A Proposal for SPP Markets+
CONTENTS
INTRODUCTION: SPP AND ENERGY MARKETS ................................................................................................... 1
GOVERNANCE .................................................................................................................................................................. 5
MARKET DESIGN .......................................................................................................................................................... 20
TRANSMISSION ............................................................................................................................................................ 64
MARKET SETTLEMENTS ............................................................................................................................................. 68
MARKET MONITORING ............................................................................................................................................. 75
STAKEHOLDER RELATIONS ...................................................................................................................................... 84
IMPLEMENTATION ...................................................................................................................................................... 85
CONCLUSION ................................................................................................................................................................ 89
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 1
Utilities have the daunting task of ensuring electric reliability and affordability for their customers.
Southwest Power Pool (SPP) has proven that centralized, regional electricity markets make this
task easier and more successful. We have years of experience and a customer-centric approach to
market development. We provide more than just market development and administration services.
We provide peace of mind.
SPP is pleased to present this proposal for Markets+, a bundle of services proposed that would
centralize day-ahead and real-time unit commitment and dispatch, provide hurdle-free
transmission service across its footprint and pave the way for the reliable integration of a rapidly
growing fleet of renewable generation. We have made an earnest attempt to accurately estimate
and clearly state the anticipated costs and obligations of designing, implementing and
administering Markets+. We’ve based the market’s design on both our own experience and the
expressed wishes of you, our customer.
We look forward to continuing to work with you in developing a mutually beneficial relationship
that will bring financial benefits and enhance electric reliability for your customers for years to
come.
INTRODUCTION: SPP AND ENERGY
MARKETS
A LEGACY OF TRUSTWORTHINESS
SPP has coordinated the reliability of the bulk electric grid for more than 80 years. We were
founded in 1941, incorporated in 1994, approved by the Federal Energy Regulatory Commission
(FERC) as a regional transmission organization (RTO) in 2004 and have grown and matured
steadily throughout our history, constantly expanding our service offerings and territory to
provide greater value to a continually growing and diverse group of customers.
Even as our services, responsibilities and staff size have grown, particularly in the last two
decades, our values and commitment to serving customers have remained the same. We believe
in doing the right thing for the right reason in the right way, and we’ve managed to stay true to
those values even as we expanded our RTO footprint, extended our contract services and
welcomed our first members in the Western Interconnection.
Our annual stakeholder satisfaction surveys regularly return superbly favorable results among
our stakeholders, and our employee engagement surveys consistently show phenomenal levels
of satisfaction, motivation and effectiveness among our highly qualified, dedicated and
professional staff of more than 600 employees. All of this is proof: Our strategy is built to last.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 2
OUR VALUE PROPOSITION: EXPERIENCE AND
CUSTOMER SERVICE SET SPP APART
Our value depends on the complimentary principles of maintaining independence through
diversity and a commitment to being stakeholder-driven. We are facilitators, helping our
stakeholders work together to responsibly and economically keep the lights on today and in the
future. We don’t tell our stakeholders what to do. We facilitate dialogue among them, ensuring
every voice is heard regardless of size.
SPP’s approach to business is creating and maintaining a strong, unique culture in which our
staff and stakeholders collaborate to be as effective and efficient as possible.
We share your values. We understand equally the challenges of managing transmission in rural
areas and the importance of maintaining reliability in large population centers. The SPP RTO
serves seven of the one hundred largest cities in the U.S. and has a keen understanding of rural
America, too: after all, it’s where we call home and is the area we have primarily served for the
past 80 years.
We hire career employees and invest in them as people first and employees second. We give
back to our community. We value transparency in our actions and communications, flexibility in
our approach to customer service and response to industry trends and integrity and trust in
everything we do. We consider ourselves partners with our stakeholders and stewards of their
valuable resources.
We are proud that SPP today – having grown from 11 members in 1941 to 114 in 2022,
spanning all or parts of 15 states and soon to provide service to even more in the west – still
reflects our early principles of collaboration with an unwavering commitment to remain
customer-focused.
SPP has a proven record of creating value for the companies we serve, who are as diverse as the
services we offer. Our customers include investor-owned utilities, rural electric cooperatives,
municipalities, public power, large retail customers, alternative power and state and federal
agencies. In fact, we are the only RTO to count among its members a federal agency: Western
Area Power Administration, Upper Great Plains Region.
The relationships we’ve forged and maintained not only serve as a testament to the integrity
and strength of our business model but also as a foundation on which to build the next step in
SPP’s evolution.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 3
SPP’S HISTORY OF SUCCESSFUL MARKET DEVELOPMENT
SPP launched its first energy imbalance services (EIS) market in 2007. With it, we set a precedent
for huge returns on market-development investments. The EIS market’s total implementation
costs were approximately $33 million, and in its first year alone it paid back its participants
threefold, providing $103 million in benefits.
Our 2007 EIS market was a real-time balancing market that dispatched participating generating
resources to meet load every five minutes. Our members and market participants quickly saw
additional reliability and economic opportunity in consolidating our 16 balancing-authority
areas and expanding our market to perform day-ahead unit commitment. We began designing
and implementing what would become our Integrated Marketplace.
In 2014, we launched the Integrated Marketplace on time and under budget with the highest
degree of quality, something no other RTO in the world has accomplished. In its first year of
operation, our expanded market delivered $380 million in net savings to our members and their
customers, paying for itself in just four months.
The Western Energy Imbalance (WEIS) market launched Feb.1, 2021. The real-time balancing
market is part of SPP’s contract-based portfolio of Western Energy Services it provides
customers in the Western Interconnection. The WEIS market helps keep wholesale electricity
costs low, increases price transparency and mitigates congestion on the transmission system for
market participants. Throughout its first year of operation, it has performed well and to the
expectations of its participants, enhancing both reliability and economics and paving the way
toward even greater value as it grows in size and leads to the development of Markets+.
SPP-administered markets save money and enhance reliability. In testimony to the House
Subcommittee on Energy and Mineral Resources, then Western Area Power Administration
Administrator and CEO Mark Gabriel said of his organization’s participation in SPP’s markets,
“Our participation in energy and transmission market initiatives has delivered greater benefits
than we anticipated … In addition to experiencing financial and operational benefits exceeding
our conservative assumptions, above-average water conditions resulted in surplus generation
sales into Southwest Power Pool (SPP) that accrued more than $48 million of additional net
market revenue. These surplus sales help put downward pressure on firm power rates.”
We have a long and successful history of providing contract services to non-members of the SPP
RTO. We’ve provided tariff administration, reliability coordination, reserve sharing and planning
authority services to dozens of entities in the Eastern and Western Interconnections.
It’s on this foundation of success that we propose to build Markets+ and bring time-tested
benefits to customers in the Western Interconnection.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 4
SPP has worked for several years with utilities in the
west to understand their needs and design solutions
to ensure the highest levels of reliability while
keeping rates as low as possible for customers. SPP
understands that western utilities place high value on
having a voice in helping shape the ever-changing
energy landscape, and that the western utility
landscape represents many diverse interests that must
be balanced in every decision.
These objectives are at the heart of who SPP is and
how we do what we do. Our customer-driven
approach will ensure western customers get the
products and services they need at affordable rates
they help control. Our strength is in our ability to
facilitate effective discussions of complex issues
among diverse stakeholders while balancing impacts
to the inseparable ideals of reliability and economics.
Our industry is undergoing transformational shifts in
generation technologies, customer demands,
environmental considerations and political
expectations. SPP has more than 75 years of
experience using a relationship-based business model
to help customers meet their challenges in a way that
fits the needs of their business, customers,
stakeholders and regulators. We know you have a
choice when considering your market options, and we
believe after reviewing our proposal you’ll agree our
approach of providing a customer-driven energy
imbalance market is the right choice for you and your
customers.
THE SPP ADVANTAGE
SPP has worked for several years with utilities in the
west to understand their needs and design solutions
to ensure the highest levels of reliability while keeping rates as low as possible for
customers. SPP understands that western utilities place high value on having a voice in helping
shape the ever-changing energy landscape, and that the western utility landscape represents
many diverse interests that must be balanced in every decision.
These objectives are at the heart of who SPP is and how we do what we do. Our customer-
driven approach will ensure western customers get the products and services they need at
WHY SPP?
• Strong customer involvement
and transparent governance
that balances the interests of
all states and all participants
• Demonstrated customer-
driven approach to decision-
making
• Long-term cost certainty
through customer-driven
changes to service
• Efficient market operation and
flow-based internal congestion
management
• Future optionality for long-
term market evolution
• Lower up-front and on-going
costs for participating
balancing authorities thanks to
the market’s direct interaction
with embedded entities
• High utilization of legacy
metering requirements
• No long-term commitments
and low up-front and on-
going costs for market
administration
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 5
affordable rates they help control. Our strength is in our ability to facilitate effective discussions
of complex issues among diverse stakeholders while balancing impacts to the inseparable ideals
of reliability and economics.
Our industry is undergoing transformational shifts in generation technologies, customer
demands, environmental considerations and political expectations. SPP has more than 75 years
of experience using a relationship-based business model to help customers meet their
challenges in a way that fits the needs of their business, customers, stakeholders and regulators.
We know you have a choice when considering your market options, and we believe after
reviewing our proposal you’ll agree our approach of providing a customer-driven energy
imbalance market is the right choice for you and your customers.
GOVERNANCE
1.0 DEFINITIONS
Affiliate: Affiliate relationships are relationships between Markets+ market participants that
have one or more of the following attributes in common:
1. Are subsidiaries of the same company
2. One Markets+ market participant is a subsidiary of another Markets+ market participant
3. Have, through an agency agreement, turned over control of a majority of their
generation facilities to another Markets+ participant
4. Have, through an agency agreement, turned over control of a majority of their
transmission system to another Markets+ participant, except to the extent that the
facilities are turned over to an independent transmission company recognized by FERC
5. Have an exclusive marketing alliance between Markets+ participants
6. Ownership by one Markets+ participant of 10% or greater of another Markets+
participant.
Federal Energy Regulatory Commission (FERC): The Federal Energy Regulatory Commission is
an independent agency that regulates the interstate transmission of natural gas, oil and
electricity. FERC is the regulatory agency that will oversee and approve Markets+.
Markets+ Independent Panel (MIP): A five-member panel that is independent from Markets+
participants and Markets+ stakeholders. The MIP is the highest level of authority for decisions
related to the Markets+ market with the SPP board of directors providing independent
oversight.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 6
Markets+ Market Participant (MMP): An entity that has executed a Markets+ market
participant agreement as part of the Markets+ tariff and contributes generation and/or load to
the Markets+ market.
Markets+ Market Stakeholder (MMS): Category of stakeholders who has executed a
Markets+ stakeholder agreement, does not contribute generation and/or load to the Markets+
market and pays an annual fee of $5,000. A MMS has voting rights at the MPEC, the MIP
Selection Forum and is eligible for a voting seat, if appointed, on the MIP Nominating
Committee, working groups and task forces. The annual fee may be waived for eligible entities
that are nonprofit organizations under the Internal Revenue Code.
Markets+ Non-Voting Stakeholder (MNVS): General category of stakeholders who provide
input at all stakeholder meetings that do not have voting rights on working groups and task
forces and pay no annual fee.
Meeting of Markets+ Participants and Markets+ Stakeholders: A meeting of Markets+
market participants and Markets+ market stakeholders shall be held for the purpose of electing
members of the MIP and conducting other business as necessary. The MPEC chair shall preside
over these meetings.
SPP: Southwest Power Pool, Inc. or successor organization (SPP Bylaws).
Staff: The technical and administrative staff of SPP as hired by the officers to accomplish SPP’s
mission.
2.0 PARTICIPATION IN MARKETS+
2.1 QUALIFICATIONS AND PHASES
Phase One: Funded Investigation
Entities that are supportive of SPP’s development of a detailed Markets+ design, can commit a
non-refundable amount so SPP can commit resources to designing the market functions, draft
the governing documents and submit the proposal to FERC.
Phase Two: SPP Implementation
Upon FERC approval of the necessary Markets+ governing documents, SPP will begin acquiring
or modifying the necessary software, hardware and related processes if entities commit to fully
fund the cost of such efforts. Upon SPP’s creation of the Markets+ systems and processes,
entities will then be integrated into the system based on participant-specific schedules,
including milestones and activation dates.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 7
Participation in each phase described above is discreet and separate. The incremental approach
is taken to confirm an appropriate amount of participant interest and commitment is achieved,
while ensuring SPP’s costs are recovered for each phase of the effort. The terms and conditions
for each agreement will be limited to the commitments within scope of each phase.
2.2 MARKETS+ MARKET PARTICIPANT AGREEMENT
SPP will administer the Markets+ market pursuant to the Markets+ FERC-approved tariff,
including a Markets+ market participant agreement. Such agreement will contain terms and
conditions that must be met for an entity to be able to participate in Markets+.
3.0 ORGANIZATIONAL STRUCTURE
3.1 SPP BOARD OF DIRECTORS
3.1.1 AUTHORITY
SPP’s independent board of directors will provide ultimate oversight of SPP’s administration of
Markets+ subject to FERC regulatory jurisdiction. The board will give significant recognition and
deference to the Markets+ Independent Panel (MIP) decision-making role.
The SPP board of directors shall review and consider:
1. Decisions of the MIP that have a material adverse effect on SPP, including:
a. Material agreements and material changes to those agreements between SPP
and Markets+ market participants or SPP and Markets+ market stakeholders
b. Issues or concerns raised by the market monitor related to any FERC filing, rule or
process within the scope of the market monitor’s authority as established by
FERC that has been previously raised to the MIP
c. Legal and/or litigation disputes or actions involving SPP or the implementation of
Markets+
d. Financial ramifications or corporate risk to SPP
2. Markets+ budgets, any debt obligations related to Markets+ or material changes to
SPP’s staffing requirements.
3. Appeals from the MIP made pursuant to Section 3.2.1.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 8
All reviews by the SPP board of directors shall be in coordination with the MIP. Any time the SPP
board of directors takes action to review any issue due to a material adverse effect on SPP, the
board shall publish the basis for the materiality.
3.2 MARKETS+ INDEPENDENT PANEL (MIP)
3.2.1 PURPOSE AND SCOPE OF ACTIVITIES
The Markets+ Independent Panel (MIP) is the highest level of authority for decisions related to
the Markets+ market with the SPP board of directors providing independent oversight. Actions
taken by the MIP under the authorities defined in its charter will be filed with FERC, unless
appealed per this section or reviewed by the SPP board of directors pursuant to its authority.
Absent an appeal, SPP staff will be authorized to submit requisite regulatory filings to
implement the MIP’s decision.
Appeals: Any member of the MIP may request the SPP board of directors review any action or
inaction of the MIP. Only members of the MIP can appeal to the SPP board of directors. Upon
such a request by a member of the MIP, the SPP board of directors shall review the matter for
resolution in consultation with the MIP. Should the SPP board determine there is not sufficient
consensus supporting the MIP’s decision, and provided time allows, the SPP board of directors
may remand the issue to the MIP and/or the appropriate Markets+ working group for further
consideration. The MIP is responsible, through the Markets+ State Committee (MSC) and the
Markets+ Participants Executive Committee (MPEC) and designated working groups,
committees and task forces, for developing and deciding or recommending policies, procedures
or system enhancements related to the administration of the Markets+ market.
In carrying out its purpose, the MIP will:
1. Provide a forum for entities that have executed a Markets+ market participant
agreement, a Markets+ stakeholder agreement with SPP or a Markets+ non-voting
stakeholder to discuss issues related to the ongoing administration and advancement of
Markets+ development in the Western Interconnection. The MIP has the authority to set
priorities and direct the Markets+ Participant Executive Committee to investigate
potential market design and tariff revisions.
2. Approve or reject proposed amendments to the Markets+ tariff made by the Markets+
Participants Executive Committee before the filing of such amendments at FERC.
3. Consider, approve or reject market rules if such rules solely apply to the administration
of the Markets+ market and have no application to the SPP Integrated Marketplace or
any other service provided by SPP. To the extent such rules do apply to the SPP
Integrated Marketplace or any other service provided by SPP, the MIP shall be afforded
the opportunity to provide input to any other applicable SPP organizational group and
the SPP board of directors.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 9
4. Collaborate with SPP staff on the development of Markets+ tariff provisions, market
protocols, business practices and interregional agreements to promote transparency and
efficiency in the operation of the Markets+ market.
5. Evaluate and provide consultation to SPP on the Markets+ market administration budget
to the Markets+ State Committee, Markets+ market participants and Markets+
stakeholders, including modifications or adjustments of the Markets+ market
administration rate, in accordance with the Markets+ tariff.
6. Review, consider and decide whether to approve market design system or process
enhancement proposals recommended by SPP, the Markets+ State Committee, the
Markets+ Participant Executive Committee or any designated working group, committee,
or task force established by the Markets+ Participation Executive Committee.
Recommendations to enhance systems or processes materially impacting SPP’s
administration of the Markets+ market or the Markets+ market administration budget
must be approved by the MIP before beginning implementation of the enhancement.
7. Resolve any disputes regarding the establishment of a working group or task force and
the staffing of that working group or task force.
3.2.2 COMPOSITION AND QUALIFICATIONS
The MIP shall consist of five persons, one of which shall be a SPP Independent Director. The MIP
shall select its chair. The members of the MIP shall be independent of any Markets+ market
participant, Markets+ market stakeholder, or Markets+ non-voting stakeholder and shall not be
limited in the number of terms he/she may serve.
Members of the MIP shall have recent and relevant senior management expertise and
experience in one or more of the following disciplines: electric industry, including electric
transmission and generation planning, markets or general understanding of electric utility
regulation.
Members of the MIP shall comply with SPP’s standards of conduct. Under the standards of
conduct, members of the MIP shall not be an employee, director, consultant or contractor of,
and shall have no interest in any third party, or any of its affiliates as defined in SPP’s FERC-
approved tariff, which shall be deemed to include ownership (outside of a mutual fund, blind
trust or similar arrangement as permitted herein) by a panelist or his/her immediate family
members of prohibited securities.
3.2.3 TERM AND ELECTION
3.2.3.1 TERM
Four of the members of the MIP shall be elected at the Markets+ Market Participants and
Markets+ Market Stakeholder Forum to a four-year term commencing upon election and
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 10
continuing until his/her duly elected successor takes office. The initial term for non-SPP directors
will be a one, two, three or four year term to allow staggering. The ballot for the initial elected
members of the MIP will consist of a single person for each seat to be filled (slate) and each
MPEC member will cast his/her vote to approve or disapprove the entire slate.
3.2.3.2 MIP NOMINATING COMMITTEE
3.2.3.2.1 Composition
The MIP Nominating Committee will consist of 11 representatives of Markets+ market
participants and Markets+ market stakeholders, including one representative from each of the
following sectors or groups:
1. Independent power producers
2. Markets+ State Committee member
3. Public interest organizations
4. Cooperatives
5. Municipal utilities, including public utility districts and joint action agencies
6. Federal agencies
7. Investor-owned utilities
8. Competitive marketers
9. Large energy and industrial customers
10. Residential and small commercial retail customers
11. MIP representative, not up for renomination, shall serve as chair. For the initial MIP
nominations, the chair shall be the SPP Independent Director designated to serve on
the MIP.
Each sector will nominate and vote on its representative to the MIP Nominating Committee.
3.2.3.2.2 Meetings
The MIP Nominating Committee shall meet as necessary. Meetings shall be open, however, the
MIP Nominating Committee may limit attendance at a meeting by an affirmative vote of MIP
Nominating Committee members as necessary to safeguard confidentiality of sensitive
information. Unless otherwise agreed to by the MIP Nominating Committee, representatives
shall be given at least 15 business days’ written notice of the date, time, place and purpose of
each regular or special meeting. Telephone or web conference meetings may be called as
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 11
appropriate by the chair of the MIP Nominating Committee with at least one business day’s
prior notice.
