Docket Nos. ER24-1658-000, ER24-1658-001, ER24-1658-002

Today’s order[1] is the latest major step forward in the continued development of organized wholesale markets in the West.[2]  I strongly support these efforts, which reflect increasing experience with markets across the West that bring substantial reliability and economic benefits to customers.  That experience and other collaborative regional efforts[3] are driving progress across the interconnection to support more efficient use of the West’s generation and transmission resources at a time of substantial load growth and increasing reliability challenges.  Market expansion and evolution are critically important to meeting these challenges, and I write separately to discuss the record before the Commission in this proceeding and what steps are needed to ensure Markets+ delivers on its potential.  

I appreciate that market constructs developed in the West reflect the varying needs, priorities, and geography of states, utilities (both Commission-jurisdictional and public power), and other participating entities.[4]  Under section 205 of the Federal Power Act, the Commission’s role is to assess whether market proposals before us are just and reasonable and not unduly discriminatory or preferential.  I recognize that there may be multiple means of satisfying that statutory standard,[5] and the Commission need not demand uniformity for uniformity’s sake.   

In this case, the filing before us is not as comprehensive, clear, or understandable as I would have preferred to review prior to making such an important decision.  Establishing a new market, like the Markets+ proposal before us, is an understandably complex task, particularly when stakeholders and future market participants may have diverse priorities.  Market design details matter, and resolving market design issues upfront provides greater certainty for utilities, states, customers, and other market participants about market operations and ultimately the benefits of market participation.  By comparison, when market rules are flawed, incomplete, or unclear, the market faces significant risks from opaque transactions with unexpected and volatile prices.  Ultimately, consumers could end up paying higher prices for market flaws.  Thus, I believe the Commission should, within the limits of our statutory task under section 205, strive to resolve known design issues at the inception of a market to the greatest extent possible.    

SPP’s filing, as further expounded upon in its subsequent pleadings and response to an extensive deficiency letter issued by Commission staff, provides sufficient information about key market design elements for us to assess what the Markets+ filing does – and critically, does not – resolve at this time.  While today’s order addresses many of those key elements, it leaves many others to future proceedings and processes. 

One of the most critical market design issues before us is the rules governing transmission availability to the market, to which the record and today’s order rightly dedicate a substantial amount of discussion.  Put simply, the more transmission that is available to Markets+, the more value it can bring to customers.  Without adequate transmission capabilities made available to Markets+, customers could end up paying significant congestion costs and lacking access to low-cost generation.  In addition, without clear rules around when and how transmission capabilities will be made available to serve load, the markets face the risk that participants may attempt to take advantage of that ambiguity through strategic withholding of capacity.  Thus, the availability of transmission in Markets+ will directly impact the value of the market and its ability to deliver reliable, cost-effective power to its customers. 

Under the Markets+ construct, participating transmission service providers will provide much of the transmission used, subject to restrictions on what transmission capabilities they can opt-out of the market and respecting their bilateral transmission agreements.  In addition, the Markets+ construct enables entities located outside of participating balancing authorities to contribute additional transmission to Markets+, while respecting the provisions of the Open Access Transmission Tariffs (OATTs) of their local transmission providers. 

However, the details of the rules governing transmission contribution and withdrawal, which are fundamental to the ultimate success of Markets+, are only partially established in today’s order.  The record makes clear that these rules will be split between a broadly-applicable Markets+ tariff – which we approve today – and future filings from individual transmission providers whose capacity will be made available to Markets+.  As a result, our action today is only one step in the full story, and the complete suite of rules and procedures governing transmission commitments to and withdrawals from Markets+ is not yet known. 

For transmission service providers that enroll in Markets+, the Commission will review any necessary revisions to their OATTs to facilitate their participation in future filings, including rules regarding transmission contribution and withdrawal.  It is important that these individual filings ensure that transmission service providers and contributors make transmission availability decisions transparently to ensure efficient transmission use.  I look forward to reviewing these filings as parties commit to Markets+ and strongly encourage market participants to develop uniform, consistent rules across individual OATT filings to minimize the variability of transmission contribution and withdrawal approaches.

