On Thursday, January 16, 2025, the Federal Energy Regulatory Commission (FERC) unanimously accepted Southwest Power Pool, Inc.’s (SPP) proposed Markets+, a regional day-ahead and real-time energy market to be operated in the Western Interconnection, which SPP expects to begin operating in 2027 after development and market trials during 2025 and 2026.

Building on its success operating its “Integrated Marketplace” in its Eastern regional transmission organization (RTO) footprint and its Western Energy Imbalance Services (WEIS) Market, SPP worked extensively with Western stakeholders to develop the key design features of Markets+—a co-optimized day-ahead and real-time energy and flexibility reserves market with a reliability unit commitment process, incorporation of greenhouse gas (GHG) pricing, and, importantly, an open and inclusive stakeholder process—which together are expected to bring greater reliability and cost-effectiveness to the region. Importantly, SPP will serve as market operator of Markets+, but the proposal does not establish an RTO or consolidated balancing authority. Instead, existing Balancing Authority Area operators and Transmission Service Providers (TSP) will continue to fulfill their roles once Markets+ is implemented, under their existing open access transmission tariffs (OATT) and other governing agreements.

In accepting SPP’s Markets+ proposal, FERC agreed with SPP and various commenters that the Markets+ proposal will provide important economic and reliability benefits to market participants. FERC expects Markets+ to help market participants manage the effects of increasing levels of variable energy resources, load growth, and extreme weather events in the region. FERC accepted the Markets+ Tariff proposal as just and reasonable, with minimal additional modifications and periodic reporting requirements during the development period and early years of market operation.

In its order, FERC limited its discussion and findings to certain aspects of the Markets+ proposal that were contested, finding the remainder of the Markets+ proposal just and reasonable without further comment.  Below is a summary of the key points in the FERC decision, which accepted each of the main components of the filing, subject to limited directives on compliance:

Transmission

Transmission availability framework and transmission opt-out mechanism.  FERC approved the Markets+ transmission availability framework, which requires Markets+ TSPs to contribute all of their flow-based transmission capability, except capacity that is not available to Markets+.  FERC also approved the second source of transmission capability—i.e., Markets+ Transmission Contributors, which are transmission customers that contribute their transmission rights on the systems of TSPs that are not otherwise participating in Markets+.  Additionally, FERC found SPP’s proposal to allow certain transmission “opt outs” to be just and reasonable, finding that the opt-out mechanism strikes a reasonable balance between maximizing operational flexibility needs and mitigating the strategic withholding of transmission capacity.  FERC directed minimal Tariff changes to clarify how SPP will identify unused physical transmission capability and ordered SPP to submit periodic informational reports on the exercise of transmission opt-outs.

Control over transmission.  FERC approved the treatment of transmission in Markets+ (i.e., TPSs retain control over their systems), acknowledging that the details regarding transmission opt outs, transmission priority, e-Tagging, accommodation of Western Power Pool Western Resource Adequacy Program (WRAP) transactions, and other transmission-related issues will be addressed in each participating TSP’s OATT.  

Markets+ Transmission Contributors.  FERC approved the Transmission Contribution option, which allows rights holders on non-participating systems to contribute their transmission rights to Markets+.  FERC required SPP to submit a compliance filing to ensure that this option would not change the terms of non-participating TSPs’ OATTs and that contributions must comply with existing rights and obligations under the non-participating TSPs’ OATT.  FERC found that this  framework would preserve the operational independence of the non-participating TSPs while still allowing transmission contributions into Markets+.

Incorporation of GHG Pricing Programs

FERC accepted SPP’s proposal to integrate state GHG pricing programs into Markets+, relying on prior examples from other markets.  SPP proposed a GHG mechanism that allows various options for responsible entities with resources serving load in a state with a GHG Pricing Program.  The Markets+ GHG Pricing Program includes the use of resource-specific “adders” to energy bids to reflect the marginal cost of GHG from generation used to serve load in states with GHG Pricing Programs.  FERC reasoned that the proposal strikes a reasonable balance between accounting for the costs of market participants complying with state GHG Pricing Programs and reducing the potential cost impacts to customers in states lacking GHG Pricing Programs.  FERC explained that GHG compliance costs will be integrated into the pricing structure for zones covered by such programs, and that SPP should monitor and revise as necessary other details of the framework, including use of unspecified source imports and unspecified GHG adders. 

Market Power Mitigation

Market Monitoring and Mitigation.  FERC approved SPP’s proposed market monitoring and mitigation measures for Markets+, including the market power test, conduct test, and market impact test.  FERC reasoned that the market monitoring measures in the Markets+ proposal are similar to the existing provisions it accepted in the SPP OATT for the Integrated Marketplace, and that any differences were warranted given differences in market structure and experience. 

Seasonal Hydroelectric Offer Curve (SHOC).  FERC accepted SPP’s proposed SHOC mitigation calculation for storage hydroelectric resources, concluding that the SHOC calculation for hydroelectric resource aggregation reasonably calculates the opportunity cost of operating hydroelectric resources with useable storage. 