3.2.3.2.3 Voting Structure
Decisions of the MIP Nominating Committee shall be by simple majority vote of the
representatives participating, whether in person or remotely by telephone, web conference or
similar technology and voting. Representatives must be participating at a meeting to vote. No
votes by proxy are permitted. The SPP staff secretary will collect and tally the ballots and
announce the results of a vote.
3.2.3.3 ELECTION PROCESS
1. At least 90 calendar days before the Markets+ Market Participants and Markets+ Market
Stakeholders Forum when election of new members of the MIP is required, the MIP
Nominating Committee shall commence the process to nominate persons equal in
number to the members of the MIP to be elected.
2. At least 45 calendar days before the Markets+ Market Participants and Markets+ Market
Stakeholders Forum, the MIP Nominating Committee shall determine the persons it
nominates for election as members of the MIP, specifying the nominee for any vacancy
to be filled. The staff secretary shall prepare the ballot accordingly and shall deliver same
to Markets+ market participants and Markets+ market stakeholders at least 30 calendar
days before the Markets+ Market Participants and Markets+ Market Stakeholders Forum.
3. For purposes of electing or removing members of the MIP only, each group of Markets+
market participants with affiliate relationships shall be considered a single market
participant.
4. Any additional nominee(s) may be added to the ballot specifying the nominee(s) to a
single seat or multiple seats if a petition is received by the staff secretary at least 15
calendar days before the Markets+ Market Participants and Markets+ Market
Stakeholders Forum and evidencing support of at least 20% of the existing Markets+
market participants and Markets+ market stakeholders.
a. If only one candidate is nominated for a seat, each Markets+ market participants
and Markets+ market stakeholders representative shall be entitled to cast a vote
by written ballot, whether in person or remotely by email or other reliable
electronic means, for or against the nominee. The votes will be calculated and will
require a simple majority. In the event a member of the MIP position is not filled,
the MIP Nominating Committee will determine a new nominee for
recommendation for election by Markets+ market participants and Markets+
market stakeholders at a special meeting of Markets+ market participants and
Markets+ market stakeholders to be held no later than the next regular MPEC
meeting.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 12
b. If multiple candidates are nominated for a seat, each Markets+ market
participants and Markets+ market stakeholders representative shall be entitled to
cast a vote by written ballot, whether in person or remotely by email or other
reliable electronic means, for only one nominee, but may vote against each
candidate. The votes will be calculated with a simple majority of votes cast
determining which nominee is elected. In the event a member of the MIP position
is not filled, the MIP Nominating Committee will determine a new nominee for
recommendation for election by Markets+ market participants and Markets+
market stakeholders at a special meeting of Markets+ market participants and
Markets+ market stakeholders to be held no later than the next regular Markets+
market participants and Markets+ market stakeholders meeting.
3.2.3.4 VACANIES
Any member of the MIP may resign by written notice to the MIP and SPP corporate secretary
noting the effective date of the resignation. The Markets+ market participants and Markets+
market stakeholders may remove an elected member of the MIP with cause by vote. Removal
proceedings may only be initiated by a petition signed by not less than 20% of the Markets+
market participants and Markets+ market stakeholders. The petition shall state the specific
grounds for removal and shall specify whether the removal vote is to be taken at a special
meeting of the Markets+ market participants and Markets+ market stakeholders or at the next
regular meeting of the Markets+ market participants and Markets+ market stakeholders. An
external member of the MIP who is the subject of removal proceedings shall be given 15
calendar days to respond to the petition in writing to the MPEC chair and SPP corporate
secretary.
If a vacancy occurs, the MIP Nominating Committee will present a nominee to the Markets+
market participants and Markets+ market stakeholders for consideration and election to fill the
vacancy for the unexpired term at a special meeting of Markets+ market participants and
Markets+ market stakeholders following 30 calendar days’ notice from the staff secretary. The
replacement member of the MIP shall take office immediately upon election.
3.2.4 MEETINGS
Meetings of the MIP are open to all interested parties and written notice of the date, time, place
and purpose of each meeting will be provided as described below. However, the MIP may limit
attendance during specific portions of a meeting by an affirmative vote of the MIP. Matters for
consideration in closed or limited sessions are limited to personnel, legal and proprietary,
confidential or security sensitive information.
At a minimum, meetings will be scheduled such that there will be an official meeting quarterly.
Annually, there will be at least one face-to-face meeting.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 13
Written notice and public posting of the date, time, place and purpose of each regular meeting
shall be given at least 15 calendar days in advance of each regular meeting. Agendas for regular
meetings will be publicly posted no less than seven days before the meeting.
Telephone conference meetings may be called by the MIP chair with prior notice of at least one
business day.
3.2.5 VOTING STRUCTURE
Decisions of the MIP shall be by simple majority vote of the members participating, whether in
person or remotely by telephone, web conference or similar technology and voting, subject to
the quorum requirements in Section 3.6. Members of the MIP must be participating at a
meeting to vote. No votes by proxy are permitted. The SPP staff secretary will collect and tally
the ballots, and announce the results of a vote.
3.3 COMMITTEES ADVISING THE MARKETS+ INDEPENDENT PANEL
3.3.1 MARKETS+ PARTICIPANTS EXECUTIVE COMMITTEE (MPEC)
The Markets+ Participants Executive Committee (MPEC) will provide a forum for Markets+
market participants, Markets+ market stakeholders and Markets+ non-voting stakeholders to
discuss issues related to the ongoing administration and advancement of market development
in the Western Interconnection.
The MPEC will review system or process enhancement proposals recommended by SPP, the
Markets+ State Committee, the Markets+ market participants, Market+ stakeholders, Markets+
non-voting stakeholders or any designated working group, committee or task force established
by the MPEC. The MPEC will provide to the MIP its recommendation on proposals received for
the MIP’s consideration and decision. The MPEC recommendations to the MIP are advisory and
non-binding. In its presentation to the MIP, the MPEC will report any minority views expressed
to the MPEC during its consideration. Recommendations to enhance systems or processes
materially impacting SPP’s administration of the Markets+ market or the Markets+ market
administration budget must be approved by the MIP before beginning implementation of the
enhancement.
3.3.1.1 COMPOSITION
Each Markets+ market participant and Markets+ market stakeholder shall appoint one
representative to the MPEC. Each representative designated shall be a senior level management
employee with financial decision making authority. The MPEC representatives will appoint the
chair and vice chair. Each representative of the MPEC may continue to be a representative
thereof until the Markets+ market participant appoints a successor representative. A Markets+
market participant and Markets+ market stakeholder shall be eligible to appoint only one
representative for itself.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 14
3.3.1.2 AUTHORITY
The MPEC will have authority to make recommendations to the MIP regarding:
• Proposed amendments to the Markets+ tariff
• Markets+ market protocols to support the filed tariff
• The administrative rate charged to participants of the Markets+ market
The MPEC may establish standing working groups and ad hoc task forces as needed to facilitate
its authorities as described below.
3.3.1.3 MEETINGS
Meetings of the MPEC are open to all interested parties, and written notice of the date, time,
place and purpose of each meeting will be provided as described below. However, the MPEC
may limit attendance during specific portions of a meeting by an affirmative vote of the MPEC.
Matters for consideration in closed or limited session are limited to personnel, legal and
proprietary, confidential or security sensitive information.
At a minimum, meetings will be scheduled such that there will be an official meeting quarterly.
Annually, there will be at least one face-to-face meeting.
Written notice and public posting of the date, time, place and purpose of each regular meeting
shall be given at least 15 calendar days in advance of each regular meeting. Agendas for regular
meetings will be publicly posted no less than seven days before the meeting.
Telephone conference meetings may be called by the MPEC chair with prior notice of at least
one business day.
3.3.1.4 VOTING STRUCTURE
Upon execution of the Markets+ participant agreement or execution of the Markets+ stakeholder
agreement and payment of the annual fee or fee waiver, an entity will be assigned to one of three
membership sectors: Investor-owned utilities, public power and independent. The sectors are
defined as follows:
Investor-owned utilities (IOUs): This sector includes Markets+ market participants that are public
utilities under the Federal Power Act, regulated by one or more state regulatory commission and
subject to a fiduciary responsibility to investors to earn a return on rate-based assets.
Public power: This sector includes Markets+ market participants that are publicly-owned utilities,
electric cooperatives and power marketing administrations (PMAs).
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 15
Independents: This sector includes Markets+ market participants that are not an IOU or a public
power utility and Markets+ market stakeholders.
The MPEC will vote with the result for that sector being a percent of approving vote to the total
number of participants in the sector participating and voting. Each of the three sectors represents
33 1/3% of the vote. An action is approved by the MPEC if the average of these percentages is at
least 67%.
3.3.2 MARKETS+ STATE COMMITTEE (RSC)
3.2.2.1 COMPOSITION/MEMBERSHIP
One representative from each state in which a Markets+ market participant has generation or
load participating in the Markets+ market in that state, may participate as a member of the
Markets+ State Committee (MSC). Each state representative will be appointed by the utility
regulatory commission of that state. The MSC will provide advice to the MIP, the MPEC and any
working group or task force on all matters pertinent, including but not limited to, initiative
prioritization and policy issues, to the participation in the Markets+ market of the Markets+
market participants under the Markets+ tariff. SPP staff will assist the MSC by providing
information and support relevant to the Markets+ market.
3.3.2.2 MEETINGS AND VOTING
The MSC will determine its meeting provisions and voting structure.
3.3.2.3 SUPPORT AND FUNDING
SPP will facilitate the retention of independent staffing for the MSC sufficient and stable enough
to support the MSC’s ability to develop analytical and legal analysis in order to present
independent positions related to the Markets+ market and before FERC. The MSC shall annually
submit a proposed budget to the MIP for approval. Before approval, the MIP shall seek
comment from the MPEC. The approved MSC budget costs will be allocated to the Markets+
market participants.
3.3.2.4 DATA ACCESS
The MSC will have access to performance data and data specific to policy initiatives, subject to
any confidentiality agreements.
3.4 OTHER COMMITTEES AND STAKEHOLDER GROUPS
3.4.1 MARKETS+ WORKING GROUPS
Through an affirmative vote in accordance with the voting structure set forth in Section 3.3.1.4,
the MPEC may establish standing working groups to assist with its mission. Before voting on the
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 16
establishment of a working group, the MPEC should consider potential resource and financial
impacts in excess of those contemplated.
3.4.1.1 COMPOSITION AND TERMS
Unless otherwise provided in these bylaws, each working group shall have a chair to preside
over meetings. The chair of all organizational groups shall be nominated by the MPEC for
consideration and appointment by the MIP. The term of the chair of all working groups shall be
two years. Working groups have discretion to determine the need for a vice-chair. Should a
working group establish a vice-chair position, the vice-chair shall be elected by the working
group.
Following a solicitation of nominations, working group representatives shall be recommended
by the MPEC chair to the MPEC for approval. The recommendation and approval of
representatives shall consider the various types and expertise of Markets+ market participants
(MMPs) and Markets+ market stakeholders (MMS) and their geographic locations, to achieve a
widespread and effective representation of MMPs and MMSs. Criteria and sector representation
for serving on a working group will be determined in the group’s scope and be sector based. An
appointment to a working group is for an individual, not a corporate entity.
3.4.1.2 MEETINGS
Working groups shall meet as necessary and the meetings shall be open. However, any working
group may limit attendance at a meeting by an affirmative vote of the working group. Matters
for consideration in closed or limited attendance session should be limited to personnel, legal
and proprietary, confidential or security sensitive information. Unless otherwise agreed to by the
working group, representatives shall be given at least 15 business days’ written notice of the
date, time, place and purpose of each regular or special meeting. Telephone or web conference
meetings may be called as appropriate by the chair of any working group with at least one
business day’s prior notice.
3.4.1.3 VACANCIES
Working group vacancies will be filled on an interim basis by appointment of the MPEC chair,
unless otherwise provided.
3.4.1.4 VOTING STRUCTURE
Each representative of a working group shall have one vote. A simple majority of
representatives, whether participating in person or remotely by telephone, web conference or
similar technology, or represented by proxy and voting shall be required for approval of an
action. Unless otherwise stated, a working group may determine to vote on an issue by email.
The outcome of any email vote must be recorded in the minutes for the group.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 17
The quorum for any working group shall be a majority of the representatives thereof, but not
less than three representatives, provided a lesser number may adjourn the meeting to a later
time. The quorum for a meeting must be established and maintained throughout the meeting in
order for the working group to take any binding action(s). Notwithstanding the above, any
actions taken before a quorum is lost are considered valid and binding.
3.4.1.5 STANDING COMMITTEES
3.4.5.1 Operations and Reliability Working Group (ORWG): Provides recommendations to other
working groups and the MPEC on the effects of current or proposed market designs on these
entities ability to ensure reliable operations. The ORWG will be comprised of one representative
from each Markets+ market participant that is a balancing authority or transmission provider.
3.4.1.5.2 Market Working Group (MWG): Reviews any initiative that would modify the Markets+
tariff or market protocols.
3.4.1.5.3 Seams Working Group (SWG): Coordinates with the ORWG, any RTO or ISO adjacent to
the Markets+ footprint and any bordering non-RTO or ISO balancing authority areas and
transmission providers.
3.4.2 AD HOC TASK FORCES
A temporary task force may be created by the MPEC chair. Through an affirmative vote in
accordance with the voting structure set forth in Section 3.3.1.4, the MPEC chair may establish
ad hoc task forces as necessary to fulfill its mission. Upon establishment of a task force reporting
to the MPEC, the MPEC chair shall appoint a chair of the task force to preside over meetings.
Any ad hoc task forces established by the MPEC chair shall be temporary and shall have the
scope of its activities limited to a specific purpose. Before the establishment of an ad hoc task
force, the MPEC chair should consider any potential resource and financial impacts to SPP.
3.4.2.1 COMPOSITION AND TERMS
Unless otherwise provided in these bylaws, task force representation will be appointed by the
MPEC chair after the SPP staff secretary solicits nominations for task force members. The MPEC
chair shall consider the various types and expertise of Markets+ market participants (MMPs) and
Markets+ market stakeholders (MMS) and their geographic locations, to achieve a widespread
and effective representation of the MMPs and MMS. Criteria and sector representation for
serving on a task force will be determined in the group’s scope. Except for any full
representation group, an appointment to a task force is for an individual, not a corporate entity.
3.4.2.2 MEETINGS
Task forces shall meet as necessary and the meetings shall be open. However, any task force
may limit attendance at a meeting by an affirmative vote of the task force. Matters for
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 18
consideration in closed or limited attendance session should be limited to personnel, legal and
proprietary, confidential or security sensitive information Unless otherwise agreed to by the task
force, representatives shall be given at least 15 business days’ written notice of the date, time,
place and purpose of each regular or special meeting. Telephone or web conference meetings
may be called as appropriate by the chair of any task force with at least one business day’s prior
notice.
3.4.2.3 VACANCIES
Task force vacancies will be filled on an interim basis by appointment of the MPEC chair unless
otherwise provided.
3.4.2.4 VOTING STRUCTURE
Each representative of a task force shall have one vote. A simple majority of representatives,
whether participating in person or remotely by telephone, web conference or similar technology,
or represented by proxy and voting shall be required for approval of an action. Unless otherwise
stated, a task force may determine to vote on an issue by email. The outcome of any email vote
must be recorded in the minutes for the group.
The quorum for any task force shall be a majority of the representatives thereof, but not less than
three representatives, provided a lesser number may adjourn the meeting to a later time. The
quorum for a meeting must be established and maintained throughout the meeting in order for
the task force to take any binding action(s). Notwithstanding the above, any actions taken before
a quorum is lost are considered valid and binding.
3.5 SPP STAFF INDEPENDENCE AND SUPPORT
Each working group, committee or task force reporting to the MPEC shall be assigned a SPP
staff member, who shall attend all meetings and act as secretary to the group. Staff secretaries
of all committees, working groups, and task forces shall be non-voting, independent and
impartial. The secretary shall keep minutes of pertinent discussions, business transacted,
decisions reached and actions taken at each meeting. Minutes shall be published within seven
calendar days following a meeting but in any event in advance of the next meeting and
considered final documents upon their approval by the working group, committee or task force.
SPP shall strive to provide support to all working groups, committees and task forces while
taking into account the Markets+ market administration budget and other priorities of the SPP
organization. Should it become necessary for SPP to hire additional staff or augment staffing to
maintain the expected level of support, SPP will advise the MIP and MPEC of any budgetary
impacts.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 19
3.6 ATTENDANCE, QUORUM AND PROXY
If a representative is unable to attend a meeting of the MPEC or any committee, working group
or task force, he/she may, in writing to the applicable chair, vice chair and staff secretary,
appoint a proxy representative who shall have such rights to participate and vote as the
representative specifies. The proxy representative may be another member of the MIP, MPEC or
the committee, working group or task force or another person who has the authority to act on
behalf of the representative.
The quorum for a meeting of the MIP, the MPEC, the MSC or any working group, committee or
task force shall be a majority of the representatives thereof, provided a lesser number may
adjourn the meeting to a later time. A representative participating by phone is considered to be
in attendance of the meeting for the purpose of quorum. The quorum for a meeting must be
established and maintained throughout the meeting in order for the group to take any binding
action(s). Notwithstanding the above, any actions taken before a quorum is lost are considered
valid and binding. A proxy will serve to meet the quorum requirements as follows:
• A proxy provided to another representative of the MPEC will not be recorded as
attendance at the meeting and will not serve to meet or maintain the quorum
requirements.
• A proxy provided to another person with the authority to act on behalf of the
representative will be recorded as attendance at a meeting for the purpose of meeting or
maintaining the quorum requirements.
3.7 APPEALS TO THE MPEC AND THE MIP
Should any Markets+ market participant, Markets+ market stakeholder or the MSC disagree on
an action or inaction taken or recommended by any working group or task force, such Markets+
market participant, Markets+ market stakeholder or the MSC may, upon written request to the
MPEC staff secretary, appeal and submit an alternate recommendation, including a
recommendation for inaction to the MPEC within seven days after the meeting following such
working group or task force action or inaction.
Should any Markets+ market participant, Markets+ market stakeholder or the MSC disagree on
the MPEC’s denial of any issue, such Markets+ market participant, Markets+ market stakeholder
or MSC member may, upon written request to the MIP staff secretary, appeal and submit an
alternative recommendation, including a recommendation for inaction to the MIP within seven
days after the meeting following the MPEC denial.
The MIP may take any action it deems necessary to address the appeal. This could include
affirming the action or inaction appealed, reversing the action or inaction appealed or
remanding the matter back to the appropriate group or groups.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 20
4.0 GOVERNANCE REVIEW
Upon the MPEC’s request, but no later than three years after the Markets+ market launch, the
MIP will initiate a review of the Markets+ market governance in light of accumulated experience
and changed circumstances. Examples of changed circumstances includes:
• Voting structure changes: Findings and a request by the MPEC that participation and
voting experiences suggest that changes in voting structures are needed.
• Markets+ service offering evolution and Markets+ State Committee authority: SPP
Bylaws confer on the RSC certain authorities and responsibilities within the governance
of SPP. Specifically, Section 7.2 of the SPP Bylaws gives the RSC specific authority
(pursuant to Section 205 of the Federal Power Act) over:
o Cost allocation
o Financial transmission rights
o Planning for remote resources
o Regional resource adequacy
While none of these authorities are part of the Markets+ service offering at this time, if the
market design evolves to include these features, the MIP will evaluate whether the MSC should
have similar designated authorities.
To accomplish the governance review, after a solicitation of nominations, the MIP shall appoint a
sector-based working group to develop recommendations for any governance revisions. Any
modification to Markets+ governance requires a super majority (4/5 vote) of the MIP.