Several parties, particularly the SPP Market Monitor and Markets+ State Committee,[6] raise legitimate concerns about the potential for market participants to selectively contribute to or withdraw transmission from Markets+ to benefit their position in the market.  Today’s order addresses those concerns by highlighting certain market provisions that should help deter or guard against the potential exercise of market power.[7] 

I take seriously the concerns raised by the SPP Market Monitor and Markets+ State Committee.  The Markets+ tariff will require that entities decide on a monthly basis what transmission they will contribute to Markets+ and provide at least 15 days of notice for transmission withdrawals.  However, SPP’s deficiency letter response also states that SPP will defer to the operation of individual transmission provider’s OATTs and their associated scheduling rights, including possible intra-day withdrawals of otherwise-contributed transmission.[8]  Such intra-day changes presumably occur today and do not inherently raise concerns.  But, in the context of a new and complex market design where concerns have been raised by multiple parties, transmission contributions, both on a monthly and intra-day basis, warrant additional oversight as SPP stands up the market to ensure that flexibility is not abused to skew market clearing prices and potentially facilitate the exercise of market power or market manipulation.  To that end, today’s order requires that SPP include in its informational reports, for the first three years of Markets+ operation, specific information regarding transmission contribution decisions to facilitate robust oversight by the Commission, SPP’s Market Monitor, and SPP. 

In addition, today’s order identifies several areas in which the Markets+ tariff, as proposed, lacks specificity on key points.  Where possible based on the record before us, the order directs SPP to revise its Markets+ tariff to provide additional clarity[9] and highlights areas where SPP could provide additional details in its protocols related to market and resource dispatch mechanics to account for state greenhouse gas (GHG) programs and the ability for resources to be aggregated when participating in Markets+.[10]  The order also provides guidance to future filers of the information the Commission expects them to include in their respective OATTs.[11]  Given how critical these elements are to the proper functioning of Markets+, regulators and market participants need clarity regarding what transmission will be made available to the market by transmission service providers, how state-regulated GHG price adders will be factored into market dispatch for certain parts of the market and not in other parts of the market, and the specific criteria to determine what aggregations of resources are permissible.  The direction and guidance are necessary to ensure that all interested parties – states, utilities, market participants, and other stakeholders – understand the rules of the road as Markets+ proceeds through development and into full operation. 

Finally, I want to summarize and emphasize what actions follow from this order, to address issues that are deferred for future resolution or that will require ongoing oversight as Markets+ goes live in the coming years. 

First, transmission service providers will need to amend their OATTs to participate in Markets+.[12]  These modifications will help ensure that all interested parties adequately understand the rules governing transmission use in Markets+ as well as promote relative consistency in the rights and behaviors of various market participants.

Second, SPP will be responsible for maintaining protocols that provide additional clarity regarding the details and implementation of key Markets+ design components, including the dispatch of resources into different parts of the market that are subject to state GHG price adders versus those that are not subject to adders, the implementation of the MW re-designation mitigation,[13] resource aggregation, and the interaction between various market elements.  To the extent possible, I encourage interested parties to actively participate in the development of those protocols to ensure they contain sufficient clarity and detail. 

Third, SPP will provide routine reports regarding transmission contribution decisions from transmission providers, which will in turn support the market oversight efforts by SPP, the SPP Market Monitor, and the Commission’s Office of Enforcement.  The reports will help address the concerns raised around the potential for exercise of market power to affect Markets+ energy prices, congestion rents, or other aspects of the market.

Fourth, while today’s order declines to initiate a new proceeding regarding potential seams issues (e.g., between EDAM and Markets+ participants, or between organized and bilateral markets), seams issues will arise as market participation becomes clearer.  Given the extensive comments in the record, stakeholders are well aware of the challenges that seams issues may present.[14]  If helpful to the West, I am open to Commission action, such as convening a technical conference, when those issues and the footprints of various markets crystalize.  In the meantime, I encourage SPP, CAISO, Western Power Pool, and other Western stakeholders to coordinate and develop workable solutions to minimize friction at the seams and maximize the benefits of wholesale market transactions for customers.

