The three independent SPP board members providing oversight of the RTO’s Markets+ development in the West have called for policy- and decision-makers to allow the process to “follow its natural course.”
In an open letter released Sept. 19 and addressed to the Pacific Northwest congressional delegation, Western state regulators and the stakeholder-led Markets+ Participant Executive Committee (MPEC), the directors said delaying decisions to allow other market options to more fully develop will lead to uncertainty and prevent some interested participants from benefiting.
“Extended delays could lead to market participant uncertainty about their market choices and, due to the need for adequate market footprint for Markets+ to succeed, deny interested parties the possibility of becoming beneficiaries of its unique design,” wrote Director Steve Wright, chair of the Interim Markets+ Independent Panel (IMIP), fellow SPP Director Elizabeth Moore and board Chair John Cupparo.
“This independent panel understands some parties’ wishes to delay decisions while other market options more fully develop. Making Markets+ a reality requires continued funding, though, and funding requires that Western entities be allowed to negotiate and execute agreements on the defined timeline,” the IMIP said. Western market participants “were clear that anything other than accelerated market development” would undermine the day-ahead market’s viability and would “hence not be worth their time or money.”
“It is our belief that the accelerated formation of the Markets+ option has already provided benefit to Western consumers,” the IMIP said. “There are many examples of competition improving market design and governance of several market alternatives that will be available to the West.
“SPP and participants in Markets+ development anticipated short delays for steps like FERC tariff approval, but longer delays could disrupt healthy competition, threaten an as-soon-as-possible go-live date for Markets+ and ultimately deny the West a solution to many of the challenges it faces,” the directors added.
The RTO has been involved with several service offerings in the Western Interconnection, some that predate the COVID-19 pandemic. It was approached in 2021 by Western entities interested in designing a market. Work with 37 stakeholders began the next year and has resulted in a governance structure that has produced a tariff and market protocols.
SPP filed the proposed Markets+ tariff with FERC in March. However, the commission issued a deficiency letter in July asking the RTO to respond to 16 issues it found lacking in the design (ER24-1658). (See FERC Finds SPP Markets+ Tariff ‘Deficient’ in Several Areas.)
As if to emphasize the need for speed, SPP filed a response to FERC’s deficiency letter Sept. 20, more than a week ahead of the due date. The RTO said the deficiency letter is part of a “routine process” it has been participating in for years. It said none of the commission’s questions indicate a “serious risk.” (See SPP Dispels Concerns over Markets+ Deficiency Letter.)
The grid operator used 33 pages to answer the 16 questions, which dealt largely with transmission issues. It asked FERC for an order by Nov. 20.
The IMIP said the deficiency letter was “consistent with our expectations” for the market’s approval and that SPP’s response to FERC “falls within its previously adopted schedule.”
The panel’s comments come as efforts to build two day-ahead markets in the West continue to ratchet up.
In recent months, the four U.S. senators from Washington and Oregon have urged the Bonneville Power Administration, one of the key Market+ players, to “act carefully and deliberately” before choosing a market. The agency has responded by reiterating its resistance to the CAISO Extended Day-Ahead Market’s (EDAM) California-centric governance model and expressed support for SPP’s market. BPA has delayed a decision until 2025, but it also plans to continue its funding in the second phase of the market’s development. (See ‘Leaning’ Evident in BPA Response to NW Senators and BPA to Fund Phase 2 of Markets+, Agency Exec Says.)
CAISO in June kicked off a West-wide Governance Pathways Initiative designed to shift the ISO’s governance structure to an independent entity within the EDAM. Four workshops have highlighted the difficulty of designing a new Western “regional organization.” (See related story, Comments on Western RO Stakeholder Plan Show Complexity of Effort.)
While potential participants consider which market to join, some have already made that choice. NV Energy announced its intention to join EDAM, and two Black Hills Energy subsidiaries said they will leave SPP’s Western Energy Imbalance Service for CAISO’s Western Energy Imbalance Market. Black Hills participated in Markets+’s first phase and said it will pursue markets that “provide additional value.”
For its part, SPP has increased its public outreach, stressing its ability to build and manage markets and transact energy over seams. It has also created a spiffy website dedicated to Markets+. (See SPP’s Experience with Seams Could Help Markets+.)
“Organizations spanning the Pacific Northwest, Desert Southwest and Mountain West regions will weigh many factors in making decisions about participating in a regional electricity market,” the IMIP said. “We trust they’ll each make the ultimate choice that’s best for their respective stakeholders.”
The directors said SPP has approved a $150 million budget for the market’s remaining development, “a fraction of a percent of the $25 billion in transactions that occur annually in Western wholesale trading markets today.” They said Markets+’s governance and market design will offset upfront costs, with the RTO’s experience operating other markets suggesting that Markets+ services will have a lower lifecycle cost than other alternatives.
According to SPP, BPA will be responsible for at least 17.4% of Phase 2 funding, second only to Powerex at 23.2%. Those percentages could increase should the Black Hills subsidiaries withdraw from further Markets+ development efforts.
MSC, IMIP Strengthen Relationship
The Markets+ State Committee, comprising Western regulators and one of the recipients of the IMIP’s letter, has endorsed a resolution that provides greater cooperation between the commissioners and the IMIP.
The two bodies have agreed to participate in each other’s meetings with allocated time on their corresponding agendas. They also agreed to host joint in-person or virtual meetings to address any issues during the market’s development and operation.
Director Wright has indicated to the MSC that the IMIP will support the resolution.
The MSC meets monthly, while the IMIP generally meets during MPEC meetings.