MARKET DESIGN
MARKETS+ OVERVIEW
As a market operator
1
, SPP collaborates with participating entities, serving as an interface
between reliability and commercial functions in the Markets+ footprint. To assist in reliable
operations and competitive wholesale electricity prices, SPP proposes to operate and administer
1
NERC Reliability Functional Model – Version 5.1; The market entity whose interrelationships with other
entities are included in the Functional Model only as an interface point of reliability functions with
commercial functions.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 21
energy and reserve markets. The responsibilities to capacity adequacy, reserves and other
reliability-based concerns do not change because of this proposed market.
ENERGY AND RESERVE MARKETS
The energy and reserve markets processes include market participant
2
participation in:
• A price-based day-ahead market (DA market) with congestion rent allocation in the DA
market
• A price-based real-time balancing market (RTBM)
• All reliability unit commitment (RUC) processes
The DA market provides market participants with the ability to submit offers to sell energy,
flexibility reserve products
3
and/or to submit bids to purchase energy. The RTBM provides
market participants with the ability to submit offers to sell energy and flexibility reserve
products. Energy and reserve markets operations will simultaneously or jointly optimize resource
offers for energy and reserve in the security constrained unit commitment (SCUC) and security
constrained economic dispatch (SCED) algorithms. The objective function of joint optimization is
the minimization of the total production costs in the DA market and the RTBM for energy and
reserve products to meet the requirements.
Procurement of operating reserve (regulation-up service, regulation-down service, spinning
reserve and supplemental reserve) will not be included in the energy and reserve markets but
will continue to occur under the existing paradigm. Market participants with resources providing
operating reserve will communicate operating reserve procurements to SPP to ensure the
energy and reserve markets do not optimize capacity set aside for those operating reserve
obligations.
The simultaneous optimization logic considers various permutations of unit commitment and
the joint dispatch of energy and flexibility reserves, resulting in a solution with the least overall
production cost subject to reliability constraints. If multiple flexibility reserve products are
defined, the simultaneous optimization logic allows product substitution of flexibility reserve if
economically efficient, i.e., the logic utilizes a higher quality product offer to fill a lower quality
product demand if and when such selection would reduce the overall production cost compared
to a situation where each product was cleared separately.
2
An entity that generates, transmits, distributes, purchases, or sells electricity within, into, out of, or
through the transmission system participating in Markets+.
3
Flexibility Products refers to energy reserve products developed to respond to uncertainties or
unexpected changes primarily due to renewable and load forecast errors. Further discussion in later
sections.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 22
SPP performs the RUC processes to ensure the physical unit commitment produced from the DA
market is sufficient to meet SPP-projected capacity needs during the operating day. Exhibit 1-1
provides an overview of the key energy and operating reserve market functions.
EXHIBIT 1-1: OVERVIEW OF KEY ENERGY AND OPERATING RESERVE MARKET FUNCTIONS
Key features of the day-ahead market include:
• A financially binding market in which all cleared supply and demand is settled with a
minimum mandatory offer quantity requirement
4
.
• Physical supply offers, virtual supply offers, physical demand bids and virtual demand
bids are accommodated.
• Import, export and through-interchange transactions are accommodated in
Markets+, resulting in energy supply or energy demand cleared at external interface
settlement locations as appropriate.
4
Specific details of minimum mandatory offer requirement will be determined in Phase 1 of Markets+
development.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 23
• DA market clearing is performed for energy and flexibility products on a least-cost,
co-optimized basis and accounts for each resource’s marginal system losses,
congestion and energy cost to minimize the overall production cost.
• All physical supply cleared for flexibility reserve products cleared are paid at the
applicable market clearing price for the flexibility reserve product.
• All cleared energy supply is paid at the settlement location
5
DA market locational
marginal price, and all cleared energy demand is charged at the settlement location
DA market locational marginal price, producing an over collection due to congestion
(congestion revenues) and marginal losses (marginal loss revenues).
• Firm
6
transmission service reservation (TSR) holders are paid DA congestion rents. DA
marginal congestion component (MCC) is collected for all load, generators, imports
and exports. The sum of this number is allocated back to TSR holders.
• Losses will settle under the host transmission service provider with any impacts of
losses reduced from Markets+ settlements to avoid double settlement of losses.
• Resources committed by SPP are assured recovery of their start-up offer, no-load
offer and actual incremental energy costs as defined in the energy offer curve,
subject to certain eligibility criteria.
• Flexibility reserve procurement costs are allocated and collected on a reserve zone
basis.
• Greenhouse gas (GHG) pricing included in the market optimization that includes the
cost to serve load in states with GHG programs, including providing the necessary
tracking and reporting associated with supply serving load in the GHG state.
Key features of the RUC processes and real-time balancing market include:
• The RUC may commit resources based on market participant offers from physical
resources that were not otherwise committed by the day-ahead market.
• The RTBM operates on a five-minute basis, calculates dispatch instructions for
energy, clears flexibility products on a least-cost, co-optimized basis and accounts for
5
Settlement locations are the location of finest granularity for calculation of settlements in Markets+. SPP
anticipates multiple types of Settlement Locations including: Resources, Load, Trading Hub, Resource Hub,
and External Interfaces.
6
The design can also contemplate allocating day-ahead congestion rents to conditional firm and
secondary network transmission service, but more discussion is needed on the appropriateness and level
of allocation for curtailment priority 6 reservations.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 24
each resource’s marginal system losses, congestion and energy cost to minimize the
overall production cost.
• Cleared flexibility reserve settlement is performed on a five-minute basis. SPP
calculates charges and credits as the difference between the RTBM flexibility reserve
megawatts (MW) cleared and the DA market flexibility reserve MW cleared amount
multiplied by the applicable flexibility reserve market clearing price.
• Resource settlement is performed on a five-minute basis. SPP calculates energy
charges and credits as the difference between the resource actual output and the
resource DA market cleared MW amount multiplied by the settlement location RTBM
locational marginal price.
• Load settlement is performed on a five-minute basis. SPP calculates energy charges
and credits as the difference between the load actual consumption and the load DA
market cleared MW amount multiplied by the settlement location RTBM locational
marginal price.
• Import, export and through-interchange transaction energy settlement is performed
on a five-minute basis. SPP calculates charges and credits as the difference between
the real-time scheduled MW amount and the DA market cleared MW amount
multiplied by the RTBM locational marginal price of the appropriate external
interface settlement location.
• Losses will settle under the host transmission service provider with any impacts of
losses reduced from Markets+ settlements to avoid double settlement of losses.
• Resources committed by SPP are assured recovery of their start-up offer, no-load
offer and actual incremental energy costs as defined in the energy offer curve subject
to certain eligibility criteria.
• Charges are imposed on market participants for failure to deploy energy as
instructed.
• Flexibility reserve procurement costs and net of penalty revenues received for
flexibility reserve availability failure are collected from market participants on a real-
time, load-ratio share basis.
Exhibit 1-2 provides a timeline-based illustration of the sequencing and interaction of the key
energy and operating reserve market functions for a representative operating day (1/31).
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 25
Exhibit 1-2: Energy and Reserve Markets Processes Timeline
CONGESTION RENT ALLOCATION
Unlike a full RTO/ISO, Markets+ will not include financial transmission rights (FTRs) or the
associated allocations, auctions and other processes that support those instruments. Instead,
Markets+ will develop a more straightforward congestion rent allocation approach that
leverages the existing OATT framework to ensure entities who secure OATT rights to physically
deliver power across constrained paths can receive the maximum economic value and the
economic value of long-term OATT rights continues to be recovered by the transmission
customers who invest in those rights (and fund the underlying facilities). Achieving these
objectives will provide confidence to transmission customers that they will continue to receive
the economic value of their existing rights, while also preserving incentives for continued
investment in long-term OATT service in the future. These outcomes support the broader goal
of preserving third-party revenues recovered by transmission service providers (TSPs) through
sales of long-term OATT service and minimize the risk of cost shifts onto the native load
customers of TSPs that join Markets+.
SPP’s proposed congestion rent allocation approach is based on transmission rights rather than
transmission schedules. This approach ensures transmission customers will receive the economic
value of their rights without the need to self-schedule their own resources or loads using their
own transmission reservations. Instead, it provides a powerful incentive for the transmission
customer to allow the market to make the most efficient use of the transmission as part of its
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 26
broader economic optimization, while providing assurance that the resulting congestion value
will be allocated to the appropriate customer(s).
FINANCIAL SETTLEMENTS
Markets+ incorporates full net-settlement of market activity for each operating day. Post-
operating day activities begin on the day immediately following the operating day. SPP will
issue scheduled settlement statements for each operating day to market participants. Settlement
invoices are issued to market participants on a weekly basis.
Exhibit 1-3 provides a representative overall timeline of post-operating day activities.
Exhibit 1-3: Post Operating Day Activities Timeline
OVERVIEW MARKET PARTICIPANT RESPONSIBILITIES
To participate in Markets+, an entity must be a balancing authority or receive balancing
authority services from a balancing authority participating in Markets+, i.e., a participating
balancing authority. An entity participating in Markets+ will have the opportunity to fully
participate In Markets+ (i.e., register assets, submit offers, financially settle with SPP, make
available transmission capabilities when appropriate, etc.). SPP will develop a more specific list of
market participant opportunities and requirements in the next detailed design phase, but the
guiding principle is entities can directly participate in Markets+ if willing and would not be
required to participate through an intermediary.
SPP anticipates significant coordination and collaboration between the participating balancing
authorities and the market operator. SPP proposes that a taskforce or stakeholder group be
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 27
established during the next phase of detailed market design to determine what, if any,
additional requirements and responsibilities are required for participating balancing authorities.
METERING REQUIREMENTS
Participants in Markets+ must designate an entity, including but not limited to itself, to provide
revenue-quality meter data to SPP for use in Markets+ settlement processes.
SPP proposes stakeholders determine the detailed, technical meter protocols
7
in the next phase
of detailed market design based on the regional preferences and standards of the anticipated
Markets+ footprint. SPP strongly encourages a two-part technical metering requirement for
Markets+. Any existing metering equipment at the time a participant integrates into Markets+ is
acceptable if the participant is capable of providing at least hourly kilowatt-hour-interval data
information. Any new or replacement metering equipment must satisfy the technical
requirements to be determined in the next phase of detailed market design. SPP finds this two-
phased metering approach to be successful in market launches, striking a balance between
uniformity in metering equipment and reducing unnecessary barriers to participant entry.
Stakeholders will determine the identification of the entity responsible for enforcing Markets+
technical meter protocols in the next phase of detailed market design.
REGISTRATION REQUIREMENTS
SPP requires participants in Markets+ to register their loads and resources within
8
a
participating balancing authority. SPP uses registration data for operation and settlement of
Markets+, determining responsibilities and identifying discrete entities.
Participants must register all resources in a participating balancing authority on a nodal basis.
Participants may register resources located at the same physical and electrically equivalent
injection point on the transmission system individually or as an aggregate. SPP proposes that
resources interconnected to the transmission system with a maximum output below a de
minimis threshold, e.g., 100 KW, not be required to register in Markets+. SPP proposes behind-
the-meter generation
9
of substantial capacity be required to register in Markets+. SPP proposes
that the specific size requirement for behind-the-meter generation be determined in the next
phase of detailed market design but would expect the size to be between five to 10 MW.
7
The detailed, technical meter protocols will include requirements for timing standards, measurement
quantities, accuracy, testing, and technology-specific requirements for different meter types.
8
This includes load and resources pseudo-tied into a Participating Balancing Authority, but does not
include load and resources pseudo-tied out of a Participating Balancing Authority.
9
A generating unit or multiple generating units on the customer’s side of the retail meter that serve all or part of the
retail Load with electric energy.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 28
Participants must register all load, either individually at each point of withdraw from the
transmission system or in aggregate, grouping multiple withdraw points into a single aggregate
location of financial settlement. Each participant must identify any nonconforming
10
load or load
associated with demand response participating in Markets+.
MARKET OPERATOR RESPONSIBILITIES
LOAD AND RESOURCE FORECASTING
SPP will develop short-term and midterm load forecasts for each balancing authority in the
Markets+ footprint. SPP will develop the short-term load forecast on a rolling five-minute basis
for the next three hours to use as an input for the real-time balancing market and short-term,
15-minute granularity reliability unit commitment. SPP will develop the midterm load forecast
on a rolling hourly basis for the next seven operating days to use as an input for all hourly unit
commitment processes.
SPP produces and updates hourly wind and solar-powered generation forecasts on a rolling 48-
hour bases to use as an input for all hourly unit commitment processes.
The individual wind and solar-powered generation forecasts may be available to individual
market participants and their designated agents, subject to any confidentiality protections. SPP
proposes to make available to all participants the aggregate summations of the solar and wind-
powered generation forecasts, with historical data available shortly after real-time for a
determined period of time.
MARKET SYSTEM AVAILABILITY
SPP can provide a highly reliable and secure Markets+ solution.
SPP maintains a tier III
11
data center, and requires software to adhere to SPP security policies to
meet cybersecurity requirements to ensure reliability and security. Physical security of SPP’s data
center is a priority. Data centers are strictly monitored, and have 24/7 security guards. SPP
conducts regular security assessments and has a team dedicated to cybersecurity.
Both of SPP’s geographically separate data centers are fully equipped with redundant circuits,
telecommunications and networking. As is typical for systems and applications used by SPP,
applications used for Markets+ will be housed in both data centers, with one serving as primary
10
Non-conforming load is more process driven and needs to be separated from the load forecast
application because it does not follow a predictable pattern and introduces error to the load forecast
produced by SPP for Markets+ processes.
11
As rated by the Uptime Institute.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 29
and the other as secondary. Should an issue occur in the primary data center, processing can be
moved to utilize the secondary data center while the primary is restored to full function, after
which processing would return to the primary data center.
MARKETS+ MARKET DESIGN KEY FEATURES
MARKET PRODUCTS
ENERGY
Energy is the primary product for Markets+ and will be cleared in order to balance generation
with expected obligations. For Markets+, energy is defined as an amount of electricity that is bid
or offered, produced, purchased, consumed, sold or transmitted over a period of time, which is
measured or calculated in megawatt hours (MWh). Financially binding clearings of energy will
occur on an hourly granularity in the DA market and five-minute granularity in RT market.
Energy will be settled at the corresponding settlement location’s locational marginal price (LMP).
As the market operator, SPP will issue energy deployment instructions to dispatchable resources
in the Markets+ footprint.
Before implementation, participants should decide the course of action when the market cannot
balance both supply and demand, along with the distinct roles and responsibilities of the market
operator and the balancing authority operator in those circumstances. It is common to have a
high penalty value that guides the market software to treat the power balance as one of the
most important constraints (see the Price Formation section). The design needs to specify
whether an administrative pricing associated with power balance will lead to high prices during
scarcity.
FLEXIBILITY RESERVES
Organized energy markets use flexibility reserve products to respond to uncertainties or
unexpected changes primarily due to renewable and load forecast errors. These products
increase the security of the grid and allow for fewer shortages and pricing
excursions. Incorporating flexibility reserve products both value and put a price on the
increasingly important attribute of flexibility under both normal and stressed conditions. One or
more flexibility products may exist that target different periods, depending on regional
preference and system need.
A short-term flexibility product targets periods in the intrahour range (e.g., 10 to 30 minutes).
Depending on the volatility and forecast uncertainties in this time range, a flexibility product
helps minimize price volatility resulting from transient error (i.e., temporary scarcity resulting
from the RT market looking at too narrow a window of time absent the product) and reduces
the risk of the RT market not meeting other future obligations. For this horizon, online
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 30
dispatchable resources would be the primary resources considered for clearing, but offline
faster-starting resources could also clear if desired.
A longer-term flexibility product could target periods beyond real-time (e.g., one hour or
greater). Depending on the potential uncertainties over this longer horizon, a flexibility product
helps ensure reliability and reduces out-of-market manual actions. Both online and offline
resources would be the primary resources considered for clearing.
The variability and forecast uncertainties of the anticipated footprint determine the potential
benefit of implementing flexibility products. Given the current and expected renewable
integration plans for most of the Western Interconnection, SPP proposes both short-term and
longer-term flexibility products be included in Markets+. SPP recommends any flexibility
product design include co-optimization and clearing in DA market and RT market studies while
accounting for those product requirements in any incremental commitment during the RUC
processes. SPP and Markets+ participants will perform analysis to determine the detailed design
once the anticipated Markets+ footprint is determined. This analysis will include:
• Number of required products (e.g., short-term, long-term, both or more) to address
uncertainty needs. SPP expects that there would be flexible reserves procured as part of
the day-ahead market optimization, with procurement volumes adjusted in the real-time
market as grid conditions become clearer.
• How scarcity of the products should be addressed (e.g., demand curve).
• Composition of the demand curve (i.e., sloped or block-based, actual scarcity prices).
• The time horizon for the products (e.g., 20 minutes for short-term flexibility and two
hours for long-term flexibility).
• Which resources can participate and whether costs are based on lost opportunity, offers,
both or some other methodology.
• Cost allocation to fund credits paid to resources providing the product.
• Calculation methodologies for system wide and zonal procurement requirements.
OPERATING RESERVES
Operating reserves include regulation and contingency reserves. Regulation reserves are a
reservation of qualified resource capacity in the up and down direction and are used to balance
real power requirements on a short-term, continuous basis. Contingency reserves are a
reservation of qualified resource capacity in the up direction and are used primarily to recover
from resource contingencies. For the initial scope of Markets+, SPP proposes regulating and
contingency reserves not be cleared in Markets+, and instead, the procurement, deployment
and compensation for these services remain under the participating balancing authorities.
Operating reserves are maintained by the balancing authority.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 31
Since Markets+ will not procure, deploy, or set prices for operating reserves, it is necessary for
participants to communicate the capacity allocated to contingency and regulating reserves to
reserve capacity and prevent the simultaneous clearing of other products or reserves with those
same MWs. As the market operator, SPP will not issue deployment instructions for operating
reserves, but the real-time balancing market should be aware of ongoing deployments to ensure
the centralized unit dispatch and balancing authority actions are complementary and do not
contribute to unforeseen risks to reliability. Depending on the design, SPP may need to be
aware of MWs coming from the deployment of reserves if those MWs are not to be subjected to
LMP settlements.
MARKET PROCESSES
MULTIDAY ADVISORY
The multiday forecast (MDFC) study is a non-binding informational study that provides a
commitment and pricing forecast based on the latest available forecast and commitment data. It
runs daily after the day-ahead market posting and has a study period covering the next three to
seven operating days at an hourly granularity. Markets+ participants and SPP will finalize the
specific study period and resulting granularity based on the specific resource mix and unique
regional operating characteristics of the footprint during the next phase of design. SPP proposes
the MDFC uses load and wind forecast data and expected resource availability and costs rather
than attempt to model the behavior-based participation in the financial day-ahead market, but
alternative inputs could be considered in the next phase of design. SPP anticipates the specific
details of the multiday forecast study to evolve over time.
The primary outputs of the MDFC are:
• Hourly pricing forecasts SPP will post publicly
• Prospective, non-binding commitments SPP will communicate to corresponding market
participants
• Potential reliability issues SPP will communicate to the appropriate TOP/BA/RC
SPP and the balancing authorities will coordinate any long lead commitments that otherwise
may not be committed through the DA market due to physical parameters or offered
availability.
DAY-AHEAD MARKET AND PHYSICAL RESOURCE COMMITMENT
Like most RTO markets, SPP’s existing market platform includes a financially binding day-ahead
market, followed by a day-ahead RUC process that can secure incremental capacity to ensure
the total physical supply committed meets the SPP operator’s projected capacity needs during
the operating day. While RUC is an important tool to ensure reliability, a day-ahead market
optimization that regularly commits the majority of physical resources based on the behavior-
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 32
based participation in the voluntary day-ahead market is likely to result in a less efficient overall
dispatch and commitment solution relative to a market optimization that is designed to
determine the most efficient use of all resources to meet all needs of the grid simultaneously.