These ongoing efforts to stand up Markets+ will require additional efforts by SPP, its Market Monitor, states, market participants, and other stakeholders.  I recognize that stakeholder participation can be a substantial commitment, particularly for state regulatory commissions, energy offices, and consumer advocates that are often resource constrained relative to the significant stakeholder obligations that regional markets require.  I accordingly echo the concerns raised by my colleagues, Commissioners Christie and Rosner, in their joint concurrence and encourage efforts, including through existing regional organizations like the Western Interstate Energy Board, to support states’ robust participation in the ongoing implementation of Markets+. 

Notwithstanding my concerns and cautions noted above, today’s order marks a significant milestone in the years-long, if not decades-long, effort to improve wholesale market competition across the West.  While much work is yet to be done, I thank all the parties involved in the Markets+ effort for their engagement and look forward to continued work to ensure its success for the customers it serves.

For these reasons, I respectfully concur.

 

 

[1] Sw. Power Pool, Inc., 190 FERC ¶ 61,030 (2025) (Markets+ Order).

[2] See, e.g., Cal. Indep. Sys. Operator Corp., 147 FERC ¶ 61,231, order denying reh’g, 149 FERC ¶ 61,058 (2014) (accepting the California Independent System Operator Corporation’s (CAISO) tariff revisions establishing the Western Energy Imbalance Market); Sw. Power Pool, Inc., 173 FERC ¶ 61,267 (2020) (accepting the Southwest Power Pool’s (SPP) tariff revisions establishing the Western Energy Imbalance Service Market); Cal. Indep. Sys. Operator Corp., 185 FERC ¶ 61,210 (2023) (accepting CAISO’s proposed tariff revisions to implement its Extended Day-Ahead Market (EDAM)).  I note that SPP’s proposed RTO West tariff revisions are currently pending before the Commission in Docket No. ER24-2184.

[3] See, e.g., Nw. Power Pool, 182 FERC ¶ 61,063, at P 27 (2023) (accepting the Western Power Pool’s proposed Western Resource Adequacy Program (WRAP) tariff).  I note that additional regional reforms are currently pending before the Commission in Docket No. ER25-595 (Western Power Pool’s proposed revisions to the WRAP tariff) and Docket No. ER25-542 (CAISO’s proposed tariff revisions to implement step 1 of the West-Wide Governance Pathways initiative).

[4] And, of course, regional variation in markets is not unique to the West; eastern organized markets have wide variation across many aspects of their market design.

[5] See, e.g., Oxy USA, Inc. v. FERC, 64 F.3d 679, 692 (D.C. Cir. 1995) (stating that a proposal under FPA section 205 “need not be the only reasonable methodology, or even the most accurate”); Cities of Bethany v. FERC, 727 F.2d 1131, 1136 (D.C. Cir. 1984) (finding that the Commission properly did not consider “whether a proposed rate schedule is more or less reasonable than alternative rate designs”).

[6] Markets+ Order at PP 58-60.

[7] Id. P 87.

[8] SPP Deficiency Letter Response at 11-12.

[9] Markets+ Order at PP 84, 93, 154.

[10] Id. PP 210, 240.

[11] Id. PP 95-98.

[12] Id.

[13] I encourage SPP, as part of its approach to GHG Pricing Programs, to provide additional detail in its protocols regarding the MW re-designation mitigation concept included in the Markets+ design and tariff.  This detail includes clarifying and defining the interactions between the economic dispatch of resources and subsequent attribution of GHG emissions to different market areas.  As a part of this process, I similarly encourage SPP to fully describe the interactions between the use of the Surplus Threshold concept (for Type 2 resources) with Markets+ dispatch mechanisms.

[14] Commenters also raised similar issues in the EDAM proceeding.  See Cal. Indep. Sys. Operator Corp., 185 FERC ¶ 61,210 at PP 505-509, 512 (2023).

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This page was last updated on January 17, 2025