Proponents of SPP’s Markets+ argued in their latest “issue alert” published Feb. 28 that the day-ahead market option provides a robust footprint with “exceptional generation and load diversity” across the region while also claiming recent warnings about its seam with CAISO’s Extended Day-Ahead Market (EDAM) are overblown.
The alert is the seventh and last in a series of notices highlighting the purported advantages of Markets+ over EDAM and the Western Energy Imbalance Market (WEIM). The alerts have covered topics such as governance, reliability, pricing practices, market seams, emissions and market operations.
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 County PUD, Tacoma Power, Tri-State Generation and Transmission Association, and Tucson Electric Power.
In their seventh alert, the proponents argued Markets+ will “be substantial in size with exceptional generation and load diversity.” For example, the market will have peak demand of over 52 GW and annual demand of over 280 TWh; a significant mix of resource diversity; clean flexible supply; and a “large geographical footprint — encompassing parts of 11 different states — resulting in a reduced probability that heat waves and cold snaps affect the entire Markets+ footprint simultaneously.”
The alert also took aim at recent production cost studies, some of which have suggested EDAM would provide the most because of its large footprint, which includes California. (See Brattle Study Shows Big Benefits for California in ‘Expanded’ EDAM.)
However, the studies do not capture the full economic picture and fail to account for the differences in market design between Markets+ and EDAM, the alert argued. The models assume Markets+ and EDAM will be isolated with limited trade when, in reality, entities in each will continue trading with one another, it said.
“This defies real-world expectations and ultimately promotes an incorrect conclusion that being in the largest possible market footprint should be the only relevant consideration informing an entity’s market choice above all other factors, including fundamental differences in governance and market design that are not evaluated by these studies,” the proponents contended.
The alert also covered congestion costs. The proponents argued that 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.
In contrast, EDAM participants will miss out on robust congestion cost protections, the proponents claimed.
“EDAM will not return these congestion charges back to the firm [open-access transmission tariff] rightsholders that are exposed to the congestion costs and will instead return the revenue to the [balancing authority area] where the constraint is located, which public data show is most often the CAISO BAA,” the alert argued. “Among the many negative consequences of this design, it is likely to impose large new costs for the transmission customers and ratepayers of EDAM participants outside of California, to the benefit of customers in the CAISO BAA.”
When asked to comment on the issue alert, CAISO’s head of communications, Jayme Ackemann, pointed to another study by the Brattle Group that suggests some EDAM participants “could conservatively save consumers nearly $900 million annually.” (See Updated EDAM Study Shows Doubling of PacifiCorp Benefits.)
Ackemann also pointed to the West-Wide Governance Pathways Initiative, an effort to ensure independent governance of CAISO’s EDAM and WEIM. California state lawmakers recently introduced legislation as part of the initiative. (See Pathways ‘Step 2’ Bill Sets Conditions for EDAM Governance.)
“With FERC’s approval of EDAM’s market design and more than 50% of the load in the West planning to participate, it is clear that maintaining a strong, geographically diverse and interconnected system is crucial to maximizing consumer benefits through widespread participation in WEIM and EDAM,” Ackemann added.
