As regional grid operators like the California ISO (CAISO) and Southwest Power Pool (SPP) continue aggressively pursuing initiatives to enhance coordination across Western electricity markets, dramatic change feels inevitable.
Just what shape it will take remains unclear. In our blog post covering the high-level roadmaps from CAISO and SPP to reduce seams issues and maximize efficiencies between states, we referenced SPP’s parallel RTO West and Markets+ proposals coming down the pike. Our Oct. 25 webinar, “Preparing for New SPP Markets+,” took a magnifying glass to these ambitious efforts that could massively extend SPP’s footprint should even one gain traction in the West.
In this post, I’ll discuss what exactly SPP has proposed with RTO West and Markets+ based on what we covered in that recent webinar. Both initiatives promise to profoundly reshape electricity markets and coordination in areas SPP expands into.
RTO West: a full-scale Western RTO
The most transformative option on the table is RTO West, which would essentially establish SPP as a Western RTO on par with CAISO, PJM, etc. Nine utilities are currently working with SPP to form RTO West.
Key features of RTO West:
- Day-ahead and real-time markets for energy and ancillary services
- Transmission congestion rights and auction revenue rights for congestion hedging
- Reliability coordination across entire RTO West footprint
- Consolidation of balancing authority areas
- Joint transmission planning
The most significant change is that individual balancing authorities would dissolve, putting the RTO in charge of overall reliability. RTO West would also handle transmission planning and expansions.
SPP Markets+: extending SPP’s real-time market
Markets+ takes a lighter approach — it builds on SPP’s existing Western Energy Imbalance Service (WEIS) by adding day-ahead optimization. There are more than 30 western entities participating in Phase 1 (the stakeholder processes to build out this future market) of Markets+. Note: a commitment to Phase 1 (support/fund the buildout of the future market) is not a commitment to join that new market (that will occur during Phase 2 of Markets+ where participants join Markets+ formally).
In contrast to RTO West:
- Utilities retain their own balancing authorities and associated responsibilities
- Transmission planning remains in the hands of individual participants
Essentially, Markets+ coordinates the next-day while preserving the independence of participating utilities.
Preparing for new SPP markets
Whether joining RTO West or Markets+, SPP participants will take on new workflows and expanded settlements. If you participate in a real-time imbalance market today (WEIM/WEIS), approximately 3-5% of your energy volumes settle through the imbalance market across both purchases and sales. Joining Markets+ or RTO West will result in 100% of your energy volumes (loads and supplies) settling through the marketplace. Managing these will require implementing new procedures to track front- and back-office data and activities. Automated solutions can prove invaluable in handling these new processes efficiently.
A few key preparation tips:
- Optimize your portfolio to really know your position
- Have tools in place to handle new bidding workflows and data tracking
- Closely shadow SPP settlement calculations to manage financial risks
The future continues to shift in the Western markets. This post examined near-term changes SPP has in motion that will open new opportunities across a wide swath of states. We’ll continue to monitor developments and equip our customers with the tools needed to adapt and succeed.
Want to learn more? Request materials from our recent webinar, “Preparing for New SPP Markets+.”