Regular reliance on the RUC process to fill capacity shortfalls resulting from the day-ahead
market solution will produce less transparent pricing and increased uplifts because the cost of
those additional resources are not reflected in market prices. As the grid mix evolves across the
nation to include more variable resources and more uncertainty in real-time grid conditions,
some market operators have observed a growing use of RUC (or other out-of-market actions),
exacerbating these efficiency and pricing concerns and indicating a need to explore potential
enhancements to the traditional day-ahead market.
For Markets+, SPP proposes to explore with stakeholders enhancements to its market design
that would enable the day-ahead market solution to find the most efficiency dispatch and
commitment of the physical resources needed to meet the reliability needs of the market
footprint, and to produce transparent price signals reflecting the marginal cost of those
resources.
The Markets+ market design sessions have narrowed the basic structure of the DA market to
two possible implementations:
• Option one: A voluntary, financial market with financially binding day-ahead positions
that include physical instructions for resources to start and stop. This is similar to the SPP
regional transmission organization (RTO) Integrated Marketplace.
• Option two: A multistage process where a reliability-based, physical resource
commitment occurs followed by a purely financial and voluntary day-ahead market.
There are multiple nuances between the two structures, but the overarching difference is
determining what drives the primary unit commitment for Markets+. Option one results in a
market design where the primary unit commitment for Market+ is driven by the participant
behavior in the voluntary, financial day-ahead market. With this option, the overall market
design must incent participation to mirror the forecasted expectations of real time. When
behavior deviates from what is expected in real time, the unit commitment may be suboptimal
and result in incremental commitments in the subsequent reliability unit commitment processes
(as described above). Option two results in a market design where the physical decision to
commit is insulated from the voluntary, financial day-ahead market and is driven by the
forecasted expectations for real time. SPP proposes the next phase of detailed market design
focus on the specific design details necessary to implement option two.
SPP proposes during the next stage of detailed market design, participants assess external
drivers in the Western Interconnection to determine what specific market timeline makes sense
once the anticipated Markets+ footprint is understood. The duration between DA market close
and posting of results is directly related to the complexity of design decisions finalized in the
next phase of market design. Based on discussions to date, SPP anticipates three to four hours
of processing time to complete and post the DA market solution for Markets+.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 33
Consistent with SPP’s current market in the east, Markets+ will allow participants to submit two
sets of resource offer information: One for use in the voluntary, financial day-ahead market and
the other for use in all other market processes.
RELIABILITY UNIT COMMITMENT
The RUC process begins shortly after posting of the day-ahead market results and will
continuously validate the existing unit commitment decisions to ensure all Markets+ obligations
are reliably and economically met based on the most recent forecast and operational
information.
The RUC processes begin with hourly granularity assessments of the existing resource
commitments, transitioning to a shorter-term, more granular study (e.g., 15-minute granularity)
closer to the operating hour.
SPP anticipates significant collaboration and coordination between the market operator and
participating balancing authorities, especially approaching period of scarcity or strained system
conditions.
REAL-TIME BALANCING MARKET
The RT market will occur near real time on a five-minute frequency, with a study interval of five
minutes. This study provides a security-constrained energy dispatch and a co-optimized clearing
of flexibility reserves and associated prices.
The RT market will initialize approximately five minutes before the target interval. The study is
completed and results are approved and published approximately one minute before the start
of the target interval.
RESOURCE PARTICIPATION MODELS
Markets+ includes multiple resource participation models, allowing participants to maximize the
benefits of centralized unit commitment and dispatch while respecting the unique capabilities
and operating characteristics of the asset. SPP proposes all resource registration and modeling
occur at the point of interconnection to the transmission system and aggregation of multiple
generating assets be limited to instances where resources share a common physical and
electrically equivalent injection point to the transmission system. Limiting the market
registration of generating resources to a single point of interconnection is important for
congestion management. In addition to the standard resource participation model, SPP
proposes the following additional participation models are included in Markets+.
MULTI-CONFIGURATION COMBINED CYCLE
A combined cycle plant has the ability to generate power through more than one operating
component. Typically, a combined cycle plant consists of one or more gas-fired turbines and a
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 34
steam turbine, both of which are capable of electricity generation. The gas turbine, in addition to
producing electricity, exhausts waste heat, which can be captured to produce steam in the steam
turbine allowing for additional electricity generation. Because combined cycle plants vary in their
design and number and type of components, they have multiple, distinct operating
configurations, each with different levels of capacity, efficiency and physical operating
characteristics.
To allow for selection of the most economic configuration in the centralized unit commitment
and dispatch processes, participants may elect to register individual operating configurations.
Participants can submit individual resource offers and physical characteristics for each
configuration and information on how the combined cycle plant transitions between registered
configurations.
MARKET STORAGE RESOURCE
An electric storage resource (ESR) is any resource capable of receiving electric energy and
storing it for future injection of electric energy to the grid. To ensure these types of resources
can participate in Markets+, SPP proposes a participation model that recognizes the physical
and operating characteristics of ESRs be part of the Markets+ market design. SPP proposes the
market participant be the default manager of state of charge
12
for the resource.
JOINT OPERATING UNIT
Joint operating units
13
(JOU) are inherently complex to operate in an organized market. SPP
proposes two options for JOU participation in Markets+ to provide flexibility to participants
wishing to maximize the benefits of Markets+ optimization while still accounting for the unique
operating conditions for a JOU.
In first option, participants may elect to register their individual share as a separate resource.
SPP would treat each individual resource separately for centralized unit commitment and
dispatch decisions.
In the second option, participant may choose to register as a combined-interest resource. A
combined-interest resource is registered as a single resource for market operation under a
single market participant. Credits and charges for these resources are allocated using a
percentage of submitted interest share in settlements.
DEMAND RESPONSE RESOURCE
SPP proposes Markets+ market design include a participation model for demand response. The
participation model will allow participants to offer the demand response similar to an injecting
12
State of charge is the amount of Energy stored expressed in MWhs.
13
A Joint Operating Unit is a resource that is owned by more than one entity or a resource for which
multiple entities have contractual rights or financial obligations.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 35
resource. In addition to the information required of an injecting resource, the participant will
need to provide information related to the controllable load and/or behind-the-meter
generation so SPP can properly account for the load reduction in market processes.
A controllable load not capable of responding to five-minute dispatch instructions but capable
of hourly reduction of withdrawal of energy from the transmission grid will receive hourly
dispatch instructions in the day-ahead market and real-time balancing market.
HYBRID STORAGE MARKET RESOURCE
As the proliferation of electricity storage and renewable generation continues in the west, SPP
proposes Markets+ allow generating resources and ESR(s) located behind the same point of
interconnection to the transmission system flexibility in asset registration. Participants may
choose between registering the collection of resources in Markets+ as a single resource or
individually. If the participant registers the resources as a single resource, the participant may
choose to register the aggregation as a market storage resource, taking advantage of the
participation model that recognizes the physical and operating characteristics of the ESR(s).
VARIABLE ENERGY RESOURCE
Variable energy resources
14
continue to make up a growing portion of the Western
Interconnection resource mix. SPP proposes Markets+ include a participation model that
maximizes the economic and societal benefits of this clean and cost-efficient generation type
while maintaining reliability, except for instances where system reliability or economic efficiency
are reduced.
For wind and solar-powered variable energy resources, SPP would produce and update hourly
forecasts, providing a rolling 48-hour projection of wind and solar production potential. To
produce an accurate and reliable forecast, SPP needs participants to provide additional
geographical data, modeling and telemetry for wind and solar resources related to
meteorological conditions.
For the financial day-ahead market, SPP proposes variable energy resources be able to
participate similar to non-variable generation. For physical unit commitment processes, SPP will
limit the maximum dispatch of wind and solar-powered variable energy resources to the lesser
of the output forecast and the submitted maximum in the resource offer. For real-time market
operations, SPP proposes variable energy resources are expected to produce the maximum
production potential unless SPP is actively dispatching the resource. SPP assumes a persistence
forecast for variable energy resources except for instances when actively dispatching the
resource in an upward or downward direction to properly account for this operating behavior in
14
A device for the production of electricity that is characterized by an energy source that: (1) is renewable;
(2) cannot be stored by the facility owner or operator; and (3) has variability that is beyond the control of
the facility owner or operator.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 36
the real-time balancing market. SPP seeks feedback from stakeholders on the design for variable
energy resources, specifically the need for exemption from market dispatch in real-time market
operations.
SPP proposes any footprint-specific reliability constraints, such as maximum ramp rate, be
determined in the next phase of detailed design when the Markets+ anticipated footprint is
better understood.
EXTERNAL RESOURCES
Markets+ will include robust design features, allowing for transactions between external parties
and participants in Markets+ as outlined in the Scheduling Activities and Bilateral Transactions
section. SPP proposes no additional market design be included to accommodate external
resources for Markets+. Entities with resources external to a participating balancing authority
wishing to participate in Markets+ must pseudo-tie those resources into a participating
balancing authority, including all necessary transmission service reservations.
GROUPED HYDRO MODEL
Throughout the design session discussions, numerous stakeholders have expressed the need for
market design features that account for the aggregate operation of multiple, individual hydro-
powered generating resources on a common water system. As part of the next stage of detailed
market design, SPP and stakeholders will determine if an existing resource participation model
can adequately account for these operating characteristics or if a new hydro-specific model is
necessary.
PRICE FORMATION
The primary goal for price formation is to determine accurate short-term prices that inform
participants of the system’s state and provide an incentive for supplying the various energy
services necessary to reliably operate the transmission system. This is challenging as different
participants may view accurate differently and argue they should be higher (the supply) or lower
(the demand).
FERC has provided valuable guidance toward seeking price formation practices that will produce
prices that meet a number of stated objectives
15
:
• Maximize market surplus for consumer and suppliers.
15
In June 2014, the Commission initiated a proceeding, in Docket No. AD14-14- 000, to evaluate issues
regarding price formation in the energy and ancillary services markets operated by RTOs/ISOs (price
formation proceeding).
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 37
• Provide correct incentives for market participants to follow commitment and dispatch
instructions, make efficient investments in facilities and equipment, and maintain
reliability.
• Provide transparency so that market participants understand how prices reflect the
actual marginal cost of serving load and operational constraints of reliably operating the
system.
• Ensure that all suppliers have an opportunity to recover their costs.
Specific pricing elements that SPP believes can support these objectives are described below.
LOCATIONAL MARGINAL PRICING
SPP uses a co-optimized security-constrained economic dispatch (SCED) model to compute
LMPs for energy at individual pricing nodes
16
. The LMP at a pricing node represents the cost of
delivering an incremental MW of energy at that specific location while satisfying all operational
constraints.
LMP components at pricing node i are calculated based upon the following formulas:
LMP
i
= MEC + MLC
i
+ MCC
i
Where:
• MEC is the component of LMP
i,
representing the marginal cost of energy.
• MLC
i
is the component of LMP
i,
representing the marginal cost of losses at PNode i
relative to the reference bus.
• MCC
i
is the component of LMPi, representing the marginal cost of congestion at ENode i
relative to the reference bus.
• The reference bus represents the network distributed load bus.
Calculating the appropriate LMP relies on energy offers and transmission system characteristics.
16
Pricing nodes represent a single node in the commercial model that has a one-to-one relationship to a
point of interconnection to the transmission system where electrical and equipment and components are
connected.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 38
Exhibit 4 1: LMP Calculation Overview
SIMULTANEOUS CO-OPTIMIZATION OF MARKET PRODUCTS
Markets+ centralized unit commitment and dispatch processes will incorporate co-optimization.
Co-optimization is a widely used and accepted methodology that allows the optimization
algorithm to make the best decision, where it may not be apparent, when assessing individual
products for clearing. Co-optimization logic assesses energy and reserve products
simultaneously to produce the least-cost solution while maximizing individual participant
benefits and accurately reflecting the demand for each product in pricing. Lost opportunity costs
are embedded in the co-optimization algorithm and ensure product pricing accounts for any
resource’s lost opportunity to sell energy for a given product to clear a different one. This is
essential to ensure resources are indifferent to the product cleared and represent the lost net
revenue of foregoing the clearing of another product. Energy and reserve products include lost
opportunity costs in the clearing and pricing algorithm.
FAST START RESOURCE PRICING
Nearly all organized markets in the United States include fast-start resource pricing logic to
better reflect the marginal cost of meeting load in real-time. Absent such logic, fast-start
resources (typically gas peaking units) that may be relatively inflexible and deployed at a fixed
level of output (e.g., 50 MW) can often be prevented from setting the market clearing price,
even when the resource is being committed on short notice to meet load in real-time. Even if a
fast-start resource is technically capable of setting price, its near-term commitment costs are
typically not reflected in its energy offer curve. Because of these characteristics and as explained
by FERC, “a lack of fast-start pricing practices may result in market prices that fail to accurately
reflect the marginal cost of serving load.”
SPP proposes to include fast-start resource pricing logic for Markets+ in a manner that is
generally consistent with FERC’s directives for applying fast-start resource pricing in SPP, NYISO
and PJM, subject to stakeholder dialogue to develop the final detailed approach. Among other
elements, SPP proposes fast-start resource pricing logic for Markets+ include two fundamental
elements by ensuring the software will:
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 39
• Relax the economic minimum operating limit of fast-start resources and treat them as
dispatchable from zero for the purpose of calculating prices
• Incorporate commitment costs, i.e., start-up and no-load costs, of fast-start resources in
energy and flexibility reserve prices.
Additional background:
Like other organized energy markets, Markets+ will allow resources to offer in three parts: The
cost to start the resource, the cost to maintain output at the minimum dispatchable limit and an
energy offer curve representing the cost to produce incremental energy above minimum output.
Historically in organized energy markets, all three parts of the resource offer are included in the
commitment decision, while the centralized dispatch only considers the energy offer curve. Most
organized markets have evolved to include the full three-part resource offer in the dispatch
decision in specific conditions.
In December 2016, FERC issued a notice of proposed rulemaking (NOPR) in Docket RM17-3 to
require each RTO/ISO to adopt market rules meeting certain requirements for pricing fast-start
resources
17
. FERC determined under certain conditions, the decision to commit fast-start
resources was part of the dispatch decision and commitment costs should influence price
formation to “recognize that fast-start resources are . . . the marginal resource used to meet the
next increment of energy or operating reserves demand.” On June 12, 2019, SPP received FERC
Order EL18-35 mandating fast-start pricing for its RTO market.
For the centralized unit dispatch pricing and quantity clearing, Markets+ will include similar
price formation logic to account for fast-start resources’
18
ability to quickly respond to needs on
the transmission system as is used in SPP’s RTO market.
Under certain conditions, e.g., starting a resource to respond to an unexpected loss in variable
energy resource output, the decision to commit a fast-start resource occurs near real-time,
effectively making the commitment decision part of the dispatch decision. In these situations,
the cost to start the resource and the cost to maintain minimum output (i.e., commitment costs)
should be included in price formation.
17
Fast-start pricing in market operated by Regional Transmission Organizations and Independent System
Operators, 157 FERC ¶ 61,213 (2016).
18
A specific definition of a fast-start resource has yet to be determined for Markets+. Most markets define
a fast-start resource as a resource capable of coming online from an offline state and being dispatchable
between 10 and 60 minutes of notification from the market operator and is capable of shutting down
within one hour of starting.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 40
Exhibit 4 2: Energy Offer Curve versus Composite Energy Offer Curve
The commitment of fast-start resources approaching real-time results in additional
complications for price-formation because the “chunky” nature of resource commitments will
occasionally limit eligibility to set price, primarily due to the physical operating limits of the
resource. For example, a fast-start resource is the marginal decision to resolve a transmission
constraint on the system and is committed close to real-time, fully resolving the constraint at its
operating minimum. To ensure fast-start resources are eligible to set price for the operating
condition they are committed to resolve, SPP proposes the operating characteristics preventing
eligibility to set price be relaxed for determining price. To ensure a reliable and feasible physical
dispatch, SPP will enforce the operating constraints when determining the physical dispatch,
necessitating a separate physical dispatch and separate financial price component of the
centralized unit dispatch processes.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 41
EXHIBIT 4-3: POTENTIAL REAL-TIME DISPATCH AND PRICING PROCESS
SCARCITY PRICING AND STRESSED SYSTEM CONDITIONS
To achieve the goals for price formation discussed above, it is important to have transparent
and informative pricing during shortage or scarcity conditions. It is relatively easy to determine
the proper price in a commodity market when demand is elastic and the desired amount
changes with price. However, demand is currently highly inelastic in organized energy markets.
The short-term price signal for Markets+ must reflect the current conditions, including scarce
conditions, while properly compensating resources for the essential reliability services they are
providing to the system. To properly determine prices, SPP proposes approximations in demand
behavior be made in shortage conditions.
When the system cannot meet the reserve product requirement, prices are impacted by
administrative pricing (e.g., demand curves)
19
. Demand curves can be a single value, stepped or
sloped based on the level of shortage. SPP proposes the appropriate demand curves for
Markets+ be derived based on the cost of the next action to resolve the shortage as a starting
point during the next phase of detailed market design,. SPP proposes required ‘check and
19
Demand curves are a series of quantity/price points used to set prices when there is a shortage of
energy or reserve supply.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 42
adjust’ processes be established in the Markets+ tariff, requiring annual review of the scarcity
pricing model performance.
CENTRALIZED UNIT COMMITMENT
Markets + has two primary and complementary unit commitment objectives. First, the
centralized unit commitment processes must maintain reliable operations of the bulk electric
system by ensuring that participating balancing authorities remain individually sufficient and the
collective set of resources committed for a given time period is deliverable to load and export
obligations. Second, the centralized unit commitment process should minimize total cost to
produce. To have the fullest set of possible resources for commitment, market design must
maximize the participation of resources, load and interchange in the day-ahead horizon when
the largest set of resources is available for unit commitment.
The primary unit commitment for Markets+ will occur in the day-ahead horizon, followed by
numerous RUC studies that continuously refine and add to the commitments based on
unforeseen changing conditions.
MULTIPLE BALANCING AUTHORITIES
Unlike other organized wholesale energy markets, Markets+ will not include consolidation of
balancing authorities into a single, regional balancing authority. As such, the individual
balancing authorities must remain individually sufficient before and throughout the operating
horizon. The transmission capability made available for centralized unit commitment and
dispatch will be a key input that constrains the centralized unit commitment. This will result in a
Markets+ resource plan that maximizes the benefit and maintains the individual sufficiency of
participating BAs. The next phase of market design will determine the specific details of how this
constraint will be modeled in coordination with the participating balancing authorities.
UNIT COMMITMENT KEY INPUTS
To ensure a reliable and economically optimal unit commitment solution, several key inputs are
required for all unit commitment processes in Markets+
20
. These inputs are necessary for the
market operator to accurately forecast the total and individual net obligations and system
conditions.
20
SPP anticipates coordination on inputs with participating balancing authorities to validate reliability and
feasibility. The specific details will be determined in the next phase of detailed market design.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 43
Submitted and updated as needed by market participants:
• Resource physical capabilities
o Operating limits, ramp rates, dispatchability, etc.
• Resource economic participation
o Availability for economic commit and/or dispatch, startup cost, no-load cost,
energy offer curve, etc.
• Outage information (resource and transmission)
Generated by SPP as the market operator:
• Load forecast (hourly for next seven days, 15-minute for next three hours)
• Wind/solar resource forecast (hourly for next seven days, 15-minutes for next three
hours)
It is to be determined which entity is responsible for submitting:
• Transfer capability for shifting commitment obligation between participating BAs
• Forward capacity obligations between participating BAs
• Data necessary to support centralized greenhouse gas accounting and pricing in the
centralized unit commitment
• Service flow constraint limits
CENTRALIZED UNIT DISPATCH
The goal of centralized unit dispatch is to optimize the dispatchable resource mix for the
Markets+ footprint to minimize costs to meet the collective obligation of all participants while
respecting the various operating constraints necessary to ensure reliability and equitable
operation.
The centralized unit dispatch determines the nodal energy prices and the product reserve prices
for each interval. Reserve prices can further be broken down into zones if zonal constraints are
modeled and activated. SPP proposes zonal delivery constraints for flexibility reserves be
included in the design for Markets+ given the existing interface and deliverability limitations
present in the Western Interconnection. Once the anticipated Markets+ footprint is determined,
participants may elect to go through a study effort during the design phase to determine
whether reserve zones are necessary.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 44
As the market operator, SPP will communicate energy dispatch instructions to dispatchable
resources for every five-minute operating interval in the real-time market. SPP will not issue or
include deployment of regulation or contingency reserves. SPP-provided energy dispatch
instruction and any instruction from the balancing authority and reliability coordinator should
be combined to determine the desired output for the resource.
As part of the design phase, SPP will work with Markets+ participants to determine the
appropriate interaction between the market and the balancing authority’s requirement to
balance and remain sufficient.
PHYSICAL SUFFICIENCY IN MARKETS+
Physical sufficiency before and throughout the operating horizon is a critical component of the
Markets+ market design and can be broken down into two phases: Resource adequacy or
capacity adequacy and resource sufficiency or energy sufficiency.
MARKETS+ RESOURCE ADEQUACY REQUIREMENT
Resource adequacy (RA) programs ensure sufficient installed capacity to maintain reliability
while allowing entities to benefit from the diversity of a broader regional footprint through
lower individual capacity requirements. For the same reasons that most RTO/ISO markets have a
common RA requirement, SPP believes a common RA requirement for Markets+ is an
appropriate and necessary prerequisite to market participation. This will enhance reliability by
verifying that each load-responsible entity contributes its individual share of the overall capacity
needs of the market footprint.
These objectives can be achieved by requiring all load-responsible entities participating in
Markets+ participate in a common, FERC-approved resource adequacy program. Any LRE that
chooses not to participate in a FERC-approved resource adequacy program will be required to
meet the same standards that the FERC-approved resource adequacy program under the
metrics defined by the FERC-approved program. Significant momentum and progress are being
made in the Western Resource Adequacy Program (WRAP), and SPP anticipates stakeholders will
select this program as the common, FERC-approved resource adequacy program for Markets+
once FERC approval is achieved. This approach would leverage WRAP (and its diversity benefits)
by allowing WRAP members to automatically satisfy the Markets+ RA requirement, while non-
WRAP members could independently show that they have met the same reliability standard
(using the same reliability metric, counting rules and deliverability requirements as defined by
WRAP). This is a workable concept, and SPP proposes further exploration of this approach with
stakeholders and the Western Power Pool (WPP) during the next phase of Markets+
development.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 45
ENSURING RESOURCE SUFFICIENCY IN MARKETS+ THROUGH A MUST-OFFER QUANTITY
Resource sufficiency or energy sufficiency will be a key design feature of Markets+. To ensure
reliable operations of the participating balancing authorities in Markets+, there must be
extremely high confidence in the centralized unit commitment and dispatch of participating
resources. The primary unit commitment for Markets+ will occur in the day-ahead
horizon. There must be sufficient participating physical and deliverable resource capacity to
meet the forecasted needs for that commitment to be reliable.
To help meet this objective, organized energy markets typically have minimum participation
requirements to ensure the forward and spot-clearing processes have sufficient supply available
to meet the anticipated demand. SPP proposes a must-offer quantity for Markets+ would
complement the Markets+ RA requirement by ensuring each entity offers enough total supply in
the day-ahead market to, at a minimum, meet its own needs (i.e., load, committed interchange,
reserves and uncertainty), increased by any potential holdback obligation quantity to others or
decreased by any potential holdback request from others, as calculated by WRAP. This approach
ensures WRAP members can realize the benefits of WRAP’s calculated diversity benefit by
automatically updating each WRAP member’s must-offer quantity based on the WRAP holdback
calculations.
The combination of a forward Markets+ RA requirement (based on the WRAP forward showing)
and a day-ahead must-offer quantity (base on the WRAP operational program) negates the
need for additional daily or hourly resource sufficiency tests. This approach – a common RA
requirement, coupled with a dynamic must-offer quantity obligation – better ensures sufficient
aggregate supply and more equitable outcomes than alternative approaches that rely on
reconciling different resource adequacy approaches through an operational resource sufficiency
framework.
As part of the next phase of detailed market design, SPP proposes a joint taskforce be created to
facilitate joint meetings to discuss these concepts and to determine the necessary coordination
needed between Markets+ and WRAP.
SPP and participants will work to determine the monitoring and settlement impact of the
physical sufficiency component in the next stage of detailed market design.
COORDINATION WITH RESOURCE ADEQUACY PROGRAMS
Resource adequacy and capacity sufficiency occur over much longer planning horizons than the
market processes contemplated for Markets+. Because of this, SPP does not propose that
Markets+ create or establish a comprehensive resource adequacy program, but requires
participants comply with an existing program, such as the Western Power Pool’s Western
Resource Adequacy Program (WRAP). As part of the next phase of detailed market design, SPP
proposes a joint taskforce be created to facilitate joint meetings to discuss the interoperability
and necessary coordination needed between Markets+ and resource adequacy programs.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 46
CONGESTION RENT ALLOCATION
Conceptual approach after the day-ahead market clears, all imports, exports, generators and
load will settle at a local marginal price (LMP). The marginal congestion component (MCC) of
the LMP at each settlement location is multiplied by the cleared MW quantity at that same
location and aggregated across the market footprint each hour. The resulting surplus revenue
collected by the market operator is known as congestion rent and must be allocated back to
market participants.
The proposed congestion rent allocation approach for Markets+ includes the following
elements. SPP currently assumes the following approach for Markets+ congestion rent
allocation. Further development of the eligibility requirements for will be discussed under Other
Considerations and included in the next phase of the initiative:
Congestion rent allocation will be based on OATT transmission service reservations (TSRs), not
transmission schedules.
The congestion rent approach will allocate congestion rents to firm network and point-to-point
(PTP) rights.
Congestion rent allocation will be based on a mapping of each eligible TSR to a source/sink pair,
with the maximum congestion rent allocation reflecting the MW quantity of the applicable TSR,
multiplied by the differential between the MCC at the applicable source and sink locations.
Congestion rent allocation will be based on prevailing flows only (meaning that congestion that
occurs in the opposite direction of a transmission reservation’s source/sink combination will not
result in a payment obligation by that rights holder).
The total congestion rent allocated to transmission customers will be equal to the total
congestion rent collected by the market operator for each hour. This ensures the market
operator is revenue neutral and that uplift charges or other true-ups are not required. This
approach may result in congestion rent allocations that are less than 100% of the nominal
transmission reservation quantity (e.g., reflecting derates).
Each transmission customer will be responsible for providing SPP with the appropriate TSRs,
which will include source, sink, MW limit and time period.
CONGESTION RENT ALLOCATION CAP
NETWORK TRANSMISSION RIGHTS
Unlike PTP transmission service that provides a defined MW capacity for the entire period of the
reservation, network transmission rights are limited to the network customer’s actual load each
hour. A network customer may therefore have more supply from designated network resources
(DNRs) than it has load at a particular point in time, and a methodology must be developed to
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 47
determine the appropriate quantity and source/sink pair(s) for purposes of allocating congestion
rent to network customers.
To achieve this outcome, SPP proposes a congestion rent allocation cap be calculated using the
maximum quantity of network transmission rights set equal to a three-year average of the
customer’s network load multiplied by 103%.
This approach ensures the entities receive congestion rent on the appropriate paths (from
available network resource to network load) and for the appropriate quantity (total yearly load).
This approach provides network customers with an economic value when delivering their DNRs
on their network rights to their load, while also allowing the market to seek more economic
supply when available (making the customer better off).
POINT-TO-POINT RIGHTS
For PTP rights, the congestion rent allocation cap will be based on the MW capacity of each
eligible transmission reservation.
REVENUE NEUTRALITY
To ensure revenue neutrality, the total congestion rents allocated to transmission customers
must be equal to the total congestion rent collected by the market operator.
Conceptually, revenue neutrality is assured by converting congestion rent allocations to a ratio
multiplied by the total congestion rents collected by the market operator:
=
"A"
(
)
(
)
Other considerations:
• In the first phase of the market design, Markets+ stakeholders will need to consider and
approve these design elements.
• Currently, only firm priority seven TSRs will be considered in the congestion rent
allocation. Conditional firm TSRs under defined circumstances will need to be examined.
• Is the congestion rent allocation cap for network customers (103% of the customer’s
network load) calculated yearly, monthly, daily or hourly?
• Should the network customer supply a resource plan in advance of the day-ahead
market that identifies which DNRs it would use to meet its own load, absent a market
optimization? To ensure the resource plan is consistent with the resources the network
customer would have used to meet its load, SPP could simply select the resources
offered into the day-ahead market, starting with the lowest-cost resource until all load is
satisfied.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 48
• Should congestion rent be allocated out on a tiered approach? An example of this would
be to allocate the congestion rents up to the full value of priority seven TSRs followed by
any additional congestion rent being allocated to priority six TSRs.
• Under revenue neutrality, simply applying a single ratio to all TSRs could result in some
TSRs receiving a lower congestion rent allocation as a result of a transmission derates on
unrelated paths. For this reason, SPP proposes to further examine categorizing
transmission rights into zones within the Markets+ footprint. This would allow SPP to
ensure derates to key paths only affect transmission reservations within the same zone,
while leaving transmission rights in other areas of the market footprint unaffected.
FLOW-BASED MARKET OPERATIONS AND PHYSICAL
DELIVERABILITY
SPP intends to operate the bulk electric system in close coordination with the TSP, TOPs and the
reliability coordinator, to the system operating limits (SOLs) and interconnection reliability
operating limits (IROLs), in addition to any transmission constraints associated with transmission
scheduling limitations. SPP systems will calculate the impact of the market dispatch serving load
within the Markets+ footprint to ensure a reliable operation when performing an economic
commitment and dispatch of the participating resources. Any redispatch obligation assigned to
the Markets+ TOP or reliability coordinator will be reflected in an effective limit activated in the
market on the associated modeled transmission constraints. These limits are known as
flowgates.
The proposed approach will ensure maximization of the available transmission system while
maintaining reliability and respecting the market participants' rights on the transmission system
not included in the Markets+ footprint.
Markets+ will respect capacity rights not associated with a Markets+ participant on transmission
scheduling. The Western Electricity Coordinating Council (WECC) path or other transmission
service-limiting elements will be modeled as service flow constraints (SFCs). The transmission
service providers will provide all transmission services, used and unused, to the market operator
via an ICCP link. The market operator will efficiently utilize transmission by continuously
calculating and updating the service flow constraints of all Markets+ participants' transmission
paths.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 49
The following summarizes the expected interaction between Markets+ and service flow
constraints.
• Markets+ does not change the scheduling and transmission service request
methodology as implemented by each TSP.
• Transmission service sold on a path methodology or flowgate methodology basis will
continue to be evaluated and sold as is and in accordance with the TSP’s methodology.
• SPP will evaluate the impact of any transmission service, tag or schedule on any
congestion on flow-based basis. This is done to assess congestion rents.
• Curtailment of any transmission service will continue to be the responsibility of the TSP,
balancing authority and reliability coordinator.
VIRTUALS OFFERS AND BIDS
Convergence between the forward and spot market for energy in Markets+ is an important
measure of market health for two critical reasons.
First, the health of an open market can generally be measured by convergence. In an open
market, intelligent and responsible buyers do not want to pay more for a product than it will be
worth. Likewise, intelligent and responsible sellers do not want to be paid less for a product than
it will be worth.
Second, excessive and systemic divergence between markets leads to arbitrage scenarios where
profits are achieved with little or no risk, while the associated losses occur with little or no means
of avoidance. The behaviors and methods of participation to reap the profits rarely provide
benefit to the overall market since they do not contribute toward convergence. In an energy
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 50
market, these types of divergences are generally a flaw in the model, a gap in the market design
or misadministration of the market.
The majority of Markets+ resource commitment decisions will occur in the day-ahead
horizon. SPP proposes the day-ahead market is not the originator of those decisions, but it is
critically important the voluntary, financial market converge with the expected needs of real-
time for those forward prices to properly inform and incentivize performance in the market.
Convergence bidding
21
is a market design instrument intended to open and converge the
market. Since asset ownership is not required for convergence bidding, any entity with sufficient
credit would be able to participate in the market, increasing liquidity beyond what would likely
be experienced in a market solely consisting of asset-owing participants. Convergence bidding
provides a mechanism for participants to push the markets toward convergence when behavior
in the day-Ahead market leads to divergence.
SPP continues to work with Markets+ stakeholders to determine if convergence bidding should
be part of the initial Markets+ design. It may be possible to delay convergence bidding for a
period of time, e.g., one to two years after Markets+ launch, to allow the market to mature and
allow participants to gain comfort and proficiency in market participation. To have an efficient
day-head market, alternative design features should be developed if convergence bidding is not
part of the initial market design. SPP proposes Markets+ incorporates convergence bidding in
the overall market design in parallel to determining the need for any necessary delay to make
convergence bidding effective.
MARGINAL LOSES
As part of the co-optimization of dispatch and unit commitment, SPP's market will assess the
deliverability of energy to load and the associated transmission system losses to optimize
energy costs. Losses are estimated and reflected as a cost in LMP as the marginal losses
component. The losses are calculated for every node and aggregated to the appropriate
settlement hierarchy. SPP proposes a marginal losses concept instead of the average loss
calculation concept because of the enhanced cost optimization and support from the Federal
Energy Regulatory Commission (FERC) The average loss calculation concept would not be
included in the LMP because of its uniform distribution of the total system losses.
Losses will be included in SPP's footprint load forecast and the market's unit commitment and
dispatch balance, with estimated transmission losses included. In a marginal losses concept,
SPP's market will assess how much an incremental MW injection at every node increases or
decreases the transmission system losses in the footprint.
21
Virtual offers and bids in SPP’s RTO organized market, The Integrated Marketplace.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 51
GREENHOUSE GAS PRICING AND DISPATCH
SPP's market design will include the cost to serve load in states with greenhouse gas (GHG)
programs in its market optimization and will work with participants to implement the necessary
tracking and reporting associated with MWs serving load in the GHG state(s). The current market
design proposal utilizes a zonal approach, where the zone represents the state(s) with a program
requiring collecting and paying GHG costs associated with various resources' carbon emission
attributes. The market optimization will consider the submitted energy offer for all resources and
the emission cost of the generation (GHG cost), which would be submitted to SPP when making
the optimization decision to serve load in a GHG zone. The proposed design allows for the
ability of any offer resource in Markets+ to participate in serving load in a GHG zone. A different
classification of resources is needed to ensure the appropriate GHG emission rate is assigned on
a resource level for internal GHG generation, imports associated with specified resources and
from the rest of the fleet on an aggregate basis. The design supports the classification of three
distinct categories of resources serving the load in a GHG zone: GHG zone internal generation,
specified-source imports and unspecified-source imports.
GHG costs will be captured separately from the LMP for resources imported into the GHG zone
and are settled with the GHG zone load and generation produced or imported into the zone.
The MWs assigned to the zone, all energy produced within the zone and energy imported into
the GHG zone, are subject to the GHG costs, which reflect the calculated price produced by the
optimization solution reflecting the marginal cost to serve load inside the GHG zone.
Through the stakeholder process, SPP will work with the participants to ensure the GHG design:
• Minimizes total production costs with GHG costs considered
• Provides a framework for any capacity to be dispatched to the zone
• Properly accounts for specified and unspecified MWs serving the zone
• Implements a solution that meets the intent of GHG policies
• Ensures that GHG costs associated with imports into the GHG zone only apply to load in
that zone
SUPPLY REDESIGNATION CONCERNS
Resources external to a GHG zone, associated with specified-source imports into the GHG zone,
may be economical and may produce the same energy amount to serve load in the Markets+
footprint regardless of the GHG zone and its costs. In this case, the incremental energy
incentivized by the GHG program may be considered zero. If energy is assigned to a GHG zone
solely based on the existence of a specified-source import designation, it could be considered
by the GHG program as a redesignation of energy carbon-emitting resources may displace. In
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 52
this case, the GHG program objectives would not have accomplished its objective of
incentivizing reduction in generation emissions.
SPP will continue to work with stakeholders to evaluate several proposals to minimize MW
redesignation of energy imported to a GHG zone, including modeling a two-pass solution to
establish a baseline for measuring incremental energy incentivized by the GHG zone.
MARKETS+ COMPATIBILITY WITH EXISTING
CONSTRUCTS
SCHEDULING ACTIVITIES AND BILATERAL TRANSACTIONS
Interchange schedules affecting Markets+ are schedules that source external, sink internal or
have a source and sink external with a POR/POD with at least one participating balancing
authority. Interchange schedules entering or exiting the Markets+ footprint must have
transmission service reservations across the TSPs in Markets+ as necessary to inject or withdraw
energy with non-market areas. As part of the centralized unit commitment and dispatch,
Markets+ will utilize all available transmission to maximize the economic value of pooling
generation to meet the total Markets+ NSI requirement. Markets+ will constrain market flow
within system operating limits as part of the security-constrained economic dispatch. In addition
to constraining the economic dispatch based on the physical capabilities of the transmission
system, SPP proposes Markets+ include constraints to limit market dispatch to reduce market
flow on individual elements or sets of elements to respect external, non-participating entities
transmission rights.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 53
EXHIBIT 5-1: MARKETS+ SCHEDULING EXAMPLE
To illustrate the concept of Markets+ scheduling, consider the example above.
BA1 – BA3 has an Intramarket schedule of 100 MW
BA1 – Ext BA1 has a Markets+ schedule of 250 MW
BA4 – Ext BA2 has a Markets+ schedule of 50 MW
The total obligation to the market is the sum of the load and NSI for participating balancing
authorities.
= 1750 + 350 + 400 + 600 100 + 2000 + 50
= ,
The economic dispatch in this example was 1,900 MW for BA1, 200 MW for BA2, 850 MW for
BA3 and 2,100 MW for BA4. To account for the resulting market flows for balancing authorities,
SPP proposes participating balancing authorities create dynamic schedules. Markets+ will
provide a dynamic schedule adjustment representing the total import/export from market flows
to provide the transparency necessary to support reliability for the Western Interconnection.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 54
For BA1:
+ =
(
+
)
+ =
(
1750 + 350
)
+ =
Market participants may utilize e-tags to document a bilateral agreement to establish a
generation-to-load relationship between contractual entities. The billing arrangements are
specific and confidential to the entities on the tag. SPP proposes the PSE for the e-tag is
responsible for the transaction billing outside of the market and Markets+ does not serve as a
clearinghouse for contractual agreements outside the market. Markets+ settlements could
support financial schedule settlements, allowing for transfer of ownership of energy at a
settlement location. SPP proposes e-tags serve as the data artifact, demonstrating the
generation-to-load relationship and underlying transmission service supporting the
deliverability across the transmission system.
Market participants may utilize e-tags to document transactions with no contract and no
specified generator or load. These e-tags are intended to buy from one market and supply to
another to take advantage of pricing differentials across an interface.
Markets+ uses market dispatch to settle e-tags that enter, leave or wheel through the SPP
Markets+ footprint. This Markets+ settlement methodology is the same for all e-tag
transactions for imports, exports or wheels regardless of whether the market participant has a
contractual obligation for the e-tag document outside the market.
All Markets+ schedules will be settled at the LMP of the interface specified on the tag. The
interface is the point at which the transaction is injected or withdrawn from the Markets+
boundary. The Markets+ settlement locations representing the market's location supporting the
transaction is responsible for the settlement of the exports, import or wheel in the market.
Transmission service must be procured to support schedules from the source to the sink outside
of the Markets+ process.
TYPES OF MARKET SCHEDULES
SPP proposes interchange schedules (for normal and dynamic tag types) identified as part of
schedule creation to distinguish which interchange schedules are intended for the day-ahead
market and which are only intended for real-time.. SPP proposes all markets schedules require
valid TSRs before consideration.
Participants will submit any known interchange to SPP though the day-ahead or real-time
market processes. Market schedules require the follow information:
• Market date
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 55
• Bids and offers for exports and imports
• Market type designation – fixed, dispatchable
• Market transaction designation – real time or day ahead
• MW profile
PSEs cannot create, adjust, correct or extend day-ahead schedules while the day-ahead market
processes. Any adjustment to the tag after-market clearing will be settled as a deviation from
the day-ahead market in settlements.
There are two marketplace transaction types supported for interchange transactions: Fixed and
dispatchable.
FIXED INTERCHANGE SCHEDULES
Fixed interchange transactions are physical transactions that bring energy into and/or out of the
Markets+ footprint. Energy prices are settled at the LMP at the applicable external interface
settlement location. Any entities who submits this type of transaction in Markets+ is the price
taker for that energy.
SPP proposes fixed interchange schedules are supported in both the day-ahead market and in
the real-time market.
DISPATCHABLE INTERCHANGE SCHEDULES
Dispatchable interchange schedules are physical transactions that bring energy into and/or out
of the Markets+ footprint and specify a bid or offer (MWh). SPP proposes these schedules are
supported in the day-ahead market only.
A dispatchable offer specifies both a MW amount and a minimum price the customer must pay
if the transaction clears the day-ahead market.
If the dispatchable interchange schedule is cleared in the day-ahead market, it continues into
the real-time market and is treated as a fixed interchange schedule at the MW level determined
in the day-ahead market. Cleared MW amounts for dispatchable interchange schedules will be
provided to the participant after the day-ahead market run. SPP proposes participants be
required to update tags to reflect the market’s cleared MW amount but could investigate
automatically adjusting the applicable tags as the market operator.
All dispatchable interchange schedules, both import schedules and export schedules, are settled
at LMPs determined in the day-ahead market at the appropriate external interface settlement
location, representing the interface between Markets+ and the applicable external balancing
authority.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 56
IMPORTS
The term import only describes those tags that come into the Markets+ footprint from an
external entity (e.g., CAISO or other non-participating balancing authority). Imports can sink in
any participating balancing authority and will settle at the interface point where the tag first
enters the Markets+ footprint (i.e., the first scheduling entity on the tag that is a participating
balancing authority). Consistent with other organized energy markets, Markets+ does not
deliver external generation to a specific load inside of the footprint. The import is delivered to
Markets+ and the market serves the load. The Markets+ systems use the Sink on the tag to
determine the settlement location to settle the tag.
EXHIBIT 5-2: MARKETS+ IMPORT
Transaction settlement = import MW x interface LMP = 100 x 40 = $4,000 (charge)
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 57
EXPORTS
The term export only describes tags that leave the Markets+ footprint from an internal entity.
The export tag can source in any participating balancing authority. Markets+ identifies export
tags by the last scheduling entity that is a participating balancing authority. The interface point
at the Markets+ footprint border is used to determine the LMP to settle the export tag.
Markets+ does not recognize or use the external loads that receive generation from Markets+
for systems or settlements. The Markets+ systems use the Source on the tag to determine the
settlement location for settlements. Consistent with other organized markets, the export tag
results in delivery from the Markets+ generation fleet, not an individual generator or source.
EXHIBIT 5-3: MARKETS+ EXPORT
Transaction settlement = export MW x interface LMP = -100 x 40 = -$4,000 (credit)
WHEELS
The term wheel or wheel through describes tags primarily external to the Markets+ footprint
even though they may cross multiple boundaries between balancing authority and TSP inside
the market. Markets+ does not recognize or account for external sources or sinks on wheel-
through tags for centralized unit commitment or dispatch. The interface point of the tag’s entry
and exit (Markets+ footprint) are used to determine the LMP difference as needed for
settlements.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 58
EXHIBIT 5-4: MARKETS+ WHEEL
Wheel-through transaction settlement = wheel-through MW x (exit interface LMP – entry
interface LMP) = 100 x (50 - 40) = $1,000 (charge)
MARKETS+ IN AND OUT TAGS
In and out tags include all tags that source and sink within the Markets+ footprint but cross
boundaries into and out of the Markets+ footprint. In and out tags may be treated as internal
transactions and settled as market flow, or in and out tags may be treated as import/export tags.
SPP proposes these types of transactions are discussed in detail once the anticipated Markets+
footprint is identified.
CONGESTION MANAGEMENT
SPP’s market assesses transmission deliverability when making commitment and dispatch
decisions in SCUC and SCED. The transmission constraints are modeled as flowgates that
represent equipment limitations, SOLs or IROLs. Transmission constraints may represent any
identified WECC paths or zonal transfer limitations, representing service contractual limitations
granted to the Markets+ entities. These constraints would be modeled as service flow
constraints. SPP captures any cost to redispatch around these transmission constraints as
congestion costs represented in the marginal congestion cost (MCC) component of the LMP.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 59
Congestion management should be coordinated with entities outside the Markets+ footprint to
ensure equitable redispatch and curtailment across the bulk electric system in the Western
Interconnection. SPP processes allow for any coordination reflected in operating guides,
Western Interconnection Flow Mitigation Process (WIUFMP) or through a joint operating
agreement if established with neighboring entities (e.g., market-to-market agreement or other
flowgate or path coordination agreements).
SPP will facilitate, lead and advocate for seams coordination with fair and equitable outcomes
across the Western Interconnection, including the expansion of the Western Interconnection
coordination congestion management and other seams coordination agreement where
appropriate.
GREENHOUSE GAS TRACKING AND REPORTING
For states with programs requiring the GHG market design component, MWs assignment by
resources for internal GHG zones and specified-source imports is necessary for settlements. SPP
will not track the MW source on a resource-specific basis for unspecified source-imports. SPP
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 60
anticipates the need for the market operator to support tracking and reporting the production
of generation by fuel type in its footprint beyond what's necessary for the GHG zones with
pricing requirement (I.e., cap and trade or cap and invest programs). Through the appropriate
stakeholder processes and forums, appropriate metrics, format and data requirements should be
established to facilitate any tracking and reporting efforts the industry needs to meet state
reporting mandates.
SPP and its stakeholders will determine the appropriate entities to receive the necessary data
from the market operator to establish and implement business rules needed to associate
generation production with load consumption by state or region. These rules should be
established and implemented outside the market operator's purview.
RESERVE SHARING GROUP
Markets+ does not include reserve sharing group (RSG) or balancing authority services. Each
participant is responsible for meeting their obligation to the appropriate RSG and the balancing
authority. SPP proposes the contingency reserves (CR) capacity assigned for the RSG and
balancing authority CR obligations is held back from the market. Markets+ will not commit or
dispatch the capacity held back by CR.
Participants will continue to be required to ensure the deliverability of the CR. Any transmission
service capacity needed to facilitate CR deployment may reduce the deliverability of the energy
product dispatched by the market.
Markets+ does not intend to interfere with any RSG construct. The service offering does not
include a CR co-optimization across the market, and the obligation to clear and deploy reserves
will continue to be a balancing authority responsibility respecting the RSG rules.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 61
DIVISION OF RESPONSIBILITIES/NERC FUNCTIONAL MODEL
A summary of each functional entity's focus within an organized market construct is discussed in
table-1. The list does not include all information or tasks required for the functional areas. The
relevant functional entities discussed in this document are the reliability coordinator (RC),
balancing authority (BA), transmission service provider (TSP), transmission operator (TO),
generator owner/generator operator (GO/GOP) and market operator (MO).
The market operator is responsible for the centralized commitment and dispatch of resources.
The MO does not assume the responsibilities of the RC, TOP or BA. Though the market operator
may facilitate and coordinate these responsibilities, entities are still responsible for their
respective functions and responsibilities as recognized in the North American Electric Reliability
Corporation (NERC) functional model and as the applicable entities in the NERC reliability
standards.
Each of the aforementioned functional entities will continue to be responsible for performing
their functions and responsibilities as outlined by their governing document, business practices
and NERC and WECC standards.
Reliability
Coordinator
Monitor and grid management, coordinate emergency operations,
manage system restoration, perform reliability analysis, coordinate
congestion management, curtail interchange schedules.
Balancing
Authority
Support interconnection frequency, situational awareness, regulation
service deployment, load-following through economic dispatch,
interchange implementation and schedule control, control net actual
interchange.
Transmission
Operator
Operates or directs operation of transmission facilities, responsible for
transmission system restoration and mitigating transmission
emergencies. May coordinate congestion management with the
market operator.
Transmission
Service Provider
Receives and evaluates TSRs per the Open Access Transmission Tariff
(OATT), determines and posts ATC values, administers OASIS for
respective tariff rules, approves/denies TSRs, approves interchange
transactions from the TSP perspective, allocates transmission losses.
Transmission
Owner
Owns and provides for the maintenance of its facilities, specifies
equipment operating limits, supplies this information to the TSP, RC,
TP and PC. In some cases, has contracts or interconnection agreements
with generators or other transmission customers.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 62
Generator
Owner/Operator
Operates or directs the operation of generation facilities, supports the
needs of the BES up to the limits of the generating facilities in its
purview, maintains generation schedules, fuel supplies and frequency
support.
Purchasing-Selling
Entity
Arranges for and takes title to energy products that it secures from a
resource for delivery to a LSE, arranges for transmission service with
the TSP and initiates bilateral interchange between BA areas.
Load-Serving
Entity
Arranges for the provision of energy to its end-use customers, may
also be GOs and can self-provide or have contracts with other GOs for
capacity and energy to serve LSE customers, or purchase capacity and
energy from non-affiliated GOs through a PSE.
Market Operator
May implement instructions from BA/TOPs utilizing the SCED, follow
respective tariffs, and perform the role of resource integration
following market and tariff rules. The MO is not a NERC-defined
reliability function and does not have compliance requirements with
NERC.
The market operator will have key interactions with these entities to exchange necessary
information and implement any required instructions or attribute changes into the market
system to ensure the system's reliability and respect equipment limitations and transmission
service limitations where appropriate. Table-2 summarizes possible points of interaction with the
market operator.
Reliability
Coordinator
Depending on the business needs and willingness of the RCs, the MO
may be able to communicate with the RC for effective and more
streamlined communication. This would likely be limited to congestion
management coordination. This does not replace the need for
coordination between the RC and other entities like the BA, GOP and
TOPs.
Balancing
Authority
In Markets+, SPP would offer commercial services such as integrating
resources ahead of the operating window, typically a five-minute
interval horizon and settlement after implementing interchange and
dispatch. The market implements the resource plan in the operating
window, making adjustments as necessary, to meet reliability
requirements and balancing needs economically and following
established market rules.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 63
In Markets+, close coordination between them operator and the
balancing authorities is expected. The market operator performs
resource integration tasks and is assigned the following:
• Determining the generation dispatch plan (unit commitment)
ahead of time.
• Integrating scheduled interchange into that generation plan.
• Provide the generation dispatch plan to the balancing authority
ahead of RT.
• Balancing authorities will continue to be responsible for BAL
standards.
Transmission
Operator
Coordination with the MO may be appropriate to communicate
transmission system or generation limitations that must be enforced in
the market system to mitigate reliability conditions.
Transmission
Service Provider
Markets+ may require the TSPs to communication the total transfer
capability and available transfer capability on transmission constraints
and the transmission rights held by participants.
Transmission
Owner
Markets+ may require the TSPs to communication the total transfer
capability and available transfer capability on transmission constraints
and the transmission rights held by participants.
Generator
Owner/Operator
GOPs may receive dispatch instructions from the market system to
streamline the communication to the generation fleet.
Purchasing-Selling
Entity
The SPP MO with have a secondary relationship with the PSE.
Load-Serving
Entity
The SPP MO with have a secondary relationship with the LSE.
SEAMS
SPP understands appropriate consideration of market seams issues is a key element of the
Markets+ design. Absent a move to a full RTO with BA/TSP consolidation, SPP expects many of
the existing seams observed in the west will continue to exist in the future, such as seams
between BAs, between TSPs, between bilateral markets and organized markets and between
multiple organized markets.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 64
SPP believes Markets+ provides a valuable opportunity to more effectively manage these seams
to support and enhance reliability for the western grid, while producing more equitable
outcomes and increasing benefits for Markets+ participants relative to today. This is possible
because the Markets+ design proactively contemplates support for existing bilateral
transactions and the OATT transmission framework, while SPP as market operator will work in
close coordination with TSPs and BAs to clearly define and perform the roles and responsibilities
assigned to each entity.
Perhaps most importantly, Markets+ will enable a peer-to-peer approach to manage seams
issues between markets (including CAISO markets) to ensure the interests and priorities of
Markets+ members are appropriately considered in resolving seams issues, and allowing SPP
and its stakeholders to achieve improved trade outcomes relative to the status quo.
To support this objective, SPP proposes to form a seams task force supported by SPP staff and
stakeholders to support seams management and future negotiation efforts.
TRANSMISSION
The market operator (MO) will be responsible for economical dispatch of generation throughout
the market footprint. The transmission service provider (TSP) and transmission owner (TO) will
continue to own and operate the transmission system. The market region is broader than a
single transmission provider’s system and uses transmission and resources differently than
traditional bilateral operations. Regional, non-pancaked transmission use facilitating the receipt
of energy from any resource in the market region to meet load obligations is necessary to
facilitate the most economical market solution. TSPs within the Markets+ footprint will maintain
their open access transmission tariff (OATT), administer their OASIS and continue to sell firm and
non-firm transmission service as they normally do before the market window. Markets+ will
economically dispatch energy across the market footprint using transmission capacity less any
capacity not available for market use (e.g., capacity owned by a non-market participant,
reliability set asides, etc.). Markets+ depends upon the TSP to provide accurate transmission
service reservation (TSR) data as needed to run the market systems and settle market energy
with market participants. This information will be provided via a secure, electronic format.
Transactions that either import into or wheel out of or across the Markets+ footprint will
continue to pay pancaked transmission rates based on the approved rates of the TSPs whose
systems make up the wheel. Revenues associated with imports, exports and wheel through-and-
out transactions will be applied to the TSP’s annual transmission revenue requirement (ATRR) as
a revenue credit toward overall ATRR and will not be part of any revenue recovery for market
use of transmission.
The Markets+ system will create dispatch signals to distribute market flow between balancing
authorities within Markets+. These dispatch signals will be associated with dynamic tags
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 65
between these balancing authorities. Since dynamic tags will be between balancing authorities,
these transactions will require a TSR to document the transaction on the TSP’s OASIS with a
special sub-type of service known as market transmission service (MTS).
MARKET TRANSMISSION SERVICE
Markets+ will utilize regional market dispatch to serve all participating load, causing revenues
from short-term firm and non-firm transmission capacity sales to decrease. A new product, MTS,
will facilitate the receipt of energy from any resource in the market region to meet load
obligations to enable regional market use of the transmission system. The MTS portion of ATRR
will be recovered through a market charge and will be applied to all energy and load cleared in
the real-time market to recognize the market use of transmission and to offset the expected
reduction of short-term firm and non-firm transmission capacity sales.
The Markets+ Transmission Working Group will determine OATT language used to define MTS
in each TSP’s respective OATT. SPP’s tariff filing will reference MTS in each OATT. Market use
compensation is provided from the market via an MTS billing determinant using a combined
revenue requirement from the OATTs as described below. The revenue requirement for MTS will
be an annually established fixed amount. The per-megawatt hour (MWh) charge for MTS will
vary based on the total amount of energy cleared in the real-time market and will apply to all
energy (generation and load) in the Markets+ footprint. This varying, energy-based ratio share
charge will collect a fixed MTS amount hourly. The variation is not expected to be large given
the charge is based on all energy and load settled in the market, and the MTS amount is
expected to be small relative to total ATRR in the market. Calculation of the MTS revenue
recovery amount (RRA) is discussed in further detail below.
The MTS revenue recovery amount is defined by a transmission provider’s qualified recovery
amount (QRA), which is based on the revenue a TSP historically received from sales of short-
term firm (STF) and non-firm (NF) transmission service. Any under or over collection of MTS
revenue collected by the market would be applied as an adjustment by the respective TSP when
calculating future ATRRs and associated transmission rates. An average of a transmission
provider’s previous three year STF, NF and total ATRR will be used to establish the initial QRA.
(
)
= ( 3 + )
A ratio of STF plus NF versus total ATRR will be calculated for each TSP, known as a qualified
revenue ratio (QRR). This ratio will be applied to current and future year ATRR to account for
changes in ATRR over time. For example, if a TSP’s initial total ATRR is $120 million with $12
million in short-term firm and non-firm sales, the ratio of STF+NF versus total ATRR is 10%. The
10% ratio will be applied to the ATRR for current and future years to determine the QRA to be
recovered for MTS. Should ATRR go up to $140 million in a future year, for example, the amount
of qualified revenue would go up to $14 million based on the TSP’s established MTS QRR
applied to the TSP’s updated ATRR. SPP will used an average of the previous three year’s STF
and NF revenue recovery to establish the MTS QRR for each participating TSP versus the
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 66
average of the TSP’s total ATRR for the previous three years. The Markets+ Transmission
Working Group will establish protocols for updating the QRR calculation in future years.
() =
(
3
+
)
( 3
)
While traditional short-term firm and non-firm sales of transmission service will likely decrease
with Markets+, it is unlikely sales of either transmission product will completely cease. To
address this condition, a recovery scaling factor (RSF) will be applied to mitigate potential over
collection for MTS. The Markets+ Transmission Working Group will establish the RSF value on
participant ATRR data and will review and adjust based on the MTS review process established
by the group. Any changes to either the MTS QRR or RSF will be applied to future year
calculations of the MTS RRA. At no time will the RSF exceed 100%.
(
)
= 0 100%
() =
(
)
TRANSMISSION REVENUE DISTRIBUTION FOR
MARKETS+
The method of revenue distribution to TSPs is based on a ratio of each TSP’s MTS QRA to the
total MTS QRA being recovered.
=
USE OF TRANSMISSION SERVICE FOR MARKET
DISPATCH
Markets+ compensates for the use of transmission to deliver energy between participating
generators and load using MTS. Transmission used to deliver market energy will be comprised
of all transmission that is unsold by transmission providers within the Markets+ footprint,
Markets+ participants’ rights not used for deliveries outside of the Markets+ footprint or
otherwise unscheduled in addition to service associated with intramarket schedules submitted
to the market (i.e., the total transmission capabilities of those entities participating in Markets+
less any non-market and set-aside transmission capacity). At 0X00 MPT, TSPs will communicate
transmission availability information to the market operator for use in subsequent market runs.
The Markets+ Transmission Working Group will establish transmission set-aside protocols to
ensure maximum transmission available for market use while respecting transmission customer
autonomy.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 67
Network transmission service is based on peak demand, not a specific point of receipt (POR) or
point of delivery (POD) path. The network customer designates generating units to serve
network load under its network transmission service. If Markets+ delivers lower-cost energy to
the customer’s network load rather than via a network customer’s generating units, the
generation is essentially delivered from non-designated network resources. The network
customer will need to maintain network transmission service in the same fashion as today to
facilitate energy delivery to their network load. MTS will facilitate the delivery of the least-cost
resources, subject to transmission availability, to network load irrespective of generation
location and transmission provider area in the Markets+ footprint.
Point-to-point (PtP) service is sold on a specific POR/POD, meaning a specific POR/POD is
shown on the PtP TSR. MTS functions as a redirect of firm transmission in this instance and
allows for delivery of least-cost energy, subject to transmission availability, from across the
entire Markets+ footprint.
