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by Grant Watson
Things are ramping up in the west as Southwest Power Pool’s (SPP’s) Markets+ program development is now in full swing. The main development groups kicked off their process in mid-April and have been meeting regularly since. With active participation from many western states, the Markets+ design groups are working under a tight timeline to get their market proposal synchronized and off the ground before the end of the year.
Rivaling Markets+ is California Independent System Operator’s (CAISO’s) Extended Day-Ahead Market (EDAM) initiative, with each market operator balancing robust design with pace of development. Although CAISO’s real-time Western Energy Imbalance Market (WEIM) commands a massive share of the West Coast’s energy operations, SPP’s Markets+ program could shake that up.
The design principles and development timeline of each market’s launch will have major implications for who is participating, and where, shaping the future of the western interconnection.
SPP Markets+ Updates
Although SPP’s Day Ahead + Real Time market development project has been in the initial design and stakeholder outreach stages since 2021, it reached some important milestones this year.
The inaugural meeting of the Markets+ Participants Executive Committee (MPEC) and Interim Markets+ Independent Panel (IMIP) was held in April and set the stage for the more recent joint working group meeting held in early June. The inaugural Markets+ meeting signaled the convergence of the Phase 1 funding participants, and the kick-off of the market’s design working groups and task forces, while the recent joint working group meeting addressed more granular market design issues.
April's Inaugural Meeting
The first in-person meeting of the nascent MPEC and IMIP convened in Westminster, CO, on April 18 to elect the MPEC and working group chairs as well as vote on provisions for participant voting rights, requirements, and responsibilities under the Phase 1 Markets+ funding agreement. During this initial meeting, Laura Trolese of The Energy Authority (TEA) was elected to chair the MPEC, and Brian Cole of Arizona Public Service (AZPS) was elected as the MPEC vice-chair. The four Markets+ Working Groups are:
- Markets+ Design (MDWG)
- Markets+ Transmission (MTWG)
- Markets+ Seams (MSWG)
- Markets+ Operations and Reliability (MORWG)
The four primary Task Forces are as follows:
- Markets+ Green House Gas (MGHGTF)
- Markets+ Congestion Rent (MCRTF)
- Markets+ Rates (MRTF)
- Markets+ Resources Adequacy (MRATF)
Representatives to chair the working groups and task forces were selected, allowing these groups to begin working in their specific areas of market design.
DA + RT Markets+ Program Development Phase 1
SPP has divided the development process of its day-ahead (DA) and real-time (RT) Markets+ program into two main phases. Phase 1 development constitutes the “potential participants and stakeholders [financially committed to the market’s development] to draft the market protocols, tariff and governing language.”
The MPEC includes representation from all of the 32 Phase 1 funding participants and is the main steering committee for the market design working groups and task forces. The IMIP, the interim authority responsible to SPP’s Board of Directors, will ultimately provide final decisions regarding the draft tariff language, market protocols, and MPEC endorsements during Phase 1 design. (The IMIP will transition to the fully fledged MIP once Phase 1 development is completed).
These committees, made up of SPP staff and western entities’ volunteers, are working hand in hand with the working groups and task forces to ensure that the market development sticks to its timeline, and allows for open and intelligent discussion and design.
https://www.spp.org/documents/67351/06242022%20gdt%20webinar.pdf
The opportunity for participation in Phase 1 of SPP’s Markets+ program drew a wide range of committed parties, with a majority of states across the western interconnection represented. Even as the deadline for Phase 1 funding commitment passed, multiple groups were still seeking Phase 1 membership approval -- a contention that went to vote at the inaugural meeting and was ultimately passed, extending the opportunity to join Phase 1 participation.
This allowed the Sierra Club, National Resource Defense Council, and the NW Energy Coalition to join for Phase 1 participation and membership. Overall, there is a high level of interest in this market development, giving the MPEC and steering groups a broad and diverse set of interests and opinions to consider for the developing market.
Phase 1 development is expected to be completed by the end of this year, with the delivery of the Markets+ draft tariff and governing language to the Federal Energy Regulatory Commission (FERC) by the beginning of 2024. The kickoff of Phase 2 development will follow acceptance of the Markets+ tariff and market protocols filed with the FERC.
https://www.spp.org/western-services/marketsplus/
June's Joint Working Group Meeting
In June, SPP’s working groups convened for a joint meeting in Portland, OR, to evaluate and vote on cross-team issues. There was unanimous approval of two motions:
- DA market to close at 10:00 a.m. (PPT) with DA results posted no later than 1:30 p.m. (PPT) each operating day
- MCRTF shall evaluate if RT congestion rent should be included in their design scope and recommendations
After lengthy group discussions, action items defined for future meetings include:
- MDWG to make a decision on make whole payment (MWP) cost allocations structure during the 7/26 MDWG meeting
- MDWG to create a proposal and seek input for the timeline of virtuals go-live in the market
- MTWG and MORWG to schedule a joint meeting to discuss transmission priorities and transfer congestion management
The Markets+ working groups and task forces will continue to meet throughout the year, evaluating participants' perspectives, and drafting governing documents. The efforts of the working groups and task forces will result in the delivery of Markets+ draft tariff language and markets operations protocols that will be sent to the FERC for approval.
SPP intends their deliverables to be ‘robust and simple’, with a standalone tariff and Markets+ specific practices and protocols.
