over 17%) share of Phase 2 funding but has said also that it would not do so until FERC approved the tariff. That funding commitment has stirred controversy in the Northwest, both among the region’s EDAM supporters and the U.S. Senate delegation representing Oregon and Washington, which has urged the federal power agency to delay its final day-ahead market decision, slated for May. (See In Letter to Senators, BPA Tempers Markets+ Leaning.)

“BPA is pleased that the Federal Energy Regulatory Commission has approved SPP’s Markets+ tariff, which was crafted through a robust stakeholder process,” Rachel Dibble, BPA vice president of bulk marketing, said in SPP’s release. “This guarantees BPA has two viable day-ahead markets to consider as we make our way toward a day-ahead market decision later this year.”

SPP’s release indicated also that BPA had “announced they would fund their share of Phase 2 development while they continue to collaborate with customers to develop a policy direction toward a day-ahead market option.”

But BPA spokesperson Doug Johnson told RTO Insider that is “not accurate.”

“At this point, we continue to work with SPP and all the other participants to finalize the timing of Phase 2 commitments. No executed agreement yet,” Johnson said in an email.

SPP did not respond to a request for a comment on the matter.

The tariff approval also comes nearly two months after Markets+ notched another important victory when it simultaneously received its first firm participation commitments from four Arizona utilities: Arizona Public Service, Salt River Project, Tucson Electric Power and UniSource Energy Services. (See 4 Arizona Utilities Commit to Joining Markets.)