Here's what's in and out for Western markets in 2025
Happy 2025! We're back serving up new updates on what's going on in the region with our in-and-out list for 2025. (Although we're not going to weigh in on what's in and out at In-N-Out because no matter what, animal style will always be in.)
Leah Rubin Shen, Managing Director at Advanced Energy United
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In: Saving Customers Money
CAISO reports that its Western Energy Imbalance Market (WEIM) continues to demonstrate substantial value, delivering $374 million over the last quarter of 2024. This puts the total cumulative West-wide benefits at $6.62 billion since 2014, and positions the market to close in on $7 billion later this year.
Out: Ignoring Data
Last week, the California Energy Commission hosted a workshop on regional markets that included a presentation of a new study by the Brattle Group. This is the latest in a series of studies examining the implications of various day-ahead market footprints. The draft study highlighted that the more utilities join the Extended Day-Ahead Market (EDAM), the more money California customers save. A day-ahead market with the broadest footprint could deliver $500 million per year in benefits to customers, relative to a market split between EDAM and Markets+, the day-ahead market offering from SPP.
Studies like these can be helpful by providing an assessment of the relative costs and benefits of utility day-ahead market choices. However, not all utilities have commissioned such studies. In one of the workshop's panel discussions, Arizona Commissioner Kevin Thompson commented on the Arizona utilities' announcement of plans to join Markets+, saying, "I think Arizona’s utilities jumped the ball a little bit...I think they jumped out there ahead of their skis, and I asked them if they would just allow this to work itself through and see where it ends, because this could be the next best thing since sliced bread. You won’t know if you don’t see it through." New Mexico Commissioner Pat O'Connell concurred, questioning "how well those [Arizona utility] decisions will age...As the economic studies suggest, not well." It is worth noting that no Arizona utility has commissioned a comparable study.
In: More Day-Ahead Market Announcements
I've said this before, but the Western day-ahead market landscape remains very dynamic, and something we continue to closely monitor. While last year saw a number of commitments to join EDAM, over the last month we also saw three entities expressing interest in joining Markets+.
Most recently, New Mexico's El Paso Electric announced its intent to join Markets+. The utility claims to have done an extensive evaluation process and notes this decision will build on EPE’s prior experience as a participant in the WEIM. It remains to be seen how the New Mexico PRC, which issued a set of guiding principles for day-ahead market decisions late last year, will react to this.
Earlier this month, Xcel Energy-Colorado also announced plans to fund and join Markets+ once they receive approval from Colorado state regulators, although it is not clear how long that approval could take.
Canadian energy marketer Powerex also recently announced that it will fund the next phase of Markets+ and reiterated its commitment to joining.
Out: BPA Commitment to Markets+?
All four senators from Oregon and Washington issued a second letter to the Bonneville Power Administration (BPA) in December, expressing concerns with BPA's decision timeline and urging BPA to carefully evaluate the costs and benefits of its market choice.
In response, BPA sent a clarifying letter back to the senators saying that the entity is still weighing the pros and cons of joining a day-ahead market. It is possible that in March, when BPA is expected to make a final decision, it will not choose a day-ahead market and will instead continue to monitor the development of both markets. However, BPA is still committed to funding over $25 million to SPP Markets+ Phase 2.
In: More Transmission in the West
Last week, RTO Insider reported that FERC approved a joint agreement between CAISO and LS Power to develop SWIP-North, a transmission line that would deliver Idaho wind power into California through Nevada. Among other benefits, this move could help secure Idaho Power’s participation in EDAM.
As readers of this newsletter know well, sharing resources with our neighbors benefits everyone! This line will help connect diverse clean energy resources across the West, reduce solar curtailment, and improve grid congestion.
Out: Worrying About Seams
In mid-January, FERC approved Markets+, which is expected to begin operating as soon as 2027. This approval now triggers the beginning of Phase 2 of Markets+ development, which is the implementation stage of the market.
Notably, in its decision, FERC declined to consider how potential seams between Markets+ and EDAM will be managed. In a concurrence to FERC's order, Commissioner Judy Chang said that the seams issue is one of several issues that remain to be addressed in tackling the challenge of creating a seamless regional electricity grid across the region. As always, the landscape is dynamic, and we will continue to track the latest developments.
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