DA + RT Markets+ Program Development Phase 2
Following Phase 1, Phase 2 development will focus on the acquisition and installation of required software and hardware, while integrating participating entities that have fully committed to fund the market development.
The kick-off of Phase 2 will also open the door for other entities to participate in the Phase 2 development. If the desired timeline holds, we should see SPP onboarding new participants to the Markets+ program in late 2024.
Competition with CAISO
SPP is not alone in its push for swift and intelligent market design. CAISO has also reached some critical milestones in their design efforts for the Extended Day Ahead Market (EDAM). EDAM’s final market proposal was accepted by the CAISO Board of Governors and the Western EIM joint governing body in early February.
Since then, the EDAM design teams have been working tirelessly to produce their subsequent draft tariff language and market protocols. On June 8th, CAISO published their revised EDAM tariff language, adding clarifications and details to their first draft tariff language published in early March. We should expect a fully realized draft tariff published to the FERC later this year.
https://www.westerneim.com/Pages/About/default.aspx
Just as SPP’s Markets+ program will add a DA timeframe onto the existing RT WEIS market, CAISO’s EDAM will serve as a DA addition to the existing RT WEIM.
Since its inception, the WEIM has grown substantially to 22 participants across 10 states in the West (and British Columbia, CAN), touting nearly $3 billion in benefits to its members. Covering 80% of the western interconnect’s total load footprint, CAISO’s WEIM commands a massive share of the west coast’s energy operations. But, SPP’s Markets+ program could shake that up.
Currently, 10 of CAISO’s 22 WEIM participants have signed on for the P1 funding and development of SPP’s Markets+ program. The WEIM recently reported Q1 2023 gross benefits to the tune of $418.82 million, the highest quarterly benefits to the market since it launched in 2014, and inclusive of the most participants to date with the additions of Avangrid, WAPA DSW, and El Paso Electric in April. While the financial benefits of this market are growing, the competition from SPP’s Markets+ could curtail the WEIM’s growth in the west.
Already, the 10 SPP Markets+ P1 participants that are currently engaged in WEIM represent roughly $165 million, or a ~40% share of the WEIM’s Q1 financial benefits. While the largest financial benefits accrued are held by the largest participants (CAISO, BANC & Pacificorp), the primary benefit of the WEIM stems from the large and diverse pool of Balancing Authorities (BAs) and generating resources serving the expansive footprint. This market allows for more effective generation and dispatch decisions to match load, utilizing intra-hour scheduling opportunities, and excess capacity transmission across a wide market footprint. If some of these invested parties were to join another market, the effectiveness (and benefits) of the WEIM would certainly take a hit.
Currently, CAISO’s WEIM operates in every western state, save for Colorado. But the competing market’s offering, Markets+, also has participating entities based primarily in the west, with participants present in CO, WY, MT, ID, WA, OR, BC CA, NV, AZ, and even CA. The western states and BA’s are exploring their options, deciding which market design will best meet their needs, and those of their end-use customers. At Yes Energy, our market monitoring team is keeping a close eye on the western states and BA’s as they explore their options.
Though the competition for western dominance is heating up, there is also a need for cooperation, at least at the state level. One of the Markets+ steering groups, the Markets State Committee (MSC), is working with state representatives around goals and issues at both the local and state levels.
During the Inaugural Markets+ meeting, the MPEC endorsed, and the IMIP passed, a motion that approved “initial membership [to the MSC] may include representatives from any of the states or provinces with entities that may plausibly choose to participate” in Markets+. For example, including CA P1 funding representatives on the MSC will ensure that the market design is compatible with CA-based BA's.
Hopefully, this creates the opportunity for CAISO and SPP representatives to collaborate around topics and issues that would benefit both the Markets+ and EDAM designs.
Goals to Watch
Currently, SPP is aiming for the beginning of 2024 to produce their drafted Markets+ tariff, and have it subsequently approved by the FERC. CAISO has a bit more aggressive target of August 2023 to serve their EDAM tariff to the FERC for approval.
SPP plans to begin onboarding for Markets+ in late 2024, while CAISO is forecasting onboarding of EDAM participants in early 2025.
Takeaway
A cornerstone of SPP’s RTO market has been collaboration and focus on a relationship-based stakeholder process, which has had resounding echoes at the inaugural Markets+ MPEC/IMIP meeting as well as the recent joint working group meeting. SPP members and Markets+ stakeholders alike have made it their goal to “come up with a market design that you [the participants] want”. The P1 funding participants of Markets+ and CAISO’s EDAM developers are both working hard to create the most robust tariff language and operational protocols for the highest quality market offerings in the west.
As both SPP and CAISO continue to refine their market proposals, draft tariff language and create operational protocols, Yes Energy® and the market monitoring team are actively following these developments. We’re watching how these market offerings are evolving, to best inform our customers and industry participants of where the west is headed … and where these markets will take us.
At Yes Energy, our teams are comprised of experts entirely focused on power market data. We understand the complexity and unique challenges of nodal power markets – it’s why we have a team dedicated to monitoring the markets for changes that will impact you. Our market monitoring and data operations teams provide our customers with Better Direction, freeing up their time for what matters most.
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If you’d like to know more about the current state of CAISO / SPP’s data offerings through Yes Energy, or are curious about western development, reach out to the Market Monitoring team.
