Overview:
- The Bonneville Power Administration (BPA) has decided to participate in the Southwest Power Pool’s Markets+ for both real-time and day-ahead markets, as outlined in a recently released draft policy. This marks a shift away from a new market that the California Independent System Operator (CAISO) is developing.
- Although the CAISO’s Extended Day-Ahead Market might present more financial advantages, the BPA believes that the SPP market better suits its needs regarding governance, resource adequacy, green gas accounting, and handling congestion revenue. A final decision on this matter is expected in May.
- BPA’s draft decision indicates the formation of two linked day-ahead markets in the Western region. Rachel Dibble, BPA’s vice president of bulk marketing, noted during a Thursday briefing that the notion of a unified market across the West is not currently feasible, but future mergers could be possible as support for Markets+ continues to grow.
Insights on Market Development:
The BPA’s choice will significantly influence market evolution in the West, as it supplies wholesale power from hydroelectric dams in the Northwest, amounting to approximately 22.4 gigawatts. The BPA’s operations encompass about 15,000 circuit miles of high-voltage transmission infrastructure, primarily selling power to cooperatives, municipal utilities, and public power districts.
The BPA’s draft decision turns down requests to postpone its decision-making process until the completion of the West-Wide Governance Pathways Initiative, which aims to create an independent governance structure for the Extended Day-Ahead Market.
A recently introduced bill in California, SB 540, aims to move forward with the Pathways Initiative’s second phase. However, BPA argues it restricts operational independence by necessitating that the market be run by the ISO, which can reaffirm California’s influence over market frameworks.
Despite the potential financial advantages of joining EDAM, BPA highlights that the ultimate choice is not simply about numbers. Dibble explained that governance, an open stakeholder process, and qualitative aspects are vital and could yield longer-term benefits.
The rivalry between the proponents of Markets+ and EDAM has already spurred improvements in both market models, and BPA believes waiting for the Pathways Initiative to unfold would diminish this competitive edge.
BPA’s critique suggests that the Pathways framework does not go far enough, with Dibble expressing confidence in the existing structure of Markets+ as the superior option.
Earlier this year, the Federal Energy Regulatory Commission provisionally approved Markets+, with expectations for it to commence operations in 2027. Conversely, EDAM, developed by CAISO, is expected to launch in 2026.
Two Markets in the West:
A number of utilities, such as Arizona Public Service, Xcel Energy’s Public Service Co. of Colorado, Salt River Project, and other companies, plan to join Markets+. They hope that, despite limited transmission links between the Northwest, Colorado, and Arizona, connectivity will improve over time.
Markets+ is anticipated to offer various benefits, with PSCo mentioning in an application to the Colorado Public Service Commission that it will feature a neutral market operator. This ensures that actions taken by the market operator serve all participants’ interests.
Although PSCo expects initial cost savings for its customers to be moderate, these could increase through additional transmission development.
On the other hand, utilities like PacifiCorp, Los Angeles Department of Water and Power, and Portland General Electric are inclined towards joining EDAM, while Idaho Power and NV Energy are considering the CAISO-managed market.
Nonetheless, PacifiCorp’s proposal for tariff adjustments to participate in EDAM is facing challenges from BPA and other entities favoring Markets+, primarily regarding transmission rights and congestion revenue management.
Mixed Reactions:
Advanced Energy United has expressed disappointment with BPA’s decision not to delay its conclusion, as advocated by Congressional members and others who favor a more unified approach. They argue that rushing into joining a fragmented market might compromise the reliability and affordability of clean energy resources in the region.
According to them, a more seamless and unified market could enhance the West’s position as a national energy leader; however, this decision could jeopardize this vision.
In contrast, the Public Power Council has shown support for BPA’s choice, asserting that it aligns with public power priorities focused on effective governance, regional reliability, and leveraging the Northwest’s unique hydropower resources.