Proponents of SPP’s Markets+ argue in their latest “issue alert” published Oct. 16 that the framework allows more flexibility for integrating greenhouse gas emission reduction programs across various states than CAISO’s Extended Day-Ahead Market (EDAM).

The alert is the fifth in a series of seven notices highlighting the purported advantages of Markets+ over EDAM and the Western Energy Imbalance Market (WEIM). The first covered differences between how the two markets would be governed, the second focused on reliability, the third compared pricing practices, and the fourth tackled market seams.

The contributing parties include Arizona Public Service, Chelan County Public Utility District (PUD), Grant County PUD, Powerex, Public Service Company of Colorado, Salt River Project, Snohomish PUD, Tacoma Power, Tri-State Generation and Transmission Association, and Tucson Electric Power.

In their fifth alert, the proponents argue that Markets+ is better positioned to address risks associated with market price formation, deliverability and congestion that can “materially impact the feasibility and expected value of investments in clean energy that can be brought to load.”

For example, Markets+ uses fast-start pricing and graduated scarcity pricing approaches, which, according to the proponents, send “transparent price signals to encourage investment and use of clean and flexible resources and storage when they are needed most.”

The alert also points to the flow-based dispatch used in Markets+, which the proponents claim will increase “the deliverability of resources across the [balancing authority]-to-[balancing authority] and [transmission service provider]-to-[transmission service provider] seams within the footprint, resulting in less congestion and more delivered clean energy than the EDAM design.”

Additionally, Markets+ provides enhanced protection from congestion costs by allocating congestion revenue to firm transmission rights holders in proportion to the congestion costs incurred on their specific transmission paths, according to the alert.

“This approach provides an opportunity for remote resources to hedge congestion costs and reduce the price risk of delivering clean energy investments to load,” the alert stated. “In contrast, the EDAM congestion revenue structure increases the financial risk for those delivering remote clean resources as the congestion revenue allocation is split between the market operator (at BAA boundaries) and EDAM entities (internal congestion).”

“This bifurcation creates significant uncertainty that the allocation methodology selected by each EDAM entity may not allocate congestion costs on an individual transmission path basis, preventing those delivering remote resources from being able to accurately forecast or hedge against congestion,” the alert added.

GHG Pricing, Tracking and Reporting

The alert also touts Markets+’s greenhouse gas emissions pricing features and tracking and reporting system.

It says the “Type 1A” option in Markets+ would ensure that external supply contracted to serve load in a GHG pricing zone will be attributed to that zone if dispatched.

“This provides load-serving entities with an increased ability to hedge their exposure to GHG costs through advanced contracting of clean supply,” it says. “It is our understanding that the same functionality is not currently available in EDAM.”

Additionally, a “Type 2” option allows a market participant located outside a GHG pricing zone to economically offer its own surplus clean energy to be attributed to a GHG pricing zone, allowing it to “retain the clean supply needed to serve its load obligations while providing an opportunity to be compensated for its surplus clean energy.”

The alert says also that the Markets+ reporting and tracking mechanism allows the market to quantify emissions associated with “residual” dispatched energy not “otherwise claimed by load-serving entities in the market.”

“The design enables participants to determine how energy is attributed to meeting their own load and how unattributed surplus energy is accounted for in residual energy reporting,” it says.

“We are pleased to have worked closely with a diverse group of Western entities to meet each state’s GHG tracking and reporting needs with the development of M+ GHG protocols,” Lisa Tiffin, senior vice president of energy management at Tri-State, said in a statement. “GHG tracking, including from energy markets transactions, will be critical for Tri-State as we progress in the energy transition.”

“CAISO also has recently proposed to develop a GHG tracking and reporting framework based on stakeholder requests and the Markets+ approach may serve as a starting point,” the alert says. “This development highlights how the existence of two competing organized markets provides greater opportunity for both markets to continuously evolve with improved products, services and market design.”

Reached for comment, CAISO said its Western Energy Imbalance Market already supports renewable integration across the West “by efficiently optimizing low-cost renewable generation and dispatching it to serve demand in the middle of the day when it is most abundant, reducing the costs of serving load for utility customers. The Extended Day-Ahead Market (EDAM) design, approved by the Federal Energy Regulatory Commission (FERC), builds on those proven advantages.”

The issue alert follows the release of a white paper by The Brattle Group, published in early October, offering a point-by-point comparison of CAISO’s Extended Day-Ahead Market and SPP’s Markets+ that leans in favor of EDAM but stops short of endorsing either market. (See Brattle Study Likely to Fuel Debate over EDAM, Markets+.)

Regarding greenhouse gas pricing mechanisms, the Brattle study notes that EDAM builds off the Western Energy Imbalance Market, saying EDAM benefits from this tried and tested approach.

“The experience of the last ten years and our own forward-looking simulation analysis indicates that the WEIM/EDAM approach is effective at delivering customer savings while limiting leakage, which could otherwise reduce the effectiveness of GHG regulations,” according to the Brattle study. “Therefore, stakeholders in EDAM have more certainty that the GHG pricing mechanism will achieve efficient outcome while minimizing leakage.”