Governance

Governance Structure.  FERC approved the Markets+ governance structure, which includes the independent SPP Board of Directors as the ultimate decision-maker on Markets+ issues, the creation of a Markets+ Independent Panel to decide most Markets+ matters, a Markets+ State Committee, composed of state government representatives, a Markets+ Participants Executive Committee, made up of a senior representative from each Markets+ Participant and Markets+ Stakeholder Agreement signatory, a Markets+ Nominating Committee, and various working groups and ad hoc task forces.  FERC approved the role of the SPP Board of Directors in providing overall oversight, while deferring decision-making authority to the Markets+ Independent Panel for most matters, and rejected arguments challenging the governance structure.  FERC encouraged SPP to consider reforms to provide a greater role for states in the governance process.

Markets+ Stakeholder Agreement. FERC approved SPP’s Markets+ Stakeholder Agreement, which allows entities who are not market participants to participate and have a vote in the Markets+ stakeholder process.

Resource Adequacy and Resource Sufficiency

Resource Adequacy Requirements.  FERC approved SPP’s proposal to require all Markets+ load responsible entities to participate in Western Power Pool’s WRAP program, finding that requiring all Markets+ load responsible entities to abide by WRAP requirements will provide additional information about resource availability and transmission capability, and improve price signals in the region.

Resource Sufficiency.  FERC approved two additional proposed requirements—i.e., a day-ahead must-offer obligation and a requirement that participants make additional supply that was not otherwise offered into Markets+ for use in the Markets+ Reliability Unit Commitment process.  FERC found that these requirements “can help ensure resource sufficiency by ensuring that a minimum amount of capacity is offered into Markets+ to meet the market’s load and reserve needs.”

Seams Issues

In the Markets+ proposal, SPP acknowledged that Markets+ will share seams with its existing WEIS market and the California Independent System Operator, Corp.’s Western Energy Imbalance Market and Extended Day-Ahead Market.  Subsequent to Commission approval, SPP plans to work with other parties in the West to develop any necessary “seams” agreements.  Several commenters expressed their concern over the seams that will exist.  However, FERC declined to address such matters in this proceeding because the scope of the issues that will need to be addressed through seams agreements and the future market footprints are not yet known.

Other Features

• Flexibility Reserve Product.  FERC approved SPP’s proposal to add flexibility reserve products to Markets+, including short-term flex up, short-term flex down, and mid-term flex up, along with proposed market power mitigation provisions based on the single pivotal supplier test, finding these products similar to those currently used in the Integrated Marketplace.
• Interchange Transaction Award Priority Process.  FERC approved SPP’s proposal to use a priority process to determine which interchange transactions will be awarded when the market load exceeds the available market generation or when generation exceeds load, finding it reasonable to prioritize high priority interchanges based on committed supply and resource adequacy attributes and to reduce uncommitted interchange transactions first during capacity shortages or surplus situations.
• Aggregate Resource Model.  FERC approved SPP’s aggregated resource model proposal, which allows the aggregation of interdependent resources that meet specific criteria into a single resource.  FERC agreed with SPP that resource aggregation could promote market efficiency by facilitating participation of interdependent resources while helping resource operators to manage their operations better.  FERC directed SPP to make a compliance filing to include in the Markets+ Tariff an explanation that the mitigation methodology used for a resource aggregation will be for the fuel type of the assets that make up the aggregation.
• Virtual Transactions.  FERC approved SPP’s proposed six-month delay for implementing virtual transactions, finding that a six-month delay will allow SPP and market participants to gain experience with the market while avoiding possible issues with virtual transactions.  FERC also approved SPP’s proposal to grant SPP the discretion to suspend the use of virtual transactions, once implemented, if SPP determines that virtual transactions are not leading to price convergence or distorting market outcomes, consistent with authorities FERC has approved in other organized markets. 
• Market Transmission Use (MTU) Charge.  FERC accepted SPP’s proposed market transmission use charge, which compensates TSPs for lost revenue from short-term bilateral transactions that may arise from participation in Markets+.  FERC found that SPP’s proposed MTU charge is similar to other FERC-approved mechanisms and reasoned that the MTU charge is a just and reasonable mechanism to avoid unintended cost shifts among customers.

Concurrences by Three Commissioners

Commissioners Mark Christie and David Rosner penned a joint concurrence, emphasizing the potential significant benefits to the West from Markets+ but urging SPP and stakeholders to consider additional reforms to provide more funding and resources for state agency participation in the stakeholder process and a dedicated staff to facilitate that participation.

Commissioner Judy Chang supported her colleagues’ joint statement and also expressed concerns about the filing’s clarity and depth.  She emphasized the need for future proceedings to address key market design details, including additional detail on transmission availability and contributions, the integration of state-regulated GHG price adders, and criteria for resource aggregation.  She also expressed willingness to engage in further FERC-led actions on seams issues that may arise with the advent of multiple market and RTO offerings in the West.