FERC issues orders expanding organized markets in the Southeast and the Southwest

SEEM

SEEM was originally proposed in 2021, at least in part as an alternative to forming an RTO. It features an enhanced platform for bilateral trades and a zero-charge, non-firm transmission service. Essentially, every 15 minutes, SEEM matches bids and offers based on price and available transmission, with payments taking place through standing agreements between the members. The SEEM proposal was highly contested, resulting in FERC (which only had four members at the time) splitting two-two and the proposal going into effect by operation of law. While litigation continued in the background, SEEM started operating in November 2022. It has since expanded to include additional members, and its implementing tariffs have undergone several revisions.

The SEEM Order, issued on March 14, 2025, affirms the existence and operation of SEEM in response to a remand from the U.S. Court of Appeals for the District of Columbia Circuit. In essence, the D.C. Circuit remanded the “order” by which SEEM had gone into operation after FERC deadlocked, asking the current Commissioners to consider a number of specific issues and reaffirm (or not) its approval of SEEM. In the SEEM Order, FERC approved the SEEM Agreement and subsequent amendments nearly as-is, finding them consistent with FERC precedent regarding open-access transmission. FERC did, however, require a compliance filing to allow entities to participate in SEEM using pseudo-ties rather than direct physical connections. This addition is intended to expand the number of entities that can take advantage of SEEM, as entities outside the SEEM footprint may participate in the market if they wish to invest in establishing a pseudo-tie.

SPP

FERC also approved SPP’s proposal to admit nine additional transmission owners, all located in the Western Interconnection. Once implemented, SPP would become the first RTO to span the boundary between the Eastern and Western Interconnections. This arrangement raises novel technical issues that SPP had to address in its proposal. For example, the two parts of the RTO will remain asynchronous, connected only by three direct current (“DC”) lines with a maximum 510 MW capacity. As a result, SPP will operate two separate balancing authority areas (“BAAs”), SPP West and SPP East. Pricing will be calculated separately for each BAA, although SPP will attempt to optimize pricing between the BAAs using the DC lines.

Take-away

When FERC first introduced RTOs (and their functionally-identical sibling, the Independent System Operator, or “ISO”) in Order No. 2000⁴ it hoped that the entire grid would be overseen and operated by these independent entities at some point in the future. However, the expansion of the ISO/RTO framework was stymied by the preferences of some states and utilities to remain independent, and/or regional politics. SPP was the last of the RTOs to be formed in 2004. Notably, the RTOs and ISOs were all formed on an operations-first basis, with control of the transmission system being handled over to the RTO/ISO prior to the implementation of energy markets.

Further progress has been uneven and has largely taken a markets-first approach. An extensive push to expand the California Independent System Operator, Inc. (“CAISO”) into the West fizzled out when it became clear that balancing the interests of California and the other states in the region was likely impossible. However, the Western Energy Imbalance Market (“WEIM”) was born out of that initiative. WEIM’s transmission owners manage their own BAAs, but get the benefit of CAISO’s real-time market, and soon, its day-ahead market as well. SEEM, likewise, arose from efforts to establish a southeastern RTO. By contrast, SPP’s expansion into SPP West will extend both operational control and markets into a new area under a traditional RTO.

Authored by George ‘Chip’ Cannon and Porter Wiseman.