by Nick Fitzmaurice
Electric transmission is the physical infrastructure that allows clean energy infrastructure to connect to the grid and deliver electrons to households and businesses (see article on pg. 16). Meanwhile, energy markets overlay the transmission system as a mechanism for organizing electricity trades between utilities. There has been a lot of recent activity as organized energy markets expand in the West.
Energy markets dictate how energy is allowed to move between utility service territories and who pays for and benefits from that energy. The more efficient the market, the more affordably that energy will be dispatched, meaning higher utilization of low-cost renewables and lower bills for utility customers. Renewable energy thrives in markets that are bigger than the weather, using complementary renewable resources across a region to supply power from where it is available to where it is needed.
Trading energy in the West has long been rudimentary and inefficient, but that has been changing over the past decade. The first step was the development of the short-term, real-time Western Energy Imbalance Market (EIM), which allows participants to buy and sell electricity up to an hour in advance. Since it began in 2014, participants have realized over $7.4 billion in benefits, including NorthWestern Energy, which has attained over $153 million in benefits to its customers since joining in 2021.
Now, two competing energy markets that will coordinate energy trades up to a day in advance are being developed in the West, each vying for utilities’ participation. The Energy Day Ahead Market (EDAM) has far greater potential for member benefits and the potential to unify the West into a single, highly-efficient energy market, and it celebrated a major victory this September. The California Legislature passed a bill relinquishing the state’s governing control over that market, which will now be governed by an independent regional nonprofit organization whose mission is to value participating states’ interests and benefit all stakeholders in the West. This addressed the major concern around governance that led a number of utilities to join Markets+, the alternative day-ahead market offered by the Arkansas-based Southwest Power Pool (SPP). This market is less desirable because, while participating utilities and states have primary oversight of Markets+, ultimate decision-making authority resides with the Arkansas-based SPP Board of Directors whose mission is to improve the business environment for its members.
NorthWestern has already joined the EIM, operated by the same entity that is developing EDAM, but it has yet to choose which day-ahead market to join. Should NorthWestern join Markets+, it would have to leave the EIM and forgo the millions of dollars in customer benefits it realizes from participation in that market.
The good news is that the West is now one step closer to a unified energy market and the low-cost clean energy system it will enable.
This article was published in the December 2025 issue of Down To Earth.