DAY-AHEAD TRANSMISSION
Once transmission availability for market use is determined, a security-constrained economic
dispatch solution (SCED) will be derived based on DA bids and offers while respecting OATT
rights committed before the day ahead. All transmission made available for the day-ahead
market from the transmission service provider should remain available until after the day-ahead
market completion to avoid over selling transmission. SPP will communicate the results of any
price sensitive dispatchable schedules to participants with the results of the day-ahead market.
Market participants should update their tags so the TSP can reflect the remaining available
transmission in their respective OATT processes leading up to the real-time operating window.
REAL-TIME TRANSMISSION
To produce the most efficient market solution in real time, the Markets+ security constrained
economic dispatch will use MTS to make use of all available participating transmission capacity
in the market footprint to optimize the commitment and dispatch of participating generators.
Markets+ will redispatch via the SCED to manage transmission constraints loading using real-
time shift factors on a flow-based basis. MTS will not displace other forms of firm or non-firm
transmission service offered by a participating transmission provider. Instead, MTS makes
intrahour use of otherwise unsold out-of-the-market transmission capacity, the existing network
and point-to-point transmission service previously procured by transmission customers in a
manner similar to non-firm redirect use of firm transmission. Markets+ use of MTS will be
compensated at the MTS rate and will be applied to all energy and load cleared and settled in
the real time market.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 68
MTS cannot be used as a substitute for point-to-point or network integration transmission
service to serve load or for off-system sales of capacity or energy to provide direct or indirect
transmission service to a third party. For off-system purchases and sales, customers must obtain
transmission service from the applicable transmission service providers, as needed, to import
energy from outside the market footprint or to export off-system sales, following FERC and
North American Energy Standards Board (NAESB) regulations.
DAY-AHEAD CLEARING PROCESS
Purchasing-selling entities (PSEs) may continue to submit current and next day TSR requests to
their TSP OASIS during the SPP Markets+ day-ahead clearing. It is expected transmission offered
in the DA market for the next day is not resold before posting of the DA market results for the
TSP to have an accurate ATC calculation to approve or deny new short-term requests for the
next day period. TSPs will hold confirmation on next day transmission requests until the DA
market completes to avoid over selling.
Once the Markets+ day-ahead clearing process is complete, the SPP system will send a tag
market adjustment directly to day ahead Markets+ BA-to-BA dynamic tags for any submitted
price sensitive imports or exports. For example, if the tag is not cleared for the total amount
offered, the system will adjust the MW on the tag to the correct cleared MW amount. The PSE
will then approve the adjustment as appropriate. Market transmission use will be communicated
to TSPs via a secure, electronic format.
Once the day-ahead tags have been market adjusted, a PSE/TC is free to make an additional
adjustment to their tags to free up any TSR capacity not used in the day-ahead market. The
PSE/TC may begin submitting new short-term TSR on their TSP OASIS and tag for real-time
operations.
The PSE will continue submitting TSR and tags under existing operating guidelines for the
remainder of the operating day and beyond.
MARKET SETTLEMENTS
In 2020 SPP implemented a new settlement system that handles all market and transmission
settlements in the SPP footprint. The SPP Settlements Management System (SMS) is a
proprietary system owned and maintained by SPP, which eliminates the reliance on external
vendors. This allows SPP to decrease implementation time, cut costs and provide a system that
is flexible, adaptable and scalable to fit settlements needs across the footprint. Markets+
settlements could be accommodated in our current SMS without requiring any new technology.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 69
The proposed Markets+ settlement timelines and processes outlined below is the high-level
overview of current SPP market settlements as defined by the SPP's current Open Access
Transmission Tariff (OATT) and market protocols in the SPP RTO. The settlement system is
flexible, but based on previous experiences and member suggestions, SPP recommends keeping
the same guidelines listed below, which drive our current market processes. These guidelines
can be adopted for Markets+ or adjusted to accommodate design differences if required to
better suit the participants' needs.
SETTLEMENT TIMELINES
There will be three standard daily postings: S7, S53 and S120, where the number indicates
calendar days after the operating day. For example, S7 posts seven days after the operating day.
There will not be any postings on weekends or holidays. These will move to the next business
day. Meter data are due OD+4 (S7), OD+48 (S53) and OD+110 (S120). The S120 allows for
sufficient time for meter data to be finalized. Any meter updates after the S120 will be limited to
submitted and granted disputes according to the dispute guidelines.
SPP will create settlement statements and settlement determinant reports daily for each market
participant and associated asset owner, detailing the cost responsibility for each.
Settlement determinant reports provide sufficient detail to verify billing amounts and complete
the market participant's internal accounting.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 70
The commercial model determines how everything is mapped in the settlement process, so SPP
will work with each market participant on how to model their respective entities. This gives the
market participant flexibility regarding how their resources and loads are settled.
SETTLEMENT STATEMENT PROCESS
DAILY SETTLEMENT STATEMENT
The settlement statement(s) will be made available for each operating day and published for
market participants and associated asset owners electronically through the Marketplace Portal
on business days. An S7, S53 and S120 scheduled settlement statement will be created for each
operating day. SPP will create resettlement statements for any given operating day as defined
below.
For each market participant, settlement statement(s) will denote:
• Operating day
• Associated asset identifier
• Market participant identifier
• Type of statement (S7, S53, S120, R<ddd>, where ddd represents the number of days
after operating day)
• Statement version number
• Unique statement identification code
• Market services settled
Settlement statements will be available electronically and include charges and credits by asset
owner, appropriate settlement interval and settlement location.
RESETTLEMENT STATEMENTS
SPP will produce an ad hoc settlement statement through the resettlement of an operating day
to correct a previously posted settlement statement for an operating day. Resettlements will be
limited to the following reasons:
• The correction of data resulting from an SPP software error and/or an SPP data error
per the discretion of the transmission provider in accordance with the rules specified
under the tariff.
• A granted dispute per the approved guidelines.
• Per court order or Federal Energy Regulatory Commission (FERC) order.
Resettlements are limited to 330 days following the operating day, allowing for a dispute period
following the relevant resettlement statement before reaching the 365-day limit set by the tariff.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 71
The 365-day limit enables market participants to have some level of finality that the financial
books can be closed on days beyond that period (barring a FERC order or instruction).
Market participants can refer to resettlements statements according to the number of days
following the operating day that the results are posted to the portal, e.g., a resettlement posted
200 days following the operating day would be referenced as the R200 resettlement.
SPP will post a resettlement schedule through the portal indicating they will resettle a specific
operating day and the date the resettlement statement will be issued.
SETTLEMENT INVOICE
SPP prepares weekly settlement invoices from settlements statements on a net basis with
payments made to or from SPP. Each market participant with a net debit balance will pay any
net debit whether or not there is any settlement and billing dispute regarding the amount. Each
market participant with a net credit balance will receive the balance shown on the settlement
invoice adjusted for balances not collected from market participants with net debit balances.
TIMING AND CONTENT OF INVOICE
SPP will electronically post an invoice based on any scheduled settlement statements or
resettlement statements produced since the prior settlement invoice for each market participant.
SPP will group invoice items by type of statement (S7, S53 and S120 scheduled settlements and
resettlements) and will sort by operating day within each category. Each settlement invoice will
contain the following:
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 72
• Market participant ID – the name, address and contact information for the market
participant being invoiced.
• Net amount due/payable – the aggregate summary of all charges owed by or due to
a market participant.
• Amount due/payable by asset owner, operating date and settlement date — the
aggregate of charges owed by or due to an asset owner listed by operating day,
which is identified by calendar date.
• Time periods – the time period covered for each settlement statement run date
identified by a range of calendar dates.
• Run date – the date the invoice was created and published.
• Invoice reference number – a unique number generated by SPP for payment-tracking
purposes.
• Settlement statement ID – an identification code used to reference each settlement
statement invoiced.
• Payment date and time – the date and time invoice amounts are to be paid or
received.
• Remittance information details – details including the account number, bank name
and electronic transfer instructions of the SPP account to which any amounts owed
by the invoice recipient are to be paid or of the invoice recipient’s account to which
SPP will draw payments due.
• Overdue terms – the terms applied if payments are received late.
• Late fees.
• Miscellaneous charges from tariff billing not otherwise covered above with details
provided or referenced on what the miscellaneous charges include and how they are
derived.
INVOICE CALENDAR
Weekly invoices will be distributed every Thursday by no later than 8 a.m. CPT, except for
holidays. Weekly invoices will include the seven daily settlement statements (scheduled
settlements and any resettlements) produced for the previous Wednesday through Tuesday
cycle. Market participant balances owed to SPP are due by 5 p.m. CPT on the first Wednesday
following the Thursday invoice date. Balances owed by SPP to market participants will be paid
on the second Friday following the invoice date by 5 p.m. CPT.
DISPUTES
A market participant may dispute items outlined in any settlement statement. The dispute must
be filed using the request management system with the following minimum content:
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 73
• Request type
• Subject
• Full description
• Statement type
• Charge type
• Settlement location
• Operating day
• Start interval
• End interval
• Dispute amount
• Proposed resolution
DISPUTE SUBMISSION TIMELINE
A market participant may dispute the settlement of any operating day within 90 calendar days
after the posting of the S7 scheduled settlement statement for that operating day. In the case of
the S120 scheduled settlement and any resettlement statements, a market participant may only
dispute incremental material changes that occur between the postings of:
• The S53 and S120 scheduled settlements
• The S120 scheduled settlement and the first resettlement statement
• Two consecutive resettlement statements
Material is currently defined as a dispute when more than $2,000 is at issue for the market
participant for the impacted operating day. A dispute relating to an S120 scheduled settlement
or resettlement statement must be filed within 30 calendar days following the posting of the
applicable settlement statement the market participant wishes to dispute.
DISPUTE STATUS
Each dispute will have a defined status. Valid status designation includes:
• Open and closed: A dispute will be deemed open when submitted promptly and
completely. Closed is the final status for all disputes.
• Denied: The dispute will be denied if SPP concludes the information used in the
dispute is incorrect. If the market participant is not satisfied with the outcome of a
denied settlement and billing dispute, they may proceed to external arbitration as
described in the dispute resolution section of the tariff.
• Granted: SPP may determine a settlement and billing dispute is granted. Upon
resolution of the issue, the settlement and billing dispute will be processed on the
following prescribed settlement statement for the operating day.
• Granted with exceptions: SPP may determine a settlement and billing dispute is
granted with exceptions when the information is partially correct. SPP will provide the
exception information to the market participant.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 74
INVOICE PAYMENT PROCESS
OVERVIEW OF PAYMENT PROCESS
Payments will be made in a two-step process where:
• All settlement invoices due with net debits owed by market participants are paid by 5
p.m. CPT of the first Wednesday following the Thursday invoice date.
• All settlement invoices due with net credits owed to market participants are paid by 5
p.m. CPT of the second Friday following the invoice date.
Payments due to SPP and payments due to market participants will be made by electronic funds
transfer (EFT) in U.S. dollars.
SETTLEMENT CATEGORIES
The following (dependent on the approved market design) categories will be included in the
daily settlement across day ahead and/or real time:
• Energy (physical and virtual)
• Flex products
• Congestion rents
• Make-whole payments
• Greenhouse gas
• Over collection of losses
• Out-of-merit energy
• Market transmission service use
• Import/export transactions
• Miscellaneous adjustments
• Revenue neutrality uplift
• Applicable distribution charges
Three distribution methods can be applied for distributing uplift: Load ratio share, market
activity and cost causers (deviators). These distribution methods can be applied to the entire
market or to the impacted balancing authority. Load ratio share will allocate costs to any entities
with withdrawals (load or exports) from the market footprint. The market activity will distribute
costs to any entity participating in the operating day market, defined as generation, load,
imports, exports and virtual activity. The last method is cost causation. This will allocate costs to
any entity that deviates in real time from the day-ahead market awards or for entities with
generation that deviates from real-time dispatch. SPP will work with stakeholders to determine
how to use these various methods to apply cost allocation correctly and fairly across the
different distribution charge types.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 75
MARKET MONITORING
BACKGROUND AND EXPERIENCE
The SPP Market Monitoring Unit (MMU) is the market monitor for the SPP Integrated
Marketplace and the Western Energy Imbalance Services (WEIS) market. MMU staff worked with
SPP staff and market participants during the design and implementation of the SPP Integrated
Marketplace and WEIS market and continues to work with SPP to ensure its markets are efficient
and fair The MMU staff possess a diverse range of skills and expertise, including degrees in
engineering, economics, finance, accounting and information technology.
MMU staff comment on numerous SPP filings at Federal Energy Regulatory Commission (FERC)
regarding proposed changes to the SPP and WEIS tariff and provide independent comments on
FERC notices of proposed rulemaking, notices of inquiry and FERC orders. Numerous examples
of MMU comments and positions on market issues can be found in Section 1.5 of this service
offering.
The MMU remains engaged in appropriate stakeholder groups and discussions. The MMU
strives to be transparent when commenting in these groups, ensuring SPP staff and market
participants are aware of the position of the MMU before formal comments and interventions
are made at FERC. The MMU collaborates with SPP staff and market participants when
addressing market issues and concerns. While there may be some issues in which it cannot
waiver, the MMU listens to the concerns of SPP stakeholders and considers their input, explains
its views, positions, reasoning and works with SPP staff and market participants to develop
workable solutions to improve market outcomes.
MISSION STATEMENT AND OBJECTIVES
MISSION STATEMENT
The mission of the MMU, as documented in the SPP Open Access Transmission Tariff (OATT), is
to “(a) monitor and report on possible abuses of horizontal and vertical market power and
gaming in Markets and Services by an Market Participant; and (b) identify market design flaws
and recommend any changes in design to improve the operation of Markets and Services for
the benefit of consumers and Market Participants’ compliance with market rules.”
The MMU achieves this mission through consistent engagement in stakeholder forums and
FERC proceedings, continuous market surveillance and analysis and transparent reporting of
market results and analysis in publicly posted reports and discussions.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 76
OBJECTIVES
The MMU works to ensure its functions and activities are implemented fairly and consistently
and to protect and foster competition while minimizing interference with open and competitive
markets. This includes evaluating existing and proposed market rules, tariff provisions and
market design elements. The MMU acts proactively, making recommendations to improve the
operation of markets and prevent the exercise of market power in advance rather than
punishing offenders afterward.
The MMU has an obligation to report any weaknesses or failures in the market design and
market rules, including those not resulting in just and reasonable prices or providing
appropriate incentives for investment in needed infrastructure. The MMU recommends
proposed rules and tariff changes to SPP staff, appropriate FERC staff and other interested
entities, like state commissions and market participants. The MMU reviews the performance of
the market and provides an annual report on the state of the market with recommendations to
improve the efficiency and performance of the market.
INDEPENDENCE
The SPP MMU is independent of SPP, FERC and market participants. The SPP MMU reports to
the Oversight Committee, a subset of the SPP board of directors, excluding any SPP
management representatives. By reporting directly to the Oversight Committee, the MMU
business-related activities are not managed by SPP staff or management. The Oversight
Committee conducts detailed oversight of the MMU by approving the MMU’s budget and goals
and evaluating the MMU’s performance on an annual basis. The Oversight Committee’s
objective is to ensure MMU independence by meeting with the MMU, receiving reports on a
quarterly basis, and discussing any concerns that could adversely affect the ability of the MMU
to be independent or effectively execute its responsibilities. The vice president of the MMU also
meets regularly with a member of the Oversight Committee to keep current on MMU activities.
Independence from market participants allows MMU staff to perform those activities necessary
to provide impartial and effective market monitoring. The MMU informs SPP staff and market
participants during discussions that the role of the MMU is advisory and non-decisional. Because
the MMU is truly independent, it does not vote in stakeholder processes and does not force or
intimidate SPP staff or its stakeholders to take a position.
The MMU is also independent of FERC. The MMU monitors FERC proceedings and helps to
shape FERC policy by filing comments and communicating with FERC staff where appropriate.
The MMU has documented policies regarding the functions it is and is not allowed to perform
as part of its obligations under the SPP OATT. These documents strengthen MMU autonomy,
which has been an effective model of independent market monitoring for both SPP and the
WEIS markets.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 77
SCOPE OF RESPONSIBILITIES
The MMU will monitor markets and services by reviewing and analyzing market data and
information.
MONITORING AND SURVEILLANCE
The MMU has established tools and processes to monitor for potential gaming and
manipulation in the market. The MMU performs its monitoring responsibilities by reviewing and
analyzing market data and information. Examples of the type of data and information monitored
include resource offer data, virtual bids and offers in the market, export and interchange
transactions, commitment and dispatch of resources, market clearing prices and transmission
and generator outages. The MMU monitors for potential instances of market manipulation and
reports on any possible manipulation in a timely manner. The MMU refers the potential gaming
or manipulation activity to the appropriate FERC staff.
MITIGATION
The MMU is charged with protecting the markets from market power abuse. A sound market
design can help prevent abuse. Sound design includes development of offer floors and ceilings
and automated mitigation measures. Effective mitigation should work to prevent the abuse of
market power. The approach used in SPP’s markets includes a conduct and impact test, along
with a participant-developed and MMU-approved mitigated offer policy. These policies can
include opportunity costs where appropriate, including for storage-based hydroelectric
generation resources.
Per the tariff, the MMU monitors for potential abuses in the market associated with certain
categories of market participant behavior, including “(1) economic withholding; (2) uneconomic
production; (3) physical withholding; (4) uneconomic virtual bids and virtual offers; and (5) other
items as specified in the tariff.” The MMU takes action as necessary, and as defined by the tariff,
to apply the appropriate mitigation measures.
Mitigation design should reflect the conditions of each particular market. In the WEIS market,
the MMU determined that system wide market power was prevalent due to the structure of the
market participants. The MMU, in coordination with SPP staff, recommended a mitigation design
to limit the exercise of system wide market power. Given the makeup of the market, the MMU
does not see a need for a comparable mechanism. The mitigation construct within Markets+
should reflect the structural conditions within the market footprint.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 78
REPORTING AND TRANSPARENCY
The MMU reports on the performance of the market on an annual, quarterly and monthly basis.
The MMU presents the results of these reports to the market participants, SPP staff, SPP board
of directors, and FERC. In its Annual State of the Market reports, the MMU makes
recommendations for enhancements to improve the efficiency and performance of the market.
In addition to routine reporting, the MMU publishes ad hoc reports as needed in response to
significant market impacts or changes. Recent reports published by the MMU include a report
on the impact of the February 2021 winter weather event and recommendations to address
deficiencies, a paper on virtual transactions in the SPP market and a report on the current
funding issues in the congestion hedging market. Earlier reports published by the MMU include
a white paper on self-committing resources in the market and a Coordinated Transaction
Scheduling (CTS) study. The MMU often includes a special issue in its quarterly reports
highlighting interesting market results, significant performance issues or inefficiencies in the
market.
In its independent report on the February 2021 winter weather event, the MMU made multiple
recommendations for significant enhancements, including resource adequacy and price
formation.
SPECIAL PROJECTS
In addition to the responsibilities described, the MMU engages in other efforts, as appropriate,
for its obligations under the tariff. One example of this engagement is the MMU participation in
the Regional State Committee (RSC) and Organization of MISO States (OMS) efforts to improve
seams coordination between SPP and MISO. The RSC AND OMS asked the MMU to participate
in the efforts to help these organizations prioritize the scope of work identified for analysis. In
addition to aiding in the prioritization efforts, the MMU performed analysis on many of seams
issues identified, including publishing a white paper assessing the potential benefits of an
interchange optimization process between the SPP and MISO markets.
MARKET ENGAGEMENT AND RECOMMENDATIONS
The MMU was engaged in the development and implementation of the SPP Integrated
Marketplace and the WEIS Market. The MMU continues to monitor these markets and
participate in stakeholder groups, providing comments and recommendations where
appropriate.
If the MMU discerns any weaknesses or failures in market design and market rules, including the
determination that markets and services are not resulting in just and reasonable prices or
providing appropriate incentives for investment in needed infrastructure, the MMU will advise
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 79
the appropriate organizational group of SPP, the president of SPP, the RSC, appropriate state
authorities, FERC staff and relevant market participants
22
.
INTEGRATED MARKETPLACE
The MMU remains engaged in stakeholder groups and activities and provides comments
proposed market changes and enhancements. The MMU provides comments in multiple forums,
including stakeholder and FERC processes, sometimes supporting the proposed changes and
sometimes opposing those changes or identifying a more appropriate enhancement. The MMU
has made multiple recommendations in its annual state of the market reports, some which have
been addressed and some which are still pending. A subset of those comments and
recommendations focusing on effective mitigation, efficient commitment, dispatch and prices
are provided below.
EFFECTIVE MITIGATION
The MMU has sponsored specific enhancements to improve mitigation, including increasing the
accuracy of cost information and reducing the time to update frequently constrained areas.
MITIGATED STARTUP AND NO-LOAD OFFER MAINTENANCE COSTS
The MMU proposed including major maintenance expenses in the cost-based or mitigated
offers. The MMU noted by allowing major maintenance costs to be included in the mitigated
offers, market participants would be able to more appropriately reflect the costs of starting and
running their resources. The MMU noted that this enhancement would improve overall unit
commitment decisions by ensuring the most economic resources were committed.
ALLOW LOCALLY COMMITTED RESOURCES TO BE MADE WHOLE TO COST PLUS 10%
Under the initial market design, resources committed for local reasons were subject to being
mitigated down to cost if the energy offer was 10 percent or higher than the mitigated offer and
were only eligible to be made whole to their costs. As a result, market participants were offering
just under the 10 percent threshold, in effect mitigating themselves. Excessive or inefficient
mitigation is not a goal of the MMU. The MMU proposed capping the energy offer at 10 percent
above the mitigated offer when committed to address a local reliability issue in lieu of
mitigating the resource down to its cost-based offer. This enhancement allowed resources to
submit energy offers at more competitive levels without the fear of being mitigated down to
their mitigated offers when committed to address a local reliability issue.
22
SPP OATT, Attachment AG Section 6.2
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 80
ACCELERATE FREQUENTLY CONSTRAINED AREA PROCESS
The MMU submitted a market design change to streamline the process needed to implement
changes to frequently constrained areas (FCAs) to address market power concerns in a timely
manner. The FCA process applies more stringent mitigation thresholds. The initial process
resulted in a five to six month lag in effectuating the changes identified by the MMU in the
annual FCA study, resources were potentially subject to FCAs that no longer applied and other
resources that should have been subject to an FCA where not until the change could be made.
The MMU’s recommended process changes allowed for resources to have appropriate
mitigation thresholds applied much sooner after completion of the analysis.
Efficient commitment and dispatch
Efficient commitment and dispatch processes lead to more appropriate market outcomes and
more accurate price signals. The MMU continues to make recommendations related to
improving commitment and dispatch decisions.
RAMP CAPABILITY PRODUCT
The MMU recommended the development of a ramp capability product and supported the
development through the market design and stakeholder processes. The MMU filed comments
supporting the SPP design, noting that the product would provide deliverable ramp capacity to
the market, while providing transparent compensation for the procurement of that capacity. The
MMU further noted that the product should increase reliability while decreasing the price
volatility observed in SPP’s real-time markets. The MMU noted its intention to evaluate the
method being used for setting the ramp scarcity price curves, which could cause ramp scarcity
to be too low and under procure ramp and whether the shape of the demand curve needed to
be adjusted.
UNCERTAINTY PRODUCT
The MMU recommended the development of an uncertainty product and supported the
development through the stakeholder-driven design process. The MMU filed comments
supporting the SPP design, noting that intent of the uncertainty reserve product is to improve
reliability, price formation and price transparency while decreasing price volatility, make-whole
payments and the impacts of out-of-market actions taken to preserve reliability. In its comments
to FERC, in which the MMU urged the Commission accept SPP’s filing, the MMU also noted two
areas for potential future enhancements. These include the potential need to address resources
under recovery of costs due to clearing uncertainty reserve amounts less than their minimum
operating limits and evaluating the appropriateness of the shape of the demand curve.
NDVER TO DVER CONVERSION
The MMU recommended requiring non-dispatchable variable energy resources (NDEVRs)
convert to dispatchable variable energy resources (DVERs). The MMU made the
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 81
recommendation to address inefficiencies caused by NDVERs, specifically the unexpected price
volatility related to price-chasing behavior and uneconomic production. The MMU supported
SPP staff and market participant efforts to implement the tariff changes need for requiring the
conversions. The final SPP proposal, which was included in the tariff filing, included exempting
certain resources and extending the conversion timeline. While these changes were not the
MMU preferred method, the MMU supported the filing because it agreed the exemptions were
limited and reasonable, and the timeline was sufficient.
UNDER SCHEDULING OF VARIABLE ENERGY RESOURCES
The MMU made recommendations to address the systematic under scheduling of wind
resources in the day-ahead market. The MMU noted that the under scheduling of these
forecasted resources can contribute to distorted price signals, suppressing real-time prices and
affecting revenue adequacy for all resources. The MMU identified potential enhancements to
address these inefficiencies, including incentivizing more variable energy resource and virtual
energy participation in the day-ahead market and allocating measurable costs to the cost
causers. This remains an open initiative in the SPP initiative roadmap process.
SELF-COMMITTED RESOURCES IN THE MARKET
The MMU continues to recommend that SPP staff and market participants address the
inefficiency caused by resources self-committing in the market. The MMU notes that it is
important to minimize the need to self-commit resources to realize the full benefits of the
market. Analysis performed by the MMU confirmed that long lead-time and long run-time
resources are often self-committed and contribute to depressing prices in the SPP market. The
current market structure is limited in its ability to commit these resources, and market
participants often commit them during uneconomic periods. The MMU has continued to
recommend that SPP staff and its stakeholders explore and develop ways to reduce the
incidence of self-commitment of resources outside of the market solution, including considering
adding an additional day to the optimization process in order to better balance forecast
accuracy with the ability to commit long lead time and high startup cost resources.
Price formation
Price formation is the economic basis of incentivizing both short-term operational and long-
term investment decisions. The MMU monitors for and makes recommendations regarding
areas of the market where prices are not providing the appropriate signals needed to make
these decisions. The MMU provided comments in FERC proceedings to address the need for
appropriate price formation when considering future enhancements needed to ensure proper
transmission and generation is in place to reliably and efficiently meet the needs of the market
and ensure just and reasonable rates for ratepayers.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 82
IMPROVING PRICE FORMATION DURING EMERGENCY EVENTS
The MMU made recommendations aligned at setting appropriate prices during emergency
events. In its recommendations, the MMU noted that when prices are actually signaling an
emergency event, market participants can take actions to address the underlying emergency
condition, like increasing imports. Accurate prices provide proper signals for investment in new
generation or demand response resources to deal with and avoid future emergencies.
Appropriate price formation provides an important signal for generators planning maintenance
as they will want to minimize outages during periods of high prices.
IMPROVING PRICE FORMATION DURING SCARCITY EVENTS
The MMU made recommendations aligned at setting accurate prices during scarcity events. The
use of violation relaxation limits (VRLs) during scarcity events may dilute or eliminate the scarcity
price effects. Relaxing the spinning reserve requirement instead of clearing the requirement
from a graduated demand curve, undervalues spinning reserves when there is competition
between products and does not provide a price signal that ensures generator availability. The
MMU continues to recommend SPP staff and stakeholders review price formation during
scarcity events and consider the establishment of graduated demand curves that incentivize
efficient price formation. In the short term, scarcity prices can ensure resources are performing
at their maximum limits and that energy imports are incentivized. Even when no more capacity is
physically available and imports are exhausted, improved price formation may not result in more
product availability during a scarcity event but will produce a price signal that will incentivize
future availability.
IMPROVING ACCURACY AND TRANSPARENCY OF TRANSMISSION LINE RATINGS
The MMU recognizes the importance of accurate line ratings and the impact that those ratings
have on the market and appropriate price formation. The MMU commented in FERC
proceedings supporting enhancements to methodologies and processes used for determining
transmission line ratings used in both transmission planning and market and operational
models. Current line ratings are not always determined using the most transparent and accurate
methodologies, relying mostly on static seasonal line ratings that do not sufficiently capture
variations in congestion and transfer capability on the transmission system. Enhancements like
the use of ambient-adjusted ratings (AARs) and dynamic line ratings (DLRs) can be a more cost-
effective way to address congestion than building out transmission. Accurate transfer capability
would promote more efficient and transparent markets and just and reasonable wholesale
market rates.
EVOLVING WHOLESALE MARKETS
The MMU recognizes the challenges that come with ensuring sufficient capabilities to serve load
in the future. These challenges include integrating renewables into the market, efficiently
addressing increased retirements for fossil fuel resources and ensuring sufficient generation and
transmission is available to reliably serve the load. MMU staff are actively engaged in
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 83
proceedings with FERC and discussions with SPP staff and stakeholders to identify
enhancements and solutions to address these issues.
Markets will need to change and evolve to meet the challenges of integrating renewable
resources and the MMU is contemplating a new framework of flexibility, dependability,
availability, resiliency and quality to help meet those challenges. As the MMU has commented in
multiple forums and FERC proceedings, the markets need to evolve to address each of these
elements.
WEIS MARKET
The responsibilities and obligations of the MMU under the WEIS Tariff are similar to those of the
SPP Integrated Marketplace, including the independence of the MMU from SPP staff and market
participants.
The MMU monitors the WEIS market for instances of market power and gaming and market
design inefficiencies. The MMU identified the need for enhancements in the WEIS market to
address the lack of available ramp in the market and improvements needed in the supply
adequacy processes.
The MMU performed a market power study in advance of the approval and implementation of
the WEIS market. The study investigated whether, and to what extent, structural market power
existed in the proposed WEIS market and included recommendations to enhance the
competitiveness and efficiency before market implementation. The market power study
identified the need to monitor for system wide market power in the WEIS market. The MMU
recommended the addition of a test for system wide market in the mitigation design for the
WEIS market.
The MMU argued that the system wide market power mitigation approach would allow market
offers to set the price when conditions were competitive and would protect consumers when
conditions were not competitive. This approach balances the need to send efficient market price
signals with protections from market power abuse. MMU staff worked with SPP staff to include
an enhancement to the mitigation design for the WEIS market to mitigate for system wide
market power.
COMMUNICATION AND OUTREACH
The MMU places importance on engagement with state and federal regulatory entities. The
MMU performs outreach on a continuous basis with FERC staff and state commissions. The
MMU provides formal and informal education on SPP markets, including education sessions to
the RSC and individual state commissioners to help regulators better understand the issues
impacting the SPP markets and MMU’s engagement in those initiatives.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 84
The MMU holds regular stakeholder calls to present its annual and quarterly state of the markets
reports and allow for questions from participants. The MMU regularly provides monthly updates
on the SPP and WEIS markets to SPP and WEIS stakeholder meetings.
The MMU maintains a hotline number and email account that are monitored continuously to
address stakeholder concerns. Information received through these forums is kept confidential as
defined per the SPP and WEIS tariffs.
SPP MMU ADVANTAGE
The MMU takes a balanced approach to its monitoring obligations, considering the impacts to
generation and load, thermal and renewable resources and physical and virtual generation when
recommending and commenting on market enhancements. The MMU supports competitive
pricing when conditions are competitive and recognizes the need for mitigation process when
conditions are not competitive to protect consumers. The MMU recognizes the importance of
building strong relationships and being professional and respectful, even when disagreeing on
market design and policy enhancements. The MMU is collaborative with the SPP staff and
stakeholders, while maintaining absolute independence. The MMU has and will continue to
support SPP staff and stakeholder initiatives it agrees with and will not hesitate to recommend
changes or disagree when appropriate. However, in either case, the MMU will take time to listen
to other positions and to explain its views and positions.
STAKEHOLDER RELATIONS
TRAINING
Stakeholders consistently rank training services as one of SPP’s most valuable services. The
Stakeholder Training team’s Markets+ training program provides prospective market
participants learning opportunities to become confident and effective participants in this energy
market.
The table below describes training offerings that will be available to Markets+ participants
leading up to and after implementation.
NAME DESCRIPTION TIMEFRAME TYPE
TARGET
AUDIENCE
Introduction to
Markets+
This course provides an
overview of the
fundamental concepts
for operating and
TBD
TBD: Virtual
Instructor-led
Training (VILT) or
Personnel
interested in
understanding
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 85
participating in an
energy market.
Classroom
Instructor-led
Market+
concepts
Markets+
Fundamentals
This course or series of
courses will detail the
specific functions and
features of market
operations that ensure
effective participation in
SPP’s Markets+ program.
Three
months
before
market trials
Instructor-led
course to be
hosted in a
central location
Personnel tasked
with performing
or supporting
market activities.
Ad hoc, hot-topic
training
These courses will cover
specific topics and will be
determined based on
stakeholder need and/or
test results from market
trials.
From the
start of
market trials
through
parallel
operations
VILT or
performance
support material
Market-support
staff
Post Go-Live
Training
SPP Stakeholder training provides on-going education post go-live based on
market enhancements, NERC/FERC orders, and stakeholder identified needs
CUSTOMER RELATIONS
In short, the stakeholder relations group is the single point of contact to assist market
participants navigate SPP for assistance with onboarding, ongoing business support and
technical support facilitation. Onboarding includes the coordination of contractual
documentation submission, commercial modeling, ICCP setup, testing, and introduction into the
production model as a participant. The second service is the ongoing business support of
participants. This includes outreach efforts associated with impacting projects, coordination of
multi-team issues, and outreach for awareness of SPP initiatives that change participant business
processes. Lastly is the technical support facilitation through the request management system
(RMS). This includes requests for system access, the reporting of system issues, and technical
questions. Whatever your needs, the stakeholder relations team is here to make your
interactions with SPP a success.
IMPLEMENTATION
SPP introduced the concept of Markets+ to stakeholders in late 2021. Following two initial
webinars, SPP issued a survey to gauge potential participants’ and stakeholders’ level of interest,
willingness to commit resources, prioritization of design elements and sense of urgency to
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 86
launch the market. Based on those results, SPP formed three design teams to address four of the
eight proposed design elements: Governance,) transmission availability and market
products/price formation. Consistent with SPP best practices, volunteers were selected to serve
as stakeholder leads to be supported by SPP staff.
Each design team established its own meeting schedule, objectives and dashboards, which
resulted in SPP hosting nearly 50 webinars (some jointly held). In addition, all potential
participants and stakeholders met virtually on a monthly basis for development update
webinars. SPP hosted three in-person two-day meetings in Phoenix, Denver and Portland for
general session discussions and breakout sessions for different design teams.
Through the course of the numerous stakeholder meetings, the remaining four design elements
were addressed: Congestion rents and peer-to-peer seams were absorbed by the Market
Products and Price Formation Design Team, while the market monitoring and greenhouse gas
tracking/accounting issues took their own tracks.
Each design team issued draft documents for review and written comment over the past few
months. Stakeholder engagement has been strong, with high participation in Markets+ webinars
and in-person meetings (two met capacity limits) and broad engagement in submitting written
comments and other feedback.
This extensive stakeholder effort has resulted in the issuance of this draft service offering Sept.
30, which will be followed by a written comment period. SPP will host a final in-person two-day
meeting in Denver Nov. 15-16 to receive additional input before issuing the final service offering
soon after.
The final service offering contemplates a two-phase process for the continuing development of
Markets+. In phase one – tariff development, potential participants and stakeholders will
financially commit to design the market protocols, tariff and governing documents. Phase two –
implementation begins upon Federal Energy Regulatory Commission (FERC) approval. In this
phase, SPP will acquire necessary software and hardware while participating entities fully commit
to fund and are integrated into the system.
PURPOSE
The purpose of phase one – tariff development is to facilitate the processes for potential
participants and stakeholders to develop the detailed market protocols, tariff and governing
documents. SPP has committed to leveraging components of the governance framework to
create stakeholder processes, facilitated by SPP staff, which provide structure and voting
mechanisms to assist in developing consensus for various proposals while maintaining a
schedule that allows all interested parties to reach timeline goals for ultimate integration and
implementation.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 87
SCOPE OF ACTIVITIES
• Market design, including detailed market protocols
• Transmission availability design
• Governance design and partial implementation
• External outreach, including utility commissions, governors’ offices, state energy offices,
potential participants, stakeholders and other interested parties
• Coordination with existing reliability coordinator and balancing authority operations
• Coordination with Western Electric Coordinating Council standards
• Assessment of interoperability with the Western Resource Adequacy Program and other
resource adequacy programs
• Stakeholder support and training
TASKS
• Coordinate with western groups and agencies to ensure coordination and
interoperability between the market and other programs and services
• Revisit the design elements of market design and transmission availability design
• Perform necessary analysis to illustrate the feasibility and as proof of concept for design
elements where appropriate
• Hire and train the necessary staff to support phase one – funded investigation of the
Markets+ initiative
• Facilitate stakeholder meetings, including providing meeting support (virtual and in-
person) and assisting in material development
• Administrative support, including posting meeting materials and general assistance
DELIVERABLES
• Allow potential participants and stakeholders the opportunity to provide substantive
comments on all draft governing documents, market protocols, tariff, operating criteria
or business practices
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 88
• Facilitate the stakeholder process to assist potential participants and stakeholders reach
sufficient consensus to develop a tariff and associated documents for the FERC filing in a
reasonable timeline
• Establish business practices and possible operating criteria for:
o Transmission
o Balancing authority coordination
o RSG interaction
• Prepare and file a tariff and associated documents focusing on markets and transmission
recovery mechanisms within settlements
• Develop governing documents, including charters for components of the governance
framework (such as the Markets+ Participants Executive Committee, the Markets+ State
Committee and any standing working groups)
• Provide SPP staff support for all stakeholder groups and task forces
TIMELINE AND BUDGET
SPP will facilitate the stakeholder process to build consensus on proposals. Potential
participants, stakeholders and SPP have a shared responsibility to maintain a reasonable
schedule to complete phase one. SPP believes it will take 21 months to develop and prepare the
package to be filed at FERC.
The phase one budget is comprised of personnel costs, technical and legal, outside legal and
consulting fees and travel/meeting expense. SPP offers this service for execution of phase one
for a fixed price of $9.7 million with a 21-month implementation schedule. The 21-month
schedule was developed based on the complexities of the market design and the expected
highly engaged stakeholder process necessary to gain desired consensus. Also built into the
schedule is the development of the filing letter, supporting analysis, and expert testimony. SPP
will work with stakeholders to develop a cost allocation approach for these startup costs prior to
the final service offering issuance in November.
At the end of the 21-month period, potential participants will pay a monthly rate of $500,000
per month to support the responses, technical analysis and research necessary to gain final
approval by FERC. SPP expects some interventions and protests to the filing and this continued
funding will provide adequate resources and support to defend the proposal and receive final
FERC approval.
Southwest Power Pool, Inc. Name of Current Section (Optional)
Report Name Publication DATE/Version NUMBER 89
CONCLUSION
This document sets forth a proposal for SPP’s development and implementation of its proposed
Markets+ service. The governance and design principles described here are based on the
feedback SPP received directly from the western utilities with whom it hopes to partner in the
interest of enhancing electricity reliability and affordability in the Western Interconnection. With
their input in mind, and drawing on its own experience facilitating mutually beneficial solutions
for diverse stakeholders and designing and administering markets, SPP has crafted a market
offering that stands to modernize and enhance the way the western grid is operated.
If your organization is interested in working with SPP to develop Markets+ or participating in
the stakeholder groups that will govern the market and oversee its continued evolution, contact
SPP’s stakeholder relations department at stakehold[email protected] or
submit a request
using our Request Management System and a representative will contact you to discuss your
needs and